GM Financial is suing Pennsylvania Chevy dealer Kinley Chevrolet, formerly called Whitmoyer Chevrolet, for defaulting on an obligation of over $37 million to the lender by allegedly selling hundreds of vehicles out of trust, according to Automotive News. The dealership’s holding company, Kinley Co. Ventures, and principal Steven Kahlon, who personally guaranteed the financing, are also implicated in the federal suit.
When a dealer sells cars out of trust, it uses loans to finance its inventory and sells the financed cars without paying the lender back. GM Financial is seeking to repossess the cars in question and receive damages from the defendants.
U.S. District Judge Mitchell Goldberg issued a temporary order on April 16th, the day after the suit was filed, allowing GM Financial to repossess its collateral and demanding the dealership hand over the keys and documentation for the cars. The order was extended on April 29th.
Kinley Chevrolet declined to comment on the lawsuit when reached for comment by Automotive News. However, it contends that GM is charging incorrect sums in interest and fees and misreporting interest to the IRS.
GM set up a $1 million/week payment plan with Kinley earlier this year but claims that the dealership has fallen behind on the payments. GM Financial also accuses the dealer of hiding car sales and pocketing the profits instead of paying what it owes. GM ultimately claims that Kinley Chevrolet, Kinley Co. Ventures, and Steven Kahlon are either financially unable to make their payments or avoiding repayment to enrich themselves.
“Whitmoyer’s failure to pay and the sheer size of the (out of trust vehicles) demonstrates either the prospect of payment or performance to be impaired or an intentional, deliberate, and deceptive decision to refuse to repay GM Financial and instead retain sales proceeds for themselves,” GM’s complaint says.
Comments
$37 million??? GM Financial couldn’t see a problem before that? Brilliant!
Reilly Deifenbach: Well, that’s for sure. The reason why I’ve been trying to reach you is that these last financing documents that you sent over to us… I can’t read the serial numbers of the vehicles…
Jerry Lundegaard: [getting nervous] Yah, well I already got the money. The loans are in place. I already got the…
Reilly Diefenbach: [voice] Yah, the 320 thousand… you got the money last month from us.
Jerry Lundegaard: So, we’re all set then.
Reilly Diefenbach: [voice] Yah, but the vehicles that you’re borrowing on, I just can’t read the serial numbers on your application. Maybe if you could just read…
Jerry Lundegaard: Yah, but the deal’s already done. I’ve already got the money.
Reilly Diefenbach: [voice] Yah, but we have an audit here and I just have to know that these vehicles that your financing with this money that they really exist.
Jerry Lundegaard: [getting more nervous] Well… they exist all right.
Reilly Diefenbach: [voice] Well, I’m pretty sure they do, but I can’t read the serial numbers here. Maybe if you could read the numbers to me on the first…
Jerry Lundegaard: Yah… well… see… I don’t have them in front of me. Why don’t I just fax you over a copy?
Reilly Diefenbach: [voice] No, no, a fax is no good. That’s what I have here and I can’t read the darn thing.
Jerry Lundegaard: Yah, I’ll have my girl send you a copy then.
Reilly Diefenbach: [voice] Okay, that’s good. But I need to tell you that if I can’t correlate these numbers with those specific vehicles, then I’m gonna have to call back all that money.
Jerry Lundegaard: How much money did you say that was?
Reilly Diefenbach: [voice] $320,000. I have to correlate that money with the cars that it’s being lent on.
Jerry Lundegaard: Okay, no problem. I’ll just fax…
Reilly Diefenbach: [voice] No, no…
Jerry Lundegaard: I mean send it right over. I’ll shoot it right over. Good bye.
Crooks cheating crooks surely not? It’s just a market adjustment boys…..
Usually not the Dealer principal’s fault although he should have had a closer eye on the books. Most often it was the Business Manager/Comptroller who was packing the money so he could disappear with it.
tRump and used car salesmen. Not a nickles worth of difference.
Don’t insult used car salesmen……..
Keep the comments to cars and trucks, please. If I wanted to read or watch complaining about government, I’d watch TV or read a newspaper.
Never trust a dealer. The whole system is set up for them to make a buck any which way possible. Righteous or not it doesn’t matter.
Only if u knew what really goes on in this place…Starts from the Dealer Principal down in this occasion. Take it from people that know the workings
This may be a dumb question but does GM have the right to repossess vehicles that were already sold to customers who may be making payments themselves? What if these customers are financed through GM Financial themselves?