Automotive News - March 24, 2008 - (Page 22)

22 • MARCH 24, 2008 Indictment: Bribe scheme cost GM $83.3 million Robert Sherefkin rsherefkin@crain.com What’s alleged Here, in simplified form, is how former GM executive Daniel Bealko and metals-trader Anthony Demetrius Brown allegedly defrauded the automaker. 1. GM tells Bealko to sell off a large chunk of its bulk aluminum holdings. 2. Bealko directs sales of more than $90 million in aluminum to or through Brown’s company. Brown kicks back $5.4 million to Bealko. 3. Brown pockets the sales receipts, fails to pay GM $83.3 million. His company becomes insolvent. Source: Court documents DETROIT — Inadequate financial controls at General Motors allowed a would-be sports promoter with a small, thinly capitalized company to conduct complex commodity trades that defrauded the automaker of $83.3 million. GM failed to detect a fraud and kickback scheme involving a GM executive and a company owned by Anthony Demetrius Brown. The company traded in large amounts of aluminum owned by GM, selling either the metal or options to buy it. Although Brown’s Fuci Metals USA, of Northfield, Ill., was insufficiently capitalized, it was allowed to trade aluminum valued at hundreds of millions of dollars with the help of a former GM employee, Daniel Bealko. Bealko and Brown were indicted this month by a federal grand jury in Chicago. The indictment also alleges that Bealko, GM’s former global commodity manager for lightweight metals, hid $5.4 million in kickbacks from Brown from the Internal Revenue Service. A GM spokeswoman declined to comment. According to the indictment, the scheme was in force from January 2002 to December 2003. Out of the country Bealko, 61, described in court documents as a dour 440-pound man with an ego to match his girth, could not be reached for comment. The former suburban Detroit resident is believed to be in the Caribbean islands of St. Kitts and Nevis. GM terminated him in December 2003. Brown presented himself to GM in 1990 as a metals broker. He became known as the “black Bill Gates” because he used the Internet extensively for trading metal commodities, an unusual practice at the time. He had a $10 million venture with sports promoter Don King, according to a 2005 New York Daily News article that said Brown was not paying creditors. In its 1996 listing of top blackowned companies, Black Enterprise magazine listed Fuci Metals USA on its BE 100 Industrial/Services list with $61 million in gross sales. Brown’s company received more than $90 million, nearly all from the sale of GM aluminum. Fuci became insolvent in September 2004, leaving GM $83.3 million in unpaid debt. Instead of paying GM in full for its excess aluminum after each sale, Brown regularly spent the money received for the aluminum on executive jets, luxury automobiles, travel, tickets for sporting events, hotel rooms and personal expenses, according to court documents.c Aluminum sales According to the indictment, Bealko had authority to devise and implement a plan for GM to divest its extensive bulk aluminum holdings from 1998 to December 2003. GM had acquired several hundred million pounds of bulk aluminum. GM then decided to sell a large portion. It’s unclear how financial controls could have failed at GM purchasing. Bealko told one insider that Fuci “did not have two nickels to rub together,” according to the criminal complaint filed in January against Bealko by the U.S. Attorney’s Office in Chicago. Bealko’s supervisor, identified only as “Individual D,” told the FBI that Bealko never told him about the sale of any amount of GM-owned aluminum through Fuci’s trading account at Carr Futures, a commodities brokerage, according to the complaint. Bealko did not have approval to transact sales through those accounts on behalf of GM. Nor did Bealko inform D about the payments to him by Brown. The FBI began its investigation in 2006 based on a complaint by GM. Pat Lobb Toyota’s environmentally friendly practices range from a giant cistern that reclaims rainwater and air-conditioning condensation for use in the dealership’s carwash to drought-tolerant plants, inset. The greening of Toyota dealerships Environmental option is part of store upgrade plan Mark Rechtin mrechtin@crain.com WHAT'S HOT RIGHT NOW? QUAD CITIES, IA: MULTI-FRANCHISE DEALER 1 OWNER USED CAR CLEARANCE WEEK: 75 Units 38% INCREASE IN GROSS! AVERAGE WEEK: 41 Units John Mathews of Pat Lobb Toyota: Dealership will pay back added costs of environmental certification in less than eight years. waste oil from oil changes, while vegetable oil has replaced hydraulic fluid in the service department lifts. John Mathews, Pat Lobb managing partner, says the added cost of building a LEED-certified store will be paid back in less than eight years. “This building will have a 40- to 50year useful life,” Mathews says. “That’s a very compelling argument, and that’s just dollars and cents. When we start talking good will with the customer base, it’s impossible to put a value on it.” The McKinney store was so successful that Toyota is using it as the template for its Image USA II Squared design program. Five other dealers should have their own versions completed by summer. The Toyota LEED architectural template was created with the idea of zooming through city planning departments without holdup, said Jim Lentz, president of Toyota Motor Sales U.S.A. Because of that, a store that normally would take 21 months to build can be accomplished in 13 months, Lentz said. Following the plan also could save 15 percent in construction costs. “There’s also lower cost for water and for electricity,” Lentz said. “It’s a win-win.” c LAKELAND, FL: CHEVROLET DEALER AVERAGE WEEKEND: 25 Units FARMINGTON, NM: INDEPENDENT DEALER AVERAGE WEEKEND: 10 Units OR TRIPLE YOUR AVERAGE WEEKEND. BOOK APRIL & MAY NOW! Gear up for spring with an ACTION EVENT that is proven to DOUBLE 1 OWNER USED CAR CLEARANCE WEEKEND: 44 Units • $114,569 Gross $, 1 OWNER USED CAR CLEARANCE WEEKEND: 25 Units • $59,977 Gross TUCSON, AZ: INDEPENDENT DEALER AVERAGE WEEKEND: 29 Units $ 4990 WITH 75,000 INSERTS EVENTS FROM REPO JOE WEEKEND: 84 Units • $212,840 Gross BRYAN, TX: TOYOTA DEALER REPO JOE WEEKEND: 55 Units • $139,987 Gross AVERAGE WEEKEND: 30 Units RIVERHEAD BAY, NY: , MULTI-FRANCHISE DEALER AVERAGE WEEKEND: 15 Units REPO JOE WEEKEND: 38 Units • $121,672 Gross AIM-0066 4x5BW VDG www.ActionIM.com Get More Information Online At ACTION INTEGRATED MARKETING PROVIDES FULL-SERVICE & EVENT MARKETING SOLUTIONS FOR DEALERSHIPS NATIONWIDE 800.478.8818 EXT. #152 LOS ANGELES — One option for dealers planning to upgrade their stores under Toyota’s Image USA II architectural plan is to install environmentally correct design elements. Toyota says stores that use the green template, based on Leadership in Energy and Environmental Design standards, can be completed in less time and for less money. The LEED rating system, developed by the U.S. Green Building Council, provides a suite of standards for design and construction. The first auto dealership of any brand to obtain LEED certification was Pat Lobb Toyota in McKinney, Texas. Pat Lobb’s green initiatives include a cistern that reclaims rainwater and air-conditioning condensation. The dealership’s typical monthly water bill for irrigating a 14-acre site, washing 4,000 cars and dispensing all the water used by 100 employees is just $800. In addition, the dealership’s exterior is made of 85 percent recycled aluminum. Green walls on the rear and sides of the building are made of climbing trumpet vine to absorb the sun’s heat and keep the building cooler. The showroom carpet is partly constructed of recycled automotive glass. The bathroom urinals are flushless. The heating system works partly from http://www.ActionIM.com http://www.ActionIM.com

