MADISON, Wis. - Former classic-car dealer David Larson has pleaded not guilty to a 23-count indictment by a grand jury in U.S. District Court here.
The indictment includes 18 felony counts alleging Larson defrauded investors in his business, and five felony counts alleging use of the mail and wire to defraud people whose cars he sold on consignment.
Larson's business, Capitol Cor-vette in Fitchburg, Wis., bought and sold used autos, and also took vehicles on consignment to be sold for others. The indictment alleges Larson raised more than $1 million from investors from 1992-96, telling them their investment was risk-free and secured original titles to cars owned by Larson. He also said this collateral was worth at least as much as the loan balance.
The indictment said the titles Larson actually gave to the investors were not for his own cars, but for cars he had sold or that were owned by consignors, who had not authorized their titles to be used as collateral.
When he sold the consigned cars, he either got the original titles back from investors, or he told the consignors that the titles were lost, and obtained duplicate titles from the state, federal officials charge. That left investors holding worthless original titles.
In late 1995 Larson told investors that additional loans, limited in number and amount, would save him the cost of seeking new investors, the indictment alleges.
Prosecutors alleged that Larson committed mail fraud and wire fraud by consigning cars, converting the money to his own use, and telling consignors that he had not sold their cars.
Business records at Capitol Corvette were seized last July after the Wisconsin Department of Transportation received complaints against the business. The state dropped previous criminal charges filed against Larson when the federal criminal investigation began.
The charges carry maximum penalties of five years in prison for 22 counts and 10 years for one count, plus $250,000 per count, but both would be limited by federal sentencing guidelines and Larson's ability to pay, said Assistant U.S. Attorney Stephen Sinnott.
Larson said that he is not guilty, and that 'we will prove that at trial,' scheduled for late summer.