World’s Largest Lamborghini Dealer Sells Cars for Pennies on the Dollar, then Closes.

[Digital-Nitrate]

First a little background to the story:

Lamborghini O.C. Closed — Largest Dealer of Exotic Car
Published Nov 5th, 2008 by John Gittelsohn of the Orange County Register Business News

The world’s largest Lamborghini dealer, Lamborghini Orange County, has closed and owners aren’t saying why.

“I can’t talk about anything,” said Vik Keuylian, owner of the Santa Ana-based dealership.

Keuylian said he sold about 10 percent of all 2,400 Lamborghinis made in the world each year. Lamborghini plans to move its North American headquarters to Santa Monica, in part, to be close to its largest dealership.

Automobili Lamborghini America said the dealer closed because of its own mistakes, not the economy.

“The financial stress Lamborghini Orange County is experiencing is due to several unfortunate business decisions made by management at Lamborghini Orange County, independently of Automobili Lamborghini,” said Pietro Frigerio, chief operating officer of Lamborghini America. “Many companies have felt an impact by the current economic situation, but the economy is not the reason for Lamborghini Orange County’s financial situation. Though, the economy has exacerbated the situation.”

In an interview this spring, when other auto dealers were suffering from the economic downturn, Keuylian said he continued to prosper.

“This April was better than April ‘07,” Keuylian told the Register. “Other dealers are turning down cars and we’re picking them up and selling them at a profit.”

A spokeswoman for Volkswagen, which owns Lamborghini, would not answer a question about whether the company had pulled the line of credit Keuylian needed to keep cars on his showroom floor.

“While we don’t comment about our business relationships with our dealerships, Volkswagen’s credit business continues to remain strong,” said Jill Bratina, a spokeswoman for Volkswagen Group of America.

At least nine Orange County auto dealers — selling Chevrolets, Chryslers, Dodges, Nissans, Saturns and other brands — have closed since January, brought down by sluggish sales and tight credit.

But Lamborghini Orange County is the most glamorous of the bunch. Customers included NBA stars Kobe Bryant and Dennis Rodman. The Keuylians threw promotional parties with celebrities such as Elton John and Sharon Stone. They helicoptered actors Eric Roberts and Luke Perry from Los Angeles to Orange County for a company party in April.

The Orange County dealership at 2441 S. Pullman St. in Santa Ana is now padlocked. The lot — previously brimming with orange and lime 12-cylinder sports cars that sold for as much as $600,000 — is vacant.

No sign explains the closure or tells customers where to go for repairs or how to pick up cars on order.

The answering machine on a phone at Lamborghini Calabasas, also owned by Keuylian, said it was not accepting messages. A recently opened Lamborghini showroom on West Coast Highway in Newport Beach also has closed. And Keuylian’s plans for a lavish new showroom there never materialized.

Then the news broke earlier this week that things were much worse than they appeared, and that Lamborghini OC appears to have sold the remaining Lamborghini's in the last few days prior to closer for pennies on the dollar and running away with the money.


VW Accuses Lamborghini O.C. of $12 million Theft
Published Jan 13th, 2009, by John Gittelsohn of the Orange County Register Business News

Lamborghini Orange County, formerly the world’s largest dealer of the Italian luxury vehicles that sell from upwards of $200,000 apiece, closed in November without explanation. Now court documents indicate what happened.

The owners of Lamborghini Orange County in Santa Ana committed “outright theft” of approximately $12 million by selling its fleet of exotic sports cars at deep discounts and failing to pay their creditor, according to a lawsuit filed by Volkswagen Credit Inc. in Orange County Superior Court.

The lawsuit says the owners of the Orange County dealership and its affiliate in Calabasas unloaded 54 cars in eight days – accounting for 8 percent of all the Lamborghinis sold in the United States during all of 2008.

The lawsuit says VW Credit, which covered the cost of Lamborghini O.C.’s cars in advance of sale, doesn’t know where the proceeds went. But it didn’t get the money.

