CEO Mario Ferla and his allies have sued owners and managers for fraud, alleging they skimmed millions from Chamco through bogus fees and excessive commissions.
In simple terms, the multimillion-dollar battle comes down to this:
Ferla and his forces say Chamco's board anointed them on March 3 and tossed out their opponents. But the tossees say they have the stock and the legal standing to make the board's action moot.
Plaintiffs and defendants have set up warring Web sites, with each group claiming to be in charge of Chamco.
Meanwhile, Chamco's West Coast distributor has sued and wants his money back.
Among those caught in the furor is Steve Saleen, the well known manufacturer of Mustang performance cars who agreed to homologate Chamco trucks for the United States. Saleen is a plaintiff in Ferla's lawsuit and has allied himself with the other plaintiffs trying to gain control of the company.
And the 37 dealers who paid franchise fees of up to $300,000 watch and wait to see if their investment will produce the promised Chinese trucks to sell — or just a painful lesson and a good story for the golf course.
The antagonistsThe two main antagonists in this drama are Ferla and E. Michael Daspin, a New Jersey business broker who helped launch Chamco two years ago.
Ferla, a former Fiat executive, was hired by Chamco last year to lead its effort to import trucks to North America in 2009. Ferla soon found himself at odds with Daspin, who, Ferla contends, controlled the company through his wife, a major shareholder.
Daspin was convicted of fraud in the 1970s.
On March 3, Ferla, Saleen and six other Chamco executives and investors sued Daspin and his allies within Chamco. The lawsuit was filed in the Superior Court of New Jersey, where Chamco is based.
The lawsuit, which was first reported on autonews.com, alleges Daspin and his allies siphoned money out of the company.
The lawsuit describes a proposed Mexican land deal that would have netted Daspin and his allies nearly $7 million. The lawsuit also alleges Daspin and his associates pocketed 25 percent of each Chamco executive's first-year salary, plus 10 percent of equity investment in Chamco.
Among the defendants are former Chamco Chairman Bill Pollack and Daspin's nephew Ron Stella, owner of Capital Corp., an investment company that profited from a services contract with Chamco.
The lawsuit seeks damages for alleged fraud and seeks to prevent defendants from issuing any more stock or using company funds. Last week Pollack told Automotive News that the defendants will fight the allegations and contended that he and his allies still run the company.
Money spigotFerla's suit alleges Daspin and his allies employed a number of strategies to siphon money out of Chamco. Among the allegations in his lawsuit:
-- Daspin and Stella were supposed to receive monthly retainers of $80,000 but routinely withdrew $100,000 or more. In February alone, the two defendants withdrew a combined $1.1 million in commissions.
-- Daspin issued Chamco stock without authorization to friends, family and associates.
-- Daspin and Stella received millions through a consulting contract Chamco negotiated with Capital Corp., which Daspin and Stella founded. Capital Corp. received 10 percent of all equity investments in Chamco, plus 25 percent of the first-year salaries of each Chamco executive.
-- Daspin and his associates hoped to enrich themselves through a Mexican land deal. They planned to borrow $500,000 from Chamco to buy land for an assembly plant. They allegedly planned to sell the land to the Mexican government for up to $7 million.
Daspin and his allies would repay Chamco's loan and pocket the rest. Mexico, in turn, would donate the land to Chamco. The lawsuit says Daspin's group "would make millions of dollars without risking any of their own money."
The deal was never consummated.
A hearing on the suit is scheduled for Wednesday, March 19.
Ambitious plansChamco had boasted that it would be the first company to sell Chinese-built trucks in the United States.
To fund its ambitious plans, the Parsippany, N.J., company raised millions of dollars from 37 dealers. And Chamco required each newly hired executive to invest up to $500,000 in company stock.
The company's Chinese partner — a small manufacturer called Hebei Zhongxing Automobile Co. — originally was supposed to start delivering SUVs and pickups to dealers by the middle of this year. But it's unclear whether Hebei, which sold only 36,800 vehicles last year, can deliver the goods.
Chamco repeatedly has delayed its launch date, and the company has aborted plans to produce trucks in Mexico.
Riled by Chamco's chaotic power struggle, the company's biggest distributor now wants to bail out. Scott Thomason, a multifranchise dealer based in San Francisco, had agreed to sell Chamco's trucks in 35 West Coast stores. He had invested $6 million and promised an additional $4 million when the trucks are delivered.
On March 3, Thomason filed a lawsuit against Daspin, Pollack and Chamco alleging fraud and deception. He is demanding the return of his money.
Ferla appears determined to lead a turnaround. He and fellow plaintiffs made their feelings clear in a March 12 court filing:
"It is the Ferla plaintiffs that seek to operate Chamco as a legitimate and successful enterprise going forward, and not the Daspin defendants who have treated Chamco as their personal piggy bank."