Originally created 08/15/97

Car dealer accepts plea agreement in Honda bribery case



ASHEVILLE, N.C. - Appearing lethargic from months of cancer treatments, car dealer Rick Hendrick pleaded guilty Thursday to mail fraud in a plea agreement in the Honda bribery case that should keep him out of jail.

The mail fraud charge was one of 15 counts against Hendrick in a 1996 federal grand jury indictment. It involved a conspiracy to commit fraud, launder money and pay bribes totalling $160,000 to executives of American Honda to built his car dealership empire, one of the nation's largest. Mr. Hendrick owns several car dealerships in South Carolina.

Mr. Hendrick had maintained his innocence since his indictment last December. He did not respond to questions about his change of heart as he left the courtroom.

"Now, I intend to focus my energy on my battle with leukemia, which I intend to win," he said in a statement released by Hendrick Automotive Group in Charlotte.

Mr. Hendrick is free on $25,000 unsecured bond pending sentencing, which is expected within the next 30 to 60 days.

Mr. Hendrick, 48, appeared to have trouble standing during the 30-minute hearing before U.S. Magistrate Max O. Cogburn. He had walked into the courtroom under his own power.

His hair thin and face red, Mr. Hendrick responded "Yes, sir" in a low voice to a series of questions from the judge about the plea agreement.

Prosecutors said they were satisfied with the deal.

"You cannot ignore the fact that he had leukemia," said U.S. Attorney Mark Calloway, who attended the hearing. "We felt we needed to temper justice with mercy."

Cogburn said the mail fraud charge carried a maximum penalty of five years and a $250,000 fine. Sentencing guidelines called for a prison sentence of 10 to 16 months and a $250,000 fine, said Assistant U.S. Attorney Jerry Miller, the lead prosecutor.

However, Miller told Cogburn the government would agree to allow Hendrick to serve his time in home detention because of his illness. Cogburn also told Hendrick he had the authority to impose a less harsh sentence.

A federal grand jury indicted Mr. Hendrick in December 1996 on the mail fraud count along with one count of conspiracy and 13 counts of money laundering. Had he been convicted of those charges at trial, Mr. Hendrick could have faced up to life in prison and fines of up to $7 million.

"Mr. Hendrick has publicly acknowledged his criminal wrongdoing," Calloway said. "The sentencing terms agreed to satisfy the interest of the United States of bringing to justice and punishing those who commit white-collar crime and puts the defendant in a position to concentrate solely on his health."

The government accused Mr. Hendrick of making hundreds of thousands of dollars in bribes to Honda executives in exchange for favorable treatment at his dealerships.

Hendrick's attorneys argued previously that Hendrick gave gifts, not bribes. They contended prosecutors targeted Hendrick unfairly while declining to prosecute more than 80 other dealers implicated in the probe.

Hendrick's trial was originally scheduled to begin in August, but his lawyers successfully delayed it because of his failing health.

Mr. Hendrick still faces at least 50 lawsuits from dealers across the country who accuse Hendrick of unfair competition. As part of the plea agreement, Hendrick agreed to pay compensatory damages if he was found liable in any of those suits, Calloway said.

In addition, related charges against Mr. Hendrick's brother, John, will be dismissed if he performs 500 hours of community service and pays a civil penalty of $120,000 to cover the cost of the investigation and prosecution, according to prosecutors.

Mr. Hendrick, an entrepreneur who started by selling used cars, rose to become one of the largest auto dealers in the country. Today, Hendrick Automotive Group operates 89 dealerships in 10 states selling 25 lines of cars with $2.4 billion in sales last year.

Rick Hendrick's guilty plea brings to 23 the number of defendants who have either pleaded guilty or been convicted in federal court in connection with the Honda bribery investigation.

The government said in 1995 that car dealers in 30 states gave $15 million in kickbacks from 1979 to 1992 to executives of American Honda Motor Co., based in Torrance, Calif., at a time when the cars were in short supply with strong demand.

Three Honda sales managers from across the U.S. have received jail time on charges stemming from a government probe.