Aug 8, 2008

Racketeering Complaints Filed Against Chinese Automaker

Times, they do change, don’t they? Once upon a time, veteran auto industry exec Malcom Bricklin announced that he would be bringing a variety of automobiles produced by Chery Automobile Company Ltd. to the United States market. Now instead of bringing in the cars, Bricklin is bringing a multibillion-dollar suit against the Chinese automaker. The suit claims Chery and others ran a racketeering enterprise that involved wire fraud, conspiracy, corporate espionage and theft that potentially cost Bricklin’s company, V Cars, $14 billion.

V Cars LLC (formerly Visionary Vehicles LLC) filed a complaint in the United States District Court in the Eastern District of Michigan against not only Chery Automobile Company, but also Yin Tongyao, Kan Lei, Chery Quantum Automobile Corp., Israel Corp. and Quantum LLC. The complaint was filed under the Federal Racketeer-Influenced and Corrupt Organizations (RICO) Act and state law of Michigan.

Even in the complaint itself, Bricklin launched into a public relations campaign against the Chinese auto manufacturer. The suit alleges Chery Automobile “has consistently plundered Western technology.” It noted that Chery Automobile settled with Volkswagen in 2003 after it violated intellectual property laws by using parts from the well-known Volkswagen Jetta, and further noted that in the same year, Chery manufactured a near-identical copy of the General Motors Chevrolet Spark that it called the QQ. GM filed suit, and Chery settled the case with the assistance of the Chinese government.

In the complaint by V Cars, it is alleged that Chery induced V Cars into giving it plans for a North American distribution business, subverted a highly placed employee and committed acts of fraud after it decided not to go through with a deal it made with V Cars. Chery has subsequently announced a deal to build cars for Chrysler. The lawsuit claims loss of $14 billion in potential profits and a $26 million investment.