After a 24-yr. chase, dealer faces fraud trial
Jun Reodica built '80s Chevy empire with fake paper, prosecutors allege
Photo credit: LOS ANGELES TIMES
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He seemed to be the consummate immigrant success story.
A Philippine native, Eminiano Reodica Jr. went from working as a showroom attendant at General Motors headquarters in Detroit to owning the country's third-largest car dealership. He drove a red Jaguar and picked up clients in a chauffeured Rolls-Royce.
In the 1980s, Reodica, known as Jun, employed hundreds of fellow Filipinos and helped thousands of struggling minorities buy their first cars even if lenders elsewhere had turned them down. Thanks to their loyalty and the support of 1,000 investors, Reodica proclaimed in a videotaped message that his Grand Chevrolet in Glendora, Calif., would soon be the top-selling dealership in the United States "and most likely, the world."
A few months later, the empire crumbled -- and Reodica vanished.
On Aug. 4, 1988, Grand Chevrolet filed for bankruptcy protection, and Reodica reportedly was seen at a hotel in the Philippines that same day. After that, even his family claimed to not know where he was.
He was indicted in 1994. Now, 24 years after he dropped from view, Reodica is in federal custody. Customs agents arrested him Nov. 27 at Los Angeles International Airport as he was traveling to a family wedding in Canada, said Ruth Pinkel, the assistant U.S. attorney now prosecuting him.
Reodica, now 68, faces 51 counts of bank fraud and could be sentenced to up to 30 years in prison for each one, Pinkel said. A trial is scheduled for March.
"It was a huge case at the time that it happened, and the numbers are still fairly large even by today's standards," Pinkel said. "The fact that it's a little older will be challenging, but we will press forward in proving this case."
'Massive fraud'
After Reodica disappeared, his investors, many of whom were Filipino doctors and other professionals, learned that about $42 million they had given him was gone. Some families had to file for bankruptcy, and several Filipino farmers who had trusted Reodica with their savings lost their farms.
Lenders who worked with Grand Chevrolet and its affiliates, including General Motors Acceptance Corp., which later repossessed the dealership's inventory, claimed losses totaling about $120 million, Pinkel said. Grand Chevrolet's largest creditor, Imperial Savings & Loan in San Diego, failed several years later in part because of the collapse of Reodica's businesses, which included three finance companies and Grand Motors, a chain of 25 auto brokerages through which customers could order any make of vehicle out of catalogs.
"This is one of the most elaborate and well-conceived scams imaginable," Victor Vilaplana, a lawyer for Imperial, told the Los Angeles Times in September 1988. Vilaplana, contacted by Automotive News, again marveled at the breadth of Reodica's alleged deceit, explaining that Imperial officials began to suspect something fishy only a short time before Reodica disappeared.
Subsequent investigations by the Times and the California Department of Motor Vehicles concluded that the dealership had used a variety of tactics to inflate sales figures and hide a high delinquency rate among its customers.
The DMV -- which then-Gov. George Deukmejian had appointed Reodica to help oversee -- said it found evidence of "massive fraud and deceit and grand theft" on the part of Reodica and managers throughout the operation. At least 10 employees later were convicted of various fraud charges. Reodica's inventory manager, Danilo DeCastro, is still a fugitive.
"Before there was Bernie Madoff, there was Jun Reodica," said Bobby Reyes, a longtime journalist who is working with two former associates of Reodica to write a book about him. Madoff's Wall Street Ponzi scheme, uncovered in 2008, involved far larger dollar amounts, but Reodica expanded his enterprise in much the same way, Reyes said.
"He was supposedly the golden boy," Reyes said. "It was the American dream he was selling to young Filipinos and other Asian immigrants. He said, 'Look at me. I'm a self-made man.'"
Fraudulent sales
In 1987, Grand Chevrolet reported revenue of $146 million, roughly $296 million in today's dollars, and sales of 12,618 new and used vehicles -- more than six times the previous year's total -- making it Chevrolet's largest dealership, the Times reported.
