Among more than a dozen fresh allegations made by the state agency: Bill Heard's Town Center dealership in Kennesaw, Ga., misrepresented to third-party lenders that options and extra features were added to vehicles that the dealership was trying to get financed for customers. The illegal practice is known as "power booking."
In power booking, a dealer artificially inflates the loaned value of a vehicle by telling the lender that there are features or options on the vehicle that don't exist. The bank then approves the loan for more than the vehicle is worth, with the difference going to the dealer.
According to court documents, Bill Heard Enterprises instructed its dealers to tell customers to lie if lenders called to verify the extra features.
The amended complaint quotes a former Bill Heard salesperson as saying: "You have to prep the buyer that when the bank calls, you know, whatever the bank asks you, you tell them, 'Yes, it's got that equipment. If it's got a hot tub in it, you got to tell them it's got a hot tub in it."
With group revenues of $2.13 billion in 2007, Bill Heard Enterprises, of Columbus, Ga., ranks No. 13 on Automotive News' list of the top 125 U.S. dealership groups based on new retail units sold.
Heard, who turns 74 on Sept. 8, told the Columbus Ledger-Enquirer in a rare interview in July that he planned to sell "two or three" of his dealerships because of slow sales. Last week, the newspaper reported that Bill Heard Enterprises has trimmed 400 employees out of 2,800 across the country.
In a written statement to Automotive News and other media last week, Bill Heard Enterprises blamed its financial condition on a combination of "adverse economic conditions, high gasoline prices and our traditional product mix" weighted toward trucks.
"We have been successful in this business for four decades, and we have navigated successfully through challenging economic conditions before," the statement said.
"Our plan is to increase our efficiency and productivity, tap the emerging fuel-conscious market with an appropriate product mix, reduce our already-competitive cost structure and restructure our business to compete effectively in current market conditions."
The company also must reply to the state of Georgia's allegations.
The state's latest complaint is an amendment to a July 2007 counterclaim to a lawsuit Bill Heard Enterprises filed in May 2007 under the Georgia Open Records Act. That lawsuit sought the names of individuals and dealerships that filed complaints against Bill Heard over a 2006 fake recall notice.
In October 2006, Bill Heard mailed fliers to about 10,000 Georgia residents labeled "urgent potential recall notification." The flier carried the logos of GM and its brands and urged recipients to call a toll-free number to schedule a free vehicle safety inspection.