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Honda's problems involve Arkansan.

FBI Links Alleged Kickbacks to Cliff Peck Dealership in Conway

A SCANDAL INVOLVING alleged kickbacks to as many as 13 executives at American Honda Motor Co. has hit Arkansas and particularly automobile entrepreneur Cliff Peck of Little Rock.

The 13 Honda officials were indicted in March by the U.S. Justice Department for receiving $10 million in illegal transactions. The transactions allegedly included accepting cash for the awarding of Honda dealerships and taking bribes to ensure a dealer would get an ample supply of the hottest Honda lines. Some of the executives were accused of accepting ownership interests in Honda and Acura dealerships in violation of Honda regulations.

Honda's former Western Zone manager, Edward A. Temple, told the FBI in March that Peck was awarded a Honda franchise in Conway in 1987 when he agreed to give Temple and Stanley James Cardiges of Laguna Hills, Calif., a 25 percent share of the business. Cardiges, a former senior vice president with American Honda who quit in April 1992, is one of the primary executives charged.

Peck, a popular owner of automobile dealerships in Arkansas for years, opened the dealership and then sold it a short time later for $1.3 million, Temple says. Peck sold the dealership to a group that included Winthrop Paul Rockefeller.

After selling the dealership, Peck allegedly paid Cardiges and Temple $162,500 apiece, representing 12.5 percent of the proceeds from the sale. The FBI says it has check stubs from the transactions. Temple pleaded guilty in October to conspiracy to commit mail fraud.

The 79-year-old Peck declined to comment on the situation, except to say, "I just would like for it to die down as quickly as possible. I'd like to see it cool down."

Peck, who has a farm in western Pulaski County, adds that it's regrettable his name has been mentioned in the charges and in publications reporting on the scandal. No charges have been filed against Peck, and there is no indication that charges may be filed against him.

Eight of the indicted executives already have pleaded guilty, including temple. Among the charges filed by the U.S. Attorney's office in Concord, N.H., are racketeering, conspiracy and mail fraud. The illegal activities have been going on for 13 years, according to the indictments.

Among the gifts Cardiges is accused of receiving from Honda dealers are a $30,000 baby grand piano, a $20,000 laser karaoke machine and Rolex watches, according to an article in Automotive News. He also allegedly sought and received cash, cars, jewelry and part-ownership in Honda franchises from dealers.

"These guys were so cocky, they'd come in, put their feet up on my desk and tell me what I had to give them," Tom Roulette, who has a Honda dealership in Painesville, Ohio, told The New York Times.

Others in State: No Pressure

Arkansas Business contacted several Honda owners in the state, but none said they had ever been pressured by Honda executives for payments in return for a better allocation of cars.

"We never did, to be honest, pay anything to them at all to get any extra merchandise," says Bob Russell, who owns Russell Honda in North Little Rock with his brother, Rick. "My brother and I were the first dealership in Arkansas to have Acura. When we got Acura, they did not mention money under the table. We got Acura with no front money at all.

"We also got Honda that way, but we got Honda back in 1972 when they were just coming into the country. In Conway, all I know is what I read in Automotive News and I'd heard the rumors. But I don't know if that's factual.

"In Cliff's case, that's the way the ball game was being played at that time, apparently. And if you wanted another dealership, evidently you had to pay to get it. So I'm not too sure he did anything illegally wrong.

"As far as I know, at that time the dealers were approached by Honda [executives]. No dealers were going into Honda and saying, 'If you get me a franchise, I'll pay you $50,000.' I think when they tried to get extra franchises, apparently an executive might come back and say, 'I can get a [franchise] for you if you pay X amount of dollars.'"

The Russells sold the Acura dealership, now Riverside Acura, to Rockefeller.

Don Nelms, who owns Nelms Honda and Nelms Acura in Fayetteville, says he was affected by the problems because after Peck opened the Conway dealership he came to Bentonville, about 25 miles away, and opened another Honda dealership. Peck no longer has any ownership in Northwest Honda, in Bentonville.