Instead of traditional advertising, Reodica relied on his sales staff, which spoke 50 dialects, to recruit customers themselves. Job applicants had to assemble a list of 2,000 "friends and associates to whom they might be able to sell cars," the Times said in a 1987 profile. Newsweek noted that 60 percent of the dealership's customers were Asians and the rest were other first-generation immigrants and blacks.
Lenders agreed to extend large lines of credit to Reodica, impressed by how virtually all of his supposedly high-risk customers were reported to them as paying on time. But those institutions later discovered that Reodica and his staff were booking fake transactions, frequently repossessing and reselling cars without notifying the lenders, deleting negative information from buyers' credit reports and fronting payments for delinquent customers, the government alleged in its 1994 indictment against Reodica.
According to the 1994 indictment:
• In the 12 months before Reodica disappeared, Grand Chevrolet double-pledged nearly 400 vehicles as collateral to its lenders. The dealership repossessed the vehicles from delinquent customers, resold the vehicles to other customers who took out new loans and continued making the payments on the original loans to keep the lenders from finding out.
• Employees were asked to take out loans in their names for cars that would in reality be sold to other customers. Then the dealership would make the payments on the salespeople's loans and count the real sale as well as the falsified one.
• From March 1984 through August 1988, the dealership fronted payments on about 4,000 loans to artificially reduce its customer delinquency rate. It issued a daily check payable to "cash," which was marked with the letter "F" and often signed by Reodica, that was deposited back into the same account to keep track of fronted payments.
• Workers doctored customers' credit reports and state registration forms to help persuade its lenders to provide more funding.
Among Reodica's 600 employees were as many as 50 members of the Magic Diablos, a Filipino gang, who ensured workers and customers went along with the schemes, according to the Times.
Airport arrest
Reodica was flying on an Australian passport under an alias when he was arrested, said Pinkel, the prosecutor. Federal agents used the fingerprints linked to that passport to locate and identify him.
He was traveling under the name Roberto Abrian Coscolluela Jr., an FBI spokeswoman said.
Moriah Radin, Reodica's court-appointed lawyer, told the Asian Journal in Los Angeles that the arrest occurred without incident and that her client is cooperating with authorities. Radin did not return calls from Automotive News.
"He is aware of the alleged losses by investors and creditors," Radin was quoted as saying. "He is eager to resolve this case."
Court documents filed last month indicate that Reodica hid in the Philippines for several years and became an Australian citizen in 1992. His wife and two siblings who worked at the dealership claimed in written testimony that they were unaware of the indictment against Reodica until his arrest in November.
His wife said she and the couple's four children were frequently threatened by angry investors. In 1990 she moved to Seattle, filed for divorce and changed her name; she has never been charged with a crime.
Testimony from Reodica's current wife indicates she met him in 1990 when they were both working in Cairns, Australia, and they married in 1993. The documents give no indication about Reodica's life in the two decades since then, though the Asian Journal said Australian business records indicate he was working as an insurance agent.
• Fronting payments: Made payments on 4,000 customers' loans to keep lenders from discovering that accounts were delinquent.
• Falsifying credit reports: Deleted negative information on 400 customers' credit reports so lenders would accept sales contracts with them as collateral.
• Double-pledging contracts: Repossessed 392 vehicles from delinquent customers without notifying the lenders, then resold the vehicles attached to new loans.
• Pledging duplicate, forged contracts: Duplicated and forged 812 sales contracts so one vehicle could become collateral on two loans.
• Collecting employee loan proceeds: Employees applied for loans by falsely claiming they were buying a vehicle, then turned over the money from the lender to the dealership, which made payments on the employees' behalf while selling the vehicle to someone else.
You can reach Nick Bunkley at nbunkley@crain.com. -- Follow Nick on 
