Judge allows American Honda to cut ties with Falconi’s

Thursday, Oct. 9, 1997 | 10:04 a.m.

An administrative law judge has ruled that American Honda Corp. can terminate its contract with Falconi's Tropicana Honda after the local dealership was tied to a nationwide kickback scheme.

The dealership has until Nov. 1 to appeal the ruling issued by Administrative Law Judge David Schreiber of the Nevada Department of Motor Vehicles.

American Honda has sought termination of the relationship since the middle of last year after 18 former American Honda managers were convicted of fraud in connection with a nationwide scheme against the car manufacturer. Two of the 18 managers, James Cardiges and Robert Rivers, pleaded guilty to racketeering and mail fraud and later testified against the others.

Cardiges and Rivers implicated Falconi dealer-principal Angelo Falconi in the kickback scheme, leading American Honda to proceed toward ending the dealer agreement.

In the administrative hearing, Falconi contended he was victimized by Cardiges, formerly senior vice president of sales for American Honda, and Rivers, the company's former Western region manager.

American Honda has said it would move quickly to form a new Honda dealership in Las Vegas and would retain as many of the Falconi employees as possible.

Louise Evans, director of operations at Falconi, said the parent company of the dealership would issue a statement later today.

"As far as we're concerned, it's business as usual," Evans said. "We're definitely doing business and we're still the lowest-priced Honda dealer in America."

Edward Morascyzk, Angelo Falconi's Washington, Pa.-based attorney, said he and Falconi had no comment on the ruling or whether an appeal is forthcoming.

In his decision, Schreiber said kickbacks paid by Falconi violated federal and state law as well as the dealership agreement with American Honda and the manufacturer's conflict-of-interest policies.

Through his attorneys, Falconi did not dispute making payments, saying he thought it was proper within Honda's salary augmentation policy. Later, through affidavits filed in the proceeding, Falconi said the payments were made voluntarily to Cardiges and Rivers in an effort to induce them to leave Honda and go to work for Falconi.

Cardiges, who pleaded guilty to receiving $2 million to $5 million in cash, clothing, cars and other gifts from dealers across the country, said he received $50,000 to $75,000 a year from 1982 to 1992 from Falconi in return for providing rare, hot-selling cars for the dealership.

Schreiber referred calls to Don Denison, new director of the Department of Motor Vehicles and Public Safety.

"As far as we were concerned, it was a problem between American Honda and their dealership," Denison said. "We were involved because we license dealerships."

Denison said the hearing -- the first such action he has ever heard of -- was conducted after several meetings between the parties involved in the case.

"The bottom line is that American Honda can now establish a new dealership," Denison said.

He said he knows of no plans to prosecute Falconi on criminal charges stemming from the case.

Denison said he did not know what would happen if American Honda moved to establish a new dealership and Falconi appealed.

In his ruling, Schreiber expressed concern for the Falconi employees who were not the cause of the franchise termination proceedings.

"It is axiomatic that Honda's best interest would be served by establishing a replacement dealership as soon as possible, so that the success, profitability and good will brought about by its general manager, Frank A. Ellis Jr., and Falconi's employees will continue in a new dealership," Schreiber said in his Oct. 2 ruling.

Nevada law states that an appeal can be made in District Court within 30 days of the ruling.