N.J. dealer slapped with lender lawsuits

Dealer Carmine DeMaio and partners have faced multiple federal lawsuits by captive finance companies alleging dealerships they owned sold vehicles but failed to repay floorplan loans — known as being out of trust. In some cases, the dealers are alleged to have floored vehicles with multiple lenders, known as double-flooring. These lawsuits filed in October involve 4 New Jersey dealerships owned by DeMaio.

Toyota Motor Credit Corp.: DeMaio, partner Frank Holtham and another owner of Lexus of Englewood were sued over allegations the store sold $8.9 million in vehicles without repaying floorplan loans. Toyota Motor Credit claimed during an Oct. 11 audit that it couldn't find about 200 vehicles. In total, Toyota Motor Credit said it is owed nearly $50 million. DeMaio and Holtham both denied allegations and sought dismissal of the suit. The case is ongoing.

Nissan Motor Acceptance Corp.: The captive sued DeMaio just 2 months after he bought Infiniti of Englewood. An Oct. 16 floorplan audit found no issues, but Nissan Motor Acceptance said it learned 2 days later of a “bulk removal” of collateral from the dealership. An Oct. 19 audit found 82 vehicles worth $2.5 million missing, the captive said. Nissan Motor Acceptance alleged some vehicles were double-floored with Toyota Motor Credit. Nissan Motor Acceptance later dropped its case; a judge dismissed the lawsuit on Jan. 24.

GM Financial: The captive alleged 25 vehicles worth $1.2 million were sold out of trust from Norman Gale Buick-GMC in Cedar Knolls, N.J., that about 2 dozen vehicles were double-floored and that titles for 173 vehicles worth $5.6 million were missing during an audit. GM said it is owed at least $22.5 million. A Nov. 1 letter from David Phillips, DeMaio's lawyer, said the dealership turned over titles, keys, vehicles and parts to GM Financial and a voluntary surrender agreement was signed, turning over possession of the dealership to GM Financial. DeMaio denied allegations and asked a judge to dismiss the case. It is ongoing.

VW Credit: An Oct. 18 floorplan audit found about $1.35 million worth of vehicles were sold out of trust at Volkswagen of Union and another $700,000 worth of vehicles had been double-floored, the captive said in its suit. Volkswagen accuses DeMaio and Holtham and says it is owed more than $23 million. DeMaio denied the allegations and asked a judge to dismiss the case. VW Credit won a motion, allowing the U.S. Marshal’s Office to seize several hundred new and used vehicles, parts and accessories and return them to VW Credit. The case is ongoing.

Source: Federal court files, Automotive News research