The owners of the dealerships named in the suit are Vik Keuylian and his sisters Asdghig, Nora and Sossi Keuylian. Their attorney, Jeffrey Gubernick, declined to comment on the allegations, because the case is still under litigation.

Gubernick has filed a motion to strike VW Credit’s demand for punitive damages, but still not responded to the general allegations in the lawsuit. A hearing is scheduled for Jan. 22.

The Keuylians attracted a celebrity list of customers, including NBA stars Kobe Bryant and Dennis Rodman. They staged fundraisers hosted by Elton John and Sharon Stone to support research to fight AIDS.

VW Credit provided financing for Lamborghini Orange County and its sister dealer in Calabasas to finance the cars. Volkswagen owns Lamborghini.

In a separate suit filed in Orange County Superior Court, East-West Bank is suing the Keuylians and Lamborghini Orange County for defaulting on a $3 million loan, for which they failed make payments in November and December.

Another lawsuit filed in Las Vegas seeks $340,000 from Vik Keuylian for failing to pay him for a 2008 Lamborghini Murcielago formerly owned by Stephen Cloobeck, owner of Diamond Resorts.

“They took the car but never gave me the check,” Cloobeck said.

What an ugly mess... and this after just a few months after Automobili Lamborghini America moved it's headquarters to Santa Monica to be closer to it's biggest dealer and to many of their customers.

Ouch!

 

[YSSMAN]

Now, I remember reading the story about the one closing before, but its very interesting how everyone is blaming each other for this. Something fishy is obviously going on, particularly at the dealer level. Either way, if the dealer was ran as terribly as the one I visited in Miami, they deserve to close.

 

[McLaren]

The reason has to do with a con-artist, or at least, that's why Lamborghini of Calabasas is gone. Silicon Valley & 2 other dealers will be receiving what's left of the inventory.

 

[Pupik]

Unscrupulous folks working and operating a car dealership? This is news!

(Exotic) car dealerships cannot survive by selling Lamborghinis alone. That's a volatile market right there, because even in a good economy, exotic cars can be so flavor-of-the-minute that models ebb and flow, and even selling 20 Lambos a month isn't going to keep a dealership afloat in any economy, especially one that lavishly throws money around.

You get a lot more lookers than buyers, if you get a discerning prospect looking at a car, they're likely to cross-shop all sorts of brands. There's lots of choices for a buyer with $100,000+, unlike 10-20 years ago. There's also the slightly-used market for exotics, which means no waiting, but you take the car pretty much as-is (no checking off boxes).

Some buyers will just sign a check and drive away, the process of kissing the behinds of someone plunking down a quarter-million dollars and the preparation of the car, is an all-day affair. So many demands will likely be made by the potential owner, too.

In many cases, the cars like these are ordered in advance, and the buyer leaves a tremendous deposit, and chooses all the options they want. How they will be delivered is likely up to the factory to decide. I'm sure some of this will wind up in court, since if the factory didn't get their share, they are unlikely to create additional production in this type of economy.

 

[Prosthetic]

The reason has to do with a con-artist, or at least, that's why Lamborghini of Calabasas is gone. Silicon Valley & 2 other dealers will be receiving what's left of the inventory.

Silicon Valley in northern California?

 

[Philly]

(Exotic) car dealerships cannot survive by selling Lamborghinis alone. That's a volatile market right there, because even in a good economy, exotic cars can be so flavor-of-the-minute that models ebb and flow, and even selling 20 Lambos a month isn't going to keep a dealership afloat in any economy, especially one that lavishly throws money around.

You get a lot more lookers than buyers, if you get a discerning prospect looking at a car, they're likely to cross-shop all sorts of brands. There's lots of choices for a buyer with $100,000+, unlike 10-20 years ago. There's also the slightly-used market for exotics, which means no waiting, but you take the car pretty much as-is (no checking off boxes).

