Ken Zangara is in hot water.
The well-connected New Mexico Dodge dealer closed his store last month because of collapsing sales. He now faces a state civil action stemming from what New Mexico Attorney General Gary King described in a court filing last week as "an automotive Ponzi scheme."
An action filed last week in a New Mexico district court alleges that the Albuquerque store took numerous vehicles on trade that had loan balances due but failed to follow through on a promise to pay off the loans.
Zangara Dodge "misrepresented that the check to the creditor is in the mail when it is not," the court filing states.
King alleges Zangara violated state consumer protection statues, a civil infraction. He is scheduled to appear in an Albuquerque court April 30. After vigorous complaints from Zangara's lawyers, King's office late Friday, March 27, agreed to file an amended document removing the "Ponzi scheme" language.
Rebecca Branch, deputy director of consumer protection in the attorney general's office, said: "We don't want that language to overwhelm the situation. We still believe they were taking money that was legally obligated for other things."
In an e-mail to Automotive News last week, Zangara vigorously disputed the allegations and "the use of the term 'Ponzi scheme' to describe the dealership's inability to pay its bills."