Table of Contents Feed for the Digital Edition of Automotive News - March 24, 2008

Ford lists 6 to succeed Mulally GM pushes luxury superstores Industry straps in for rough ride Bob Irvin is a worthy addition to Hall of Fame Debate at Scion: How to grow Ford moves executives in Asia to new jobs CEO of lanelogic: We're still here Kia's N.Y. duo Chrysler's exec trio: Reports of friction mostly fiction Where others see gloom, Honda chief sees boom in U.S. Fukui: Nickel battery is best bet for hybrid Beijing conference explores key issues in China market Planworks keeps its role as buyer for GM ads Lincoln: MKS will make up for brand's slow start in '08 Deal's no big deal: Styling top reason to buy GM Penske's Smart start: He'd like 15,000 more Dodge's pitch for Challenger: A halo that you can afford Chrysler plans 'We listen' ads You go, Bob With zest, activist Ditlow remains on lemon patrol Autos did the job after 9/11; don't bet on that now Chinese cars? Dealer beware Solar power is the only answer Where will we get power for the Volt? Want higher CAFE? First, do this In N. California, hybrids are hot Detroit 3 can learn from the Marlboro Man The Prius is a phenomenon Wait 3 years, then judge Ford How many Jeeps will India buy? Lithia looks into improper sales reports at dealerships AutoNation's lead shrinks as largest U.S. dealer group Honda ad agency creates unit to build Acura brand Study: Consistent theme in auto ads builds viewer recall Big-truck sales continue slide in Feb. -- off 27.1% MazdaSpeed revs up racing accessory sales Calif. company eyes electric charging stations for Volt, Vue Indictment: Bribe scheme cost GM $83.3 million The greening of Toyota dealerships 6 more finalists in race for PACE recognition Tenneco expands Japanese work, seeks more Bosch buys diagnostic equipment firm in China JV will design vehicle platforms Citation moves headquarters NxtGen tests emissions system VW stake may help Porsche on fuel economy rules Chrysler's Project Genesis wins over Ore. dealer Germany, new EU members send up European sales Saturn will choose store system soon VW thinks modular for flexibility at auto plants Automakers eager as axles turn high-tech Talking drivetrains with American Axle Dollar halts U.S. retail sales of Audi Q7 hybrid Hyundai: Genesis Coupe offers more go for dough Maxima's target: Luxury Euro makes Pontiac adds 3 sporty variants Outsider Elmer Johnson shook up GM Importer Yanase was Hall of Fame member Obituaries Redesigned TSX has many Acura firsts Dealers Certified sales up 7.5% in Feb.; Audi leads the way eBay's new Web site has new look, more features Big pickups and SUVs lead plunge in used-vehicle prices Ex-Reynolds CEO O'Neill joins J.D. Power Auto Hall of Fame will induct 8 Liberatore looks beyond Daimler Molina gets the top job at GMAC F&I pioneer Pat Ryan to retire from Aon Study: Hydrogen research worth the cost Gulf States trial halted As yuan rises, so do prices of Chinese parts Personnel exec Laymon: Ford still seeking outside talent GE gives supplier credit Dana CEO wants Asian growth Tesla launches production Todt steps down as Ferrari CEO Union pursues Toyota effort Chrysler offers spiffs for military Land Rover ads focus on heritage Mark Rechtin Fresh heir: To turn green, must BMW create brand? GM ponders mini-muscle Camaro New Ford ads coming in April With a spiffier image, Lincoln would rock abroad Rival says Nardelli's OK Ford hails its cab, but mpg is an issue

Automotive News - March 24, 2008

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