Federal grand jury probes FCA's U.S. sales

DETROIT -- Some of Fiat Chrysler’s U.S. dealers have begun receiving subpoenas to provide documents and or testimony to a federal grand jury in Detroit as part of a probe into the company’s sales reporting practices, Automotive News has learned.

It is unclear how many of FCA’s approximately 2,650 U.S. dealerships have received subpoenas. Federal grand jury proceedings are secret under U.S. law.

A dealer source, speaking on condition of anonymity, confirmed that subpoenas had been issued seeking dealer-level sales data and other information.

FCA declined to comment.

However, an attorney representing some dealers who have received subpoenas said he planned to object to the requests.

“The dealers we represent will be objecting to the subpoenas as they seek overly broad and unduly burdensome records, such as the home and cell phone numbers of all employees covering seven years. Also, all reported sales which were subsequently unwound,” wrote Len Bellavia, a lawyer with Bellavia Blatt & Crossett in Mineola, N.Y., in an email.

Bellavia wrote that it is “unfair that dealers should be dragged into this by expending time and money to help the Justice [Department] make out a case against FCA. FCA employee statements and records should be sufficient.”

Bellavia is the attorney who filed the amended federal civil racketeering case against FCA US on behalf of dealerships owned by the Napleton Automotive Group that is believed to have started the federal investigation. He is no longer involved in that case, however.

FCA US confirmed on July 18 that it was under investigation by the Securities and Exchange Commission and the U.S. Department of Justice over its sales reporting methods.

The dealer source said FCA US and its employees were issued warrants by federal investigators when they visited all nine of the automaker’s regional business centers, as well as its corporate headquarters in Auburn Hills, Mich., beginning on July 11. Investigators also visited current and former employees in their homes, the source said.

On Tuesday, the automaker issued a sweeping restatement of its monthly U.S. sales results going back to 2011 and disclosed that it was changing the methodology under which monthly sales are tallied.

As a result of the changes, FCA US’ streak of month-over-month sales increases, which had run up to 75 consecutive months through June, actually ended in September 2013.