I'm going to guess that, like many dealers, this Lambo dealer was making a good chunk of money off nice used cars. Compared to Lamborghinis, you're going to be selling a lot more Benzes and Porsches. I know the big exotic dealer in Seattle sells a big variety of things. They even have Pontiac and MINI on their list of used cars. And Ferrari of Seattle has a few BMWs and Porsches on sale.

 

[Digital-Nitrate]

Update:

Judge Tosses Suit Against Lamborghini O.C.
Published Jan 22nd, 2009 by John Gittelsohn of the Orange County Register Business News

An Orange County Superior Court judge today dismissed a lawsuit against Lamborghini Orange County, once the world’s largest dealer of the Italian-made exotic autos, because Volkswagen Credit Inc. did not present a strong enough case to get punitive damages.

“We’re very happy with the ruling and we’ll wait to see what VCI does,” said Jeffrey Gubernick, the attorney representing the dealer’s owners.

Judge Franz E. Miller said from the bench that VW Credit could refile its suit against the auto dealer, if it adds more specific allegations to its complaint. Michael Schulman, the attorney for VW Credit, declined to comment on his plans.

VW Credit said in its suit that Lamborghini Orange County and its sister dealership in Calabasas sold 54 Lamborghinis worth about $12 million at deep discounts during an eight-day period last fall, accounting for 8 percent of all Lamborghinis sold in the United States in 2008.

Lamborghini Orange County closed in November after VW Credit pulled the line of financing the dealer needed to keep cars on its showroom floor. The dealer remains shut.

 

[McLaren]

Silicon Valley in northern California?

Yes, though all the vehicles are gone. All the cars from these 2 dealers sold for well, well under what they were worth. A LP640 Roadster sold for about $123,000 under what it should have been.

 

[Digital-Nitrate]

Yes, though all the vehicles are gone. All the cars from these 2 dealers sold for well, well under what they were worth. A LP640 Roadster sold for about $123,000 under what it should have been.

So I've heard rumors and speculation that many of these Lambos were sold for half their sticker price... but I have yet to confirm this. Reventon, where did you hear the exact selling price for that car and do you have any specific info on any of the other cars? Thanks.

 

[McLaren]

So I've heard rumors and speculation that many of these Lambos were sold for half their sticker price... but I have yet to confirm this. Reventon, where did you hear the exact selling price for that car and do you have any specific info on any of the other cars? Thanks.

I've heard from various sources at FChat as well as 6Speed. I don't have any specific info on any of the other cars except that VAG is now supposedly demanding that if any of the cars from L.O.C. come into another dealer, the dealer is to let VAG know all the owner's information. Apparently, VAG has made sure to keep record of all the VIN's from the cars L.O.C. sold for under MSRP is trying to track them down. Some of us are assuming they are going to try and get their money back from the owner.

 

[Pupik]

These owners shouldn't have to pay any more than what they signed for, unless California law suddenly became very pro-corporation; I can't imagine too many courts that would suddenly allow a corporate entity to to suddenly agree on another "in-writing" price for something they've already possessed. The owners of the dealership are the ones they need to apply muscle to, they're the ones that conned Lamborghini.

That sets a dangerous precedent for companies to back-charge a consumer on a past transaction because they misjudged the (eventual) value of a piece of merchandise.

Otherwise, it's tough crap, VAG.

 

[McLaren]

Vik has been caught, seeks court Monday.

SANTA ANA, Calif., March 11 (UPI) -- A high-end Southern California sports car dealer has been charged with bilking his financing company by not reporting sales, federal prosecutors said Wednesday.

Viken Keuylian, 45, Laguna Hills was charged Wednesday with wire fraud in connection with millions of dollars borrowed to pay for expensive Lamborghini cars that he sold out of his two Orange County lots.

The U.S. Attorney's office in Los Angeles said in a written statement that Keuylian, whose sales accounted for 5 percent of the Lamborghinis sold worldwide, would plead guilty in Santa Ana federal court on Monday.

Prosecutors said Keuylian allegedly borrowed millions of dollars from Volkswagen Credit Inc. to pay for the purchase of the cars he sold out of his dealerships in Orange County and Calabasas. The loan agreement required Keuylian to pay VCI back whenever he sold a car.

Keuylian was accused of selling cars and then failing to report the sale. He allegedly used the money from the loans to pay off unrelated business debts.

The FBI seized some 54 vehicles worth more than $12 million in the investigation, including some Bentleys and other high-end cars.

http://www.upi.com/Top_News/2009/03...ged_with_Lamborghini_scam/UPI-93671236800162/


The Agreement, Cars sold, and to whom. 54 cars in 8 days at low prices.
http://ocbiz.freedomblogging.com/files/2009/03/lamborghini-scam-plea-agreement.pdf


And according to a Lamborghini representative, VAG has red flagged all the VINs of the vehicles sold by Vik. When the car comes into the shop, the dealer is to seize the vehicle and let VAG know immediately that one of the cars are in their hands.

Expect big law suits between the owners & VAG as well as Vik.

Some cars shown below from the file.

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VIN-----------NUMBER-----YEAR MANU MODEL---------------------SALEDATE---------PURCHASER-----------CASH RECEIVED---VCI BALANCE
SCBCR63W44C 021527------2004 Bentley CONTINENTAL------------10/24/2008--------AVDAA auction--------$ 81,000----------$ 105,720
SCBBR53W36C 034794------2006 Bentley CONTINENTAL------------10/27/2008--------Autosports------------$ 70,000----------$ 122,660
SCBBR53W96C 036467------2006 Bentley CONTINENTAL------------10/23/2008--------RAA-------------------$ 89,425----------$ 122,660
WDCYR71E68X 170906------2008 Mercedes G55--------------------10/24/2008--------Newport Collectibles---$ 70,000----------$ 88,540
WD8PE845675 189355------2007 Dodge SPRINTER 250--------------10/27/2008--------Sunrise Auto----------$ 60,000----------$ 90,585
ZHWBU16M83L A00676------2003 Lamborghini MURCIE--------------10/16/2008--------Arts Auto-------------$ 105,000---------$ 166,080
ZHWBU6S14L A01281-------2008 Lamborghini MURCIE--------------10/17/2008--------Newport Collectibles----$ 110,000--------$ 184,080
ZHWBU26S36L A01761------2006 Lamborghini MURCIE--------------10/17/2008--------Newport Collectibles----$ 150,000--------$ 264,480
ZHWBU16S56L A01898------2006 Lamborghini MURCIE--------------10/18/2008--------Arts Auto--------------$ 149,500--------$ 223,440
ZHWBU26S36L A01985------2006 Lamborghini MURCIE--------------10/17/2008--------Newport Collectibles----$ 175,000--------$ 269,040
ZHWBU26516L A02021------2006 Lamborghini MURCIE--------------10/17/2008--------Newport Collectibles----$ 175,000--------$ 264,480
ZHWBU37MS7L A02062------2007 Lamborghini MURCIE--------------10/17/2008--------Arts Auto -------------$ 170,000--------$ 288,960
ZHWBU37S28L A02715------2008 Lamborghini MURCIE--------------10/23/2008--------Arts Auto--------------$ 230,000--------$ 395,690
ZHWBU37SX8L A02798------2008 Lamborghini MURCIE--------------10/24/2008--------Lou Gadio--------------$ 369,500--------$ 348,572
ZHWBU37S38L A02870------2008 Lamborghini MURCIE--------------10/20/2008--------Allsup------------------$ 344,570--------$ 344,570
ZWBU47S08L A02895-------2008 Lamborghini MURCIE--------------10/17/2008-------sold Exotic, undisposed--$ 550,000--------$ 462,305
ZHWBU47S08L A02914------2008 Lamborghini MURCIE--------------10/23/2008--------Autosports-------------$ 110,000-------$ 373,290
ZHWBU37598L A03151------2008 Lamborghini MURCIE--------------10/15/2008--------Irani-------------------$ 389,000--------$ 357,580
