Army News, opinions, editorials, news from Iraq, photos, reports - Army Times

Banned car dealerships file for bankruptcy

SIERRA VISTA, Ariz. — A group of southern Arizona automobile dealerships that were barred from selling to soldiers at the Army’s Fort Huachuca in May have filed for bankruptcy protection.

Johnston Shield Inc. operates several dealerships, including Wildcat Mitsubishi in Tucson and Ideal Automotive Group in Sierra Vista and Huachuca City. The company filed for Chapter 11 reorganization last week and listed more than $7 million in unsecured debt, including nearly $1.3 million in unpaid state and federal taxes.

Ideal Automotive Group general manager Beau Johnston said the action barring soldiers from doing business at the auto dealerships is not the key reason for the filing. The main cause is “due to the downward turn in the economy,” he told the Sierra Vista Herald newspaper on Monday.

Johnston is the son of the corporation’s listed owners, Richard and Pat Johnston of Hereford.

An investigation by the Arizona Daily Star newspaper found a series of problems at the dealerships, including sales of damaged vehicles, calling police on customers and filing false documents with the state Motor Vehicle Division that allowed it to sell cars and trucks with salvage titles.

The dealerships are currently being investigated by state regulators for not having a required license to finance vehicles. And they face at least one lawsuit stemming from the sale of a previously wrecked truck with a salvage title.

Tucson attorney Timothy Remick, who represents the Johnstons, says the dealerships are working hard to fix any shortcomings. He said the company didn’t know it was illegal to sell vehicles with a salvage title in Arizona and mistakenly provided inaccurate identification numbers for those wrecked cars to the state. He also said the Johnstons believed they have the proper licenses.

Fort Huachuca commander Maj. Gen. John Custer barred all military personnel assigned to the base from visiting the dealerships after a series of complaints from soldiers who said they were threatened, cheated or misled.

The president of the Southern Arizona Better Business Bureau said the company has “a culture of contempt for their customers.”

Complaints include threats by company employees, selling vehicles and then threatening to take them back unless more money is paid.

Reorganizing under Chapter 11 of the federal bankruptcy law will allow the corporation to continue to serve its customers, Beau Johnston said.

“We’re cutting back and watching costs,” Johnston said. “We’ve reduced labor and salaries. All the fat is gone.”

He said he hoped Army commanders see that the corporation has addressed their concerns and again let soldiers buy from the dealerships.

Army officials will review the off-limits status in August.