Complaint Review: DEALER SERVICES CORPORATION - Carmel Indiana

JOHN E. FULLER The Man, the Legend Excerpts from Article Chris O'Malley8/6/07

In the 2-1/2 years since Fuller started Dealer Services Corp. in 2005, his Carmel firm has racked up loan receivables of $550 million, compared with $776 million reported last year by Automotive Finance Corp., the company Fuller founded and sold to auto auction chain Adesa in 1994. There was probably over $5,000,000 just in California, but the ex-marine forgot to get a California Lenders License. He made the same mistake when he ran AFC, was that the reason they let him go?

Finding personnel was not difficult, at least at first. Word quickly spread to Fuller's former company, Adesa's AFC division, several blocks north on Meridian Street. Phone calls from prospective employees poured in. Fuller began to take every employee he could snatch from AFC. He also opened up offices in the same buildings as AFC and solicited the same dealers as AFC. DSC gave dealers lines of credit of sometimes $200,000 (unusual for a lot that sells 12 cars a month to need $200,000, but hey, what are loan sharks for?)

Fuller snagged his six top lieutenants, who sat in the "war room" and strategized over what they'd always wanted to change while at AFC. Most likely they didnt want to be burdened with getting a lenders license.

"It is so far ahead of what's down the street. It's unbelievable," Fuller said. Its pretty technical stuff to loan money for two weeks when you hold the title to the car.

By the time DSC had lassoed somewhere around 75 employees from Adesa's (about 20 percent of its staff), AFC executives had summoned their lawyers. Shots fired. Adesa filed a lawsuit in Hamilton Superior Court against DSC (good luck finding this case - court said file destroyed) and several former employees who jumped shipped to Fuller's fledgling firm. Adesa alleged its former AFC workers took computer records and trade secrets to the new competitor.

Fuller insists those workers had never signed non-compete agreements, and neither had he, for that matter. Before hiring them, he'd consulted with big-time Washington, D.C., law firm Aiken Gump Strauss Hauer & Feld, which is perhaps better known locally for its work in the ATA Airlines Chapter 11 case. A chapter 11 lawyer is useful when you have to repay usurious interest.

Fuller found himself being asked by friends whether it was indeed true that his firm stole information from Adesa. "I said, 'Heck no. I designed it. It's in my head."' Plus, John Fuller was the smartest guy in town, just ask anyone he pays.

"They were trying to ruin our name," Fuller said. Which name AFC? DSC? SFA? ADC? Discover DSC? AFC Cal LLC?)

Ironically, he said, he had plenty of dirt on Adesa that could have embarrassed then-CEO David Gartzke. What dirt? That Adesa was also an unlicensed lender in California? That their loans were usurious? That no one complied with any laws concerning repossessions or the sale of collateral?

So with all that baggage, and later an incendiary lawsuit by Adesa against his new company, the ex-Marine struggled to keep his mouth shut. quite the Saint, John. Did you tell AFC that you would blow the whistle on stealing cars with a UCC filing?

When his lawyers weren't chasing him with a roll of duct tape, they were drawing up a countersuit, seeking $25 million in damages from his former employer. The two companies settled in late 2005. Among DSC's concessions, it would put 12 former Adesa/AFC employees on leave for up to six months.

AFC also agreed to discuss an agreement so dealers who finance through DSC can more easily make purchases at Adesa auctions. What, a mutual anti-trust agreement? Is Manheim in on this?

"This is sick stuff," Fuller said of the legal battle, swearing he'll write a book about corporate idiocy after he retires. Sorry, I think youre only allowed pencils.

Before he retires, whenever that is, Fuller wants DSC to have receivables of at least $1 billion, or almost double current level. One of the more innovative new products is an alternative to the traditional "buy here pay here" vehicle sales model. This takes real intelligence a genius in fact.

The latter sends dealers scrambling to jump through repossession hoops when customers don't pay or file bankruptcy. DSC's "Ren'T'Own" gives dealers full ownership rights until the vehicle is paid for. They can separate a delinquent "renter" from his beloved car in a New York minuteno sticky consumer-protection laws to slow things down.

RenTOwn can separate a delinquent renter from his beloved car in a New York minute. No sticky consumer protection laws to slow things down!!!!! John, did YOU actually say something this ???

"If your payment is not in my office by the due date or the car back on my lot with the keys, I will report the vehicle stolen and you will suffer the consequences," Northland touts in literature to dealers of a portion of the contract. Great, make the police department and courts do the repossessions for you plus you get to turn a simple car buyer into a criminal.

"These used car dealers - I love them," Fuller said (then why sue so many of them?). "They are the entrepreneurs of America."As to whether DSC makes much of a ding in Adesa's AFC is yet to be seen.

Hockett, however, is bullish. "It's really exceeded everyone's expectations," Hockett said. "I don't think there's anybody who has a better understanding of the business than John Fuller." Hockett? Is this D. Michael Hockett aka Mike Hockett who may or may not be on the DSC board of Directors?