Kia America is taking a New England dealership group to court, alleging it falsified records that resulted in the owners pocketing in ill-gotten sales incentives of over six figures.
Dan O’Brien Auto Group and its top management are alleged to have submitted hundreds of fraudulent retail delivery reports for vehicles that hadn’t actually been sold to customers, according to a federal lawsuit filed in New Hampshire.
The lawsuit, which names six current and former O’Brien dealerships in New Hampshire and Massachusetts, CEO Dan O’Brien and COO Tom Kuhn, alleges racketeering, fraud, conspiracy, and related claims in a scheme that had dealerships shuffling inventory around to mask the purported deception.
Kia Lawsuit Details
From January 2019 through July 2021, Kia contends there was a “substantial discrepancy” of up to 350 new vehicles between the number of new vehicles the auto group had on hand and the inventory they should have had if their sales reports were accurate.
A Kia auditor visited the O’Brien dealerships in Norwood, MA, and Concord, NH in June 2021 and turned up dozens of vehicles that had previously been reported as sold, according to the court filing. The automaker estimated damages at more than $500,000, citing 280 retail delivery reports that supposedly contained false information.
As a result of the audits, Kia issued termination notices to each of the O’Brien Kia dealerships in January 2022 after the dealerships’ failed “to adequately explain why these vehicles had been reported as having been sold.” By late 2022, all of Dan O’Brien Auto Group’s franchised dealerships had been closed or sold, or were up for sale, according to the lawsuit.
Dan O’Brien Defense
Defense attorney Paul Harris, who’s representing Dan O’Brien Auto Group, said the accusations are false. “What this dealership did is perfectly legitimate,” Harris said in published report.
In a related federal case out of Massachusetts, a federal judge blocked Kia’s attempts to raise racketeering charges against the Norwood dealership.
In that case, Kuhn offered up an explanation for the discrepancies Kia said it found at the Norwood dealership.
Previous Case
“For a small number of transactions, we determined that data entry errors or record-keeping oversights had been made by dealership personnel and agreed that incentive payments should be charged back by KIA for those transactions in accordance with KIA’s sales policies,” Kuhn wrote in a 2022 affidavit. “These were simply errors and oversights that occur at a high-volume dealership such as O’Brien KIA.”
Harris accused Kia of trying to “venue shop” after the Massachusetts case was settled last year and intends to file a motion to dismiss the New Hampshire lawsuit.
O’Brien’s operations has dwindled to a single location in Methuen, MA.