Army puts Arizona dealerships off-limits

SIERRA VISTA, Ariz. — In her decade as spokeswoman for Fort Huachuca, Tanja Linton says, the Army base here has declared some rowdy bars off-limits to soldiers.

But this spring, base officers ordered military personnel not to do business with two auto dealerships here and one in nearby Tucson, all owned and run by Rick Johnston and his two sons.

Linton says the base felt the need to "protect" its soldiers — as many as 80 percent of whom are sent to Iraq or Afghanistan — from abuse by the dealerships.

"We were concerned that our service members are being taken advantage of," she told Automotive News. Linton and others cite complaints that the dealerships cheated or at least misled soldier customers and threatened them with arrest or a tarnished credit history when they complained. Linton says many soldiers who complained asked not to be identified out of "fear of retribution" by the dealerships.

The dealerships — Wildcat Mitsubishi in Tucson and Ideal Automotive, which operates Mitsubishi and Suzuki stores here in Sierra Vista — also are under civilian scrutiny. The state of Arizona is investigating the dealerships' practices, after the local Better Business Bureau fielded 30 complaints about them over the past three years.

In an interview here, dealer Rick Johnston, 59, and his sons, Heath, 37, and Beau, 34, who manage the dealerships, concede mistakes.

They admit selling vehicles with improperly recorded identification numbers — a clerical error, Beau Johnston says. And they acknowledge financing some deals without a needed state license — a bureaucratic mix-up, Rick Johnston claims.

But Rick Johnston insists: "We're not bad people. We're just a family trying to make a living."

The three dealerships sold about 2,000 new cars and trucks last year. The Johnstons say bad publicity and other effects of the military ban could cut that business in half.

Last month, Rick Johnston's company filed for bankruptcy, looking for breathing space to reorganize. In a court filing, the company reported owing its 20 largest unsecured creditors more than $2.1 million.

Heath Johnston challenges officers at Fort Huachuca to "come up with one instance where we are hurting the morale and welfare of their soldiers." The Johnstons defend their conduct in their dealings with soldier James Tuman.

In February 2006, Tuman bought a used 1995 Pontiac Firebird from Ideal Automotive. He soon returned the car to the dealership, claiming it had mechanical problems.

Tuman tried to cancel the purchase, financed by a $10,760 loan he had taken from Ideal Automotive, and buy a car at a competing dealership. But the Johnstons refused to return his trade-ins, a 1994 Isuzu Rodeo and a motorcycle.

"We told him he could switch to another car on our lot," Heath Johnston says. "But we're not going to let you out of the contract."

Johnston threatened to identify the Firebird as repossessed, which would have blemished Tuman's credit report. A bad credit rating can affect a soldier's security clearance.

An argument between Tuman and Beau Johnston in April 2006 led the dealership to call police. Tuman was cited for disorderly conduct and released. Ultimately, the Johnstons say, Tuman agreed to let them keep the trade-in vehicles in return for a voided sale that would not damage his credit rating. Heath Johnston says Tuman never signed the agreement. Tuman was not available for comment.

Tuman returned to Fort Huachuca last year after a tour of duty in Iraq. Soon thereafter, Phil Maxey, a civilian lawyer on the base's Armed Forces Disciplinary Control Board, proposed that the dealership pay Tuman $6,000 for his trade-ins and "cause any adverse entries to his credit report to be favorably corrected." In return, Tuman would drop his complaint to the board.

Beau Johnston calls Maxey's offer "an extortion game." But he says the Johnstons probably will pay Tuman the $6,000 if the bankruptcy court that is hearing their case approves. Maxey declined to comment.

The dealership must address other issues. The Arizona Department of Financial Institutions has cited Ideal Automotive for making finance deals without a license over the past two years. The Johnstons say they forgot to renew the license but have now filed the proper forms.

Jack Hudock, a spokesman for the state department, says the Johnstons could face fines of $5,000 a day for each violation. The case is pending.

Last month, the state Transportation Department cited Wildcat Mitsubishi for violating a previous order to stop issuing temporary license plates. Five times, the department said, the dealership had issued temporary plates with the wrong vehicle identification numbers.

The dealership could be fined $3,000 for violating the order, says Transportation Department spokeswoman Cydney DeModica. The department has not decided whether to assess the penalty, she says.

Tom Collier, president of the Better Business Bureau of Southern Arizona, says other consumer complaints against the dealerships include refusing to return a deposit after a customer decided not to buy a car, selling a customer's trade-in before a purchase was completed and claiming falsely that aftermarket parts in a used car sold by Wildcat Mitsubishi were covered by a warranty.

One of the complaints came from Andrea Gragg, 26, a server at a Sierra Vista restaurant. Last year, Gragg bought a used Dodge Durango from Ideal Automotive. The dealership allowed her to take the truck before financing was approved. After Gragg's poor credit disqualified her from financing, she returned the Durango.

But instead of refunding Gragg's $750 deposit, she says, the dealership pressed her to buy a used Plymouth Neon. Again, she says, she drove away in the car before she was financed.

When the dealership later quoted her a 28 percent interest rate on her loan, she brought the car back. Beau Johnston refused to return her deposit, she says.

"He said he hasn't given down payments back in as many years as he has owned Ideal, and he wasn't about to start," Gragg says. Only after she complained to the Better Business Bureau, she says, did the dealership refund her deposit.

Heath Johnston denies that the dealerships engage in strong-arm sales tactics. When financing problems arise, he says, "nine times out of 10, we make appropriate adjustments," such as reducing the sales price or offering larger trade-in allowances.

One of the Johnstons' most bizarre altercations involving Fort Huachuca came in late 2003, when Heath Johnston was charged with aggravated assault after he rammed a car outside a Sierra Vista bar.

According to the Arizona Daily Star, the soldier who owned the car was grazed as he jumped out of the way, and Johnston dragged the car 50 feet. Johnston got four years' probation in the incident.

Johnston says he mistakenly hit the car in a "scramble" after a brawl inside the bar with employees of Lawley Automotive, which operates five new-vehicle dealerships here. The soldier was not involved in the brawl, the newspaper reported.

Next month, Fort Huachuca's disciplinary board will consider lifting the ban against the dealerships. The Better Business Bureau's Collier says the Johnstons have agreed to submit complaints by soldiers and civilians against Ideal Automotive to binding arbitration by the bureau.

Collier says he last met with Rick and Beau Johnston in April. Since then, he says, the Johnstons have not sought to meet with him. He observes wryly: "One of the things I'm supposed to be doing with them is scheduling customer service classes."