Hyundai’s fraud lawsuit over bogus fleet repairs
Where it stands:
Company asks court to triple jury’s $1.9 million award
U.S. District Judge Roger Hunt is considering Hyundai’s motion to triple the damages under the Racketeer Influenced and Corrupt Organizations, or RICO, Act.
The lawsuit accused Ace-A-Dent Inc., corporate officers Dennis Hallam and Gary Bowman, and former Hyundai Motor America employee Robert Corder of conspiring to submit fraudulent invoices and other documents for repair services that weren’t performed or were performed improperly.
The verdict covered compensatory and punitive damages against the three men, who denied liability. Ace-A-Dent of Florida, which filed for bankruptcy protection, defaulted.
The case was based on an audit covering an eight-month period December 1998 through July 1999, but Hyundai spokesman Chris Hosford said the company believes the fraudulent activity began before then.
Ace-A-Dent was under contract to repair company vehicles such as employee leases and off-lease vehicles before auction, he said, adding “Hyundai was its single-largest client.”
The lawsuit alleged that Robert Corder, a Hyundai manager of fleet remarketing, accepted bribes and kickbacks in exchange for channeling work to Ace-A-Dent and for allowing the fraud to occur. He was responsible for overseeing and approving the work. Corder was later fired, Hosford said.
The scheme was discovered during a routine audit. “The auditors examined vehicles and found that work we were invoiced for had never been done. Once you see one or two of them, the red flag goes up,” Hosford said.
At trial, Hyundai offered evidence that there was little correlation between the work done and amounts billed as well as evidence of schemes to divert funds to shell corporations.
No criminal charges have been filed.
Hyundai’s lawyer, Kenneth Keller of San Francisco, said the punitive damage award might deter future frauds. Said Keller: “Hyundai intended to send a message that this conduct will not be tolerated.”