An Iowa dealer who lost his thriving small-town Ford franchise after he was accused of rigging rebate sales dates and endorsing rebate checks made out to customers said he has exhausted all appeals.
Craig Foster resisted Ford Motor Co.'s termination effort for five years as he challenged, under the state franchise law, the loss of Craig Foster Ford Inc. in Tripoli, Iowa.
He had owned the dealership for 13 years; in a couple of those years, he said he sold nearly 500 vehicles.
Foster's case began with customer complaints that led to a Ford audit. The case went to the Ford regional office in Chicago, which recommended termination, and then moved to the Ford Dealer Policy Board in Dearborn, Mich.
From there the case went to an administrative law judge with the Iowa Department of Transportation, then to Bremer County District Court, and finally to the Iowa Supreme Court, which agreed with the lower court's finding against Foster.
Along the way, one judge said falsifying sales information and endorsing the checks was evidence of bad faith bordering on fraud.
Foster now operates Foster Sales & Service Inc., a used-car store.
The audit covered August 1989 to August 1991 and revealed 40 instances in which Foster reported sales within eligibility dates that were not made during the period. 'In 11 of the incorrectly reported sales, the named buyers were actually Foster Ford employees, not bona fide buyers,' the state Supreme Court said.
In 20 of 26 incorrectly reported sales involving cash rebates, Foster issued universal bank drafts payable to the named 'customer,' then endorsed the drafts in the payee's name and deposited the drafts in Foster's bank account.
In 34 other instances, the court said, when dates were reported correctly and rebates were authorized, the customers were unaware that Foster had endorsed the checks payable to those customers.
Foster's appeal urged reversal on two grounds: misinterpretation of the law's 'good cause' for termination, and the fact that Ford did not prove another Ford dealership would become effective in the same community, as required by Iowa law.
In defending his actions, Foster claimed Ford encouraged or condoned deceptive practices. He said managers exerted pressure to keep sales high and that he sometimes received advance notice of incentive programs. He said other dealers discussed bending the rules, and other dealerships sold vehicles contrary to the rules without consequences imposed by the company.