Chrysler Fined $7.6 Million for Odometer Violations
Aug. 11, 1990
ST. LOUIS (AP) _ A judge fined Chrysler Corp. $7.6 million for selling thousands of supposedly new cars to customers who were unaware that company employees had already driven them with the odometers disconnected.
The criminal fine handed down Friday by U.S. District Judge John Nangle is on top of an earlier settlement of $16.3 million in a civil lawsuit.
Chrysler had entered a plea of no contest to the criminal charges in December 1987. The judge ordered Chrysler to pay $500,000 on each of 15 fraud counts, and fined the company an additional $100,000 on a conspiracy count.
''Over $7 million dollars is a substantial amount of money,'' said Chrysler spokesman James Kenyon. The company will decide soon whether to appeal, he said.
The cars were driven before sale as part of Chrysler's quality-assurance program. After the charges were filed in June 1987, company Chairman Lee Iacocca apologized and said the unhooking of odometers would stop.
Nangle said the car-testing program had started out as a good idea. But he said that the program had led to ''increasing abuses'' and that Chrysler had passed up chances in the 1980s to eliminate them.
Chrysler's attorneys had argued that federal law limited the fine to a maximum of $1 million. Government prosecutors had suggested Chrysler could be fined $120 million.
Robert G. Morvillo, a Chrysler attorney from New York, said the company had ''bent over backward'' to satisfy the affected customers. The company still tests cars, he said, but leaves the odometers connected and puts no more than 65 miles on the vehicles.
''Chrysler has done everything it can to make amends to its customers and the general public,'' Morvillo said.
Chrysler also was charged with selling about 30 previously wrecked cars to consumers who thought the cars were factory-fresh.
The U.S. Postal Inspection Service, which had brought the charges at the end of a four-year investigation, said that Chrysler has replaced all vehicles identified as having been previously wrecked, except for cars involved in ongoing court cases.
There are about 46 individual civil lawsuits pending around the country, Kenyon said.
In January, Nangle ordered Chrysler to complete the terms of the settlement of the class-action civil lawsuit by paying $500 each to more than 27,000 people worldwide who had purchased Chrysler cars with disconnected odometers that had been driven by company executives.
The consumers also are entitled to a second payment to be determined after Nangle decides how much of the remaining $2.5 million from the $16.3 million settlement should go to plaintiffs' attorneys.
Records showed that the automaker disconnected the odometers on about 60,000 new cars that were driven from one day to five weeks by Chrysler executives.