"I just think things like that are wrong," Nelms says. "I don't think it should have been done and it needs to be cleared up.

"I knew Jim Cardiges. I knew Ed Temple. I knew most of those people. I've been a dealer for 23 years, so I've been around this thing for a long time. It's really a real shock to you to wake up one morning and see in print what you've been concerned about for a long time.

"But I can tell you I never participated in it and I'm proud of that, and I never would have."

The federal indictments are spawning civil suits throughout the country, says Lindsay Chappell, the reporter who has written the articles in Automotive News.

"When the indictments came down, all these dealers around the country apparently started looking at it and said, 'That kind of affected me, too,'" Chappell says. "One dealer in California has filed a class-action civil suit because he feels his dealership was hurt by these alleged shenanigans. He seeks to define all Honda dealers in the United States as a class."

Michael Connolly, the assistant U.S. attorney in Concord who has been in charge of the investigation, declined to comment on the investigation or whether any charges could be filed against Peck.

A native of New Jersey, Connolly says he lived in Little Rock for two weeks during his senior year in high school in an exchange program.

He attended Little Rock Central.

Connolly told the Los Angeles Times that he couldn't say if the investigation would extend to other makes of automobiles besides Honda.

Temple told the FBI that in February 1991, Christian Walker, an American Honda employee, got copies of the two checks Peck had written to Cardiges and Temple. Walker threatened to expose Cardiges' and Temple's involvement in the kickback scheme. When he learned that Walker intended to expose them, Cardiges planned a cover-up of the deal with Temple.

Temple told the FBI that Cardiges asked him to write a promissory note describing Cardiges' $162,500 kickback as a loan between Cardiges and Peck at an interest rate of 12.5 percent. Cardiges then told Temple to call Peck and inform him about the note, with the stated understanding that Peck and Cardiges had never discussed a cover-up.

Temple then took a rough draft of the note to a secretarial service to be typed and returned to Cardiges' $750,000 mansion in Laguna Hills with the completed copy.

Last November, Cardiges went to Temple's Costa Mesa, Calif., Honda dealership and discussed the FBI's investigation. Cardiges told Temple that Honda attorneys had interviewed him and asked him specifically about the Peck deal. Cardiges told Temple that he described the $162,500 payment as a loan with an interest rate of 12.5 percent. The reason Cardiges picked the 12.5 percent rate, Temple told the FBI, was to coincide with the 12.5 percent ownership interest he had in the dealership.

Peck's Altruism

For years, Peck was well-known in central Arkansas because of his Cliff Peck Chevrolet dealership in Little Rock. He also has been known in the automotive industry for his altruism.

In 1991, he turned over the Little Rock dealership to Joe Morgan, who was his general sales manager at the time. Peck still has an ownership interest in what is now Service Chevrolet.

It was the 25th time in his career Peck had relinquished an automobile dealership to a partner.

At the time, Morgan said of Peck's generosity, "He gets a great deal of satisfaction from helping people, and he prides himself on it."

Peck and his family own automobile dealerships in Arkansas and Mississippi. In 1989, Peck said his family had about 10 dealerships in the South.

His son, Cliff Peck IV, has an ownership interest in a Toyota dealership in Fort Smith. He also had some ownership in Northwest Honda in Bentonville, but the Pecks are no longer involved in it.

His daughter, Patty, owns Patty Peck Honda, a thriving dealership in Jackson, Miss. Peck reportedly gave it to her as a wedding present.

His son, Pat, runs Pat Peck Nissan in Gulfport and Greenville, Miss. In recent years, Pat Peck also has had an ownership in a Honda dealership in Florence, Ala., and a Toyota dealership in Laurel, Miss.
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Title Annotation:American Honda Motor Company Inc.; owner of automobile dealerships Cliff Peck
Author:Smith, David (American novelist)
Publication:Arkansas Business
Date:May 16, 1994
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