ZHWBU37S68L A03222------2008 Lamborghini MURCIE--------------10/23/2008--------Newport Collectibles----$ 200,000--------$ 355,200
ZHWBU37S29L A03297------2009 Lamborghini MURCIE--------------10/28/2008--------Newport Collectibles----$ 200,000--------$ 368,350
ZHWGU12T06L A03336------2006 Lamborghini GALLARDO-----------10/23/2008--------Eurocar Inc.------------$ 90,000---------$ 150,480
ZHWGU12T66L A03535------2006 Lamboghini GALLARDO------------10/18/2008--------Arts Auto--------------$ 105,000--------$ 138,708
ZHWGU22T37L A04164------2007 Lamboghini GALLARDO SPY--------10/23/2008-------sold Kim,---------------$ 145,000--------$ 188,160
ZHWGU22TX7L A04288------2007 Lamboghini GALLARDO SPY-------10/24/2008--------Hollywood Auto---------$ 130,000--------$ 184,800
ZHWGU22N88L A05796------2008 Lamboghini GALLARDO SPY-------10/23/2008--------Newport Collectibles-----$ 120,000--------$ 211,060
ZHWGU43T48L A05836------2008 Lamboghini GALLARDO SUP-------10/23/2008--------Eurocar Inc.------------$ 140,000--------$ 150,000
ZHWGU43T78L A06141------2008 Lamboghini GALLARDO-----------10/24/2008---------AVDAA auction---------$ 140,000--------$ 229,385
ZHWGU22T88L A06512------2008 Lamboghini GALLARDO SPY-------10/15/2008--------Gugasian----------------$ 185,000--------$ 223,235
ZHWGU43T38L A06718------2008 Lamboghini GALLARDO SUP-------10/23/2008--------Newport Collectibles-----$ 120,000--------$ 231,065
ZHWGU22T88L A07014------2008 Lamboghini GALLARDO SPY-------10/22/2008--------Arts Auto---------------$ 165,000--------$ 219,300
ZHWGU22T68L A07223------2008 Lamboghini GALLARDO SPY-------10/23/2008--------Newport Collectibles-----$ 120,000 -------$ 222,930
ZHWGU22T78L A07537------2008 Lamboghini GALLARDO SPY-------10/23/2008--------Newport Collectibles-----$ 120,000--------$ 226,060
ZHWGU22T98L A07541------2008 Lamboghini GALLARDO SPY-------10/22/2008--------Arts Auto---------------$ 165,000--------$ 222,795
ZHWGU54T39L A07891------2009 Lamboghini GALLARDO 560-------10/23/2008--------Newport Collectibles-----$ 120,000---------$ 224,595

 

[Philly]

And according to a Lamborghini representative, VAG has red flagged all the VINs of the vehicles sold by Vik. When the car comes into the shop, the dealer is to seize the vehicle and let VAG know immediately that one of the cars are in their hands.

Can VAG do this? I would be furious if I brought my new Lamborghini in for service only to have it seized. And then you also have to wonder how many of those cars have since been sold to other parties at closer to sticker price, which is only going to make things even more complicated.

 

[McLaren]

Can VAG do this? I would be furious if I brought my new Lamborghini in for service only to have it seized. And then you also have to wonder how many of those cars have since been sold to other parties at closer to sticker price, which is only going to make things even more complicated.

Hence why there will probably be plenty of law suits. However, I don't know. Vik did sell many of the cars for well under what they should have been, and tbqh, someone of these people had to think something was up when they got a $264,000 car for $150,000. No dealer will ever take $114,000 off a car they are trying to sell, esp. not a dealer for Lamborghini.

 

[a6m5]

This is very interesting. Many car dealers actually don't own the cars that they sell on their own lot(s). It is financed from the manufacturers. One of the main reasons for so many recent dealer closures.

In my mind, the theft here is of the profit gained from the car sales, not of the cars themselves. I'd let the buyers keep the cars, