Carmaker DeLorean is back in court -- this time over fraud
For the second time in barely two years, John Z. DeLorean is in court. A jury is being selected this week to hear charges against the former General Motors executive that range from wire fraud and tax evasion to racketeering. If convicted, he faces up to 90 years in jail.
In the summer of 1984, Mr. DeLorean beat a supposedly ``air-tight'' drug charge in Los Angeles federal court. That happened in spite of his having been videotaped taking a suitcase full of cocaine from undercover agents, drugs he allegedly was going to sell to help raise the money needed to keep his car company alive.
This time, DeLorean faces 15 separate indictments alleging he engaged in what prosecutors call a ``bold and massive scheme to defraud'' investors, including entertainers Sammy Davis Jr. and Roy Clark. About 140 investors had posted a total of $18.7 million to realize DeLorean's dream of building a stainless-steel, gull-winged sports car.
Today there exist serious questions about $8.5 million of those funds, which seemingly disappeared through a Panamanian company called GPD Services Inc.
``This case is about the fraudulent diversion of money,'' wrote United States attorneys Joseph Papellan and Sheldon Light in their case outline.
The missing money was earmarked to finance engineering and design work for the DeLorean Motor Company's sports car; the money was charged to Lotus Cars Ltd., a well-respected British race car company. Prosecutors charge the money was laundered through GPD's office in Switzerland, then transferred to DeLorean's personal checking account in New York City.
The money, they claim, was used in part, for personal expenses, such as the purchase of jewelry for DeLorean's wife, but primarily to back a loan DeLorean secretly obtained in the Netherlands. The loan, they charge, was used to buy the Logan Manufacturing Co., a Utah firm that makes equipment to groom ski slopes.
For his part, DeLorean and his defense team will be relying heavily on the same strategy they used successfully in California: trying to put the government, rather than DeLorean, on trial.
``They framed me in L.A. and it didn't work, so I assume it's the same thing here,'' DeLorean told reporters on the steps of Detroit's federal building Monday.
Defense attorney Howard Weitzman is expected to argue that the government is trying to create a case around DeLorean as revenge for his beating the drug charge. DeLorean's defense team will also argue that his financial transactions were legal, and that the transfer of the $8.5 million was approved by the late Colin Chapman, who created Lotus.
``When all the documents and facts are presented, I expect to be fully vindicated,'' DeLorean wrote in his autobiography last year.
If he's wrong, DeLorean could be in for an extended stay at a federal penitentiary. The racketeering charge is the most serious, and could mean 20 years behind bars. The other 14 counts, including wire and mail fraud, tax evasion, and interstate transportation of stolen money, each carry penalties of three to five years.
Opening arguments by the prosecution will not begin before next week, and the trial should take at least two to three months. -- 30 --