Multimillion-dollar scam rocked GMAC
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But in September 1992, McNamara admitted bilking General Motors Acceptance Corp. out of about $443 million in a Ponzi scheme. He borrowed about $6 billion from GMAC over 11 years.
A federal judge sentenced McNamara to five years in prison in 1996.
"McNamara actually had good credit. He paid his bills on time for years. But he paid them by increasing the amount of float time," said Bill Lovejoy, who was GMAC president when the operations staff discovered the fraud in late 1991.
McNamara exported vehicles to the Middle East, which made it more difficult to keep track of his inventory, Lovejoy said. The inventory wasn't confined to his dealership; some of the vehicles could be at the port or in transit overseas. McNamara used new loans to pay off older debt.
To this day, the McNamara scam is a tough topic for former GMAC executives.
"It's embarrassing," said Robert O'Connell, who was appointed GMAC chairman in 1992, after McNamara was caught in a lie. GMAC improved its system for monitoring dealer inventory and for rating dealer credit, O'Connell said.
Lovejoy and other executives lost their jobs after McNamara's swindle was made public.
Ironically, GMAC made more than $1.4 billion in 1991 in spite of taking a hefty write-down for McNamara's theft.
"GMAC hit all its financial targets that year," Lovejoy said. "But GMAC lost good people. It was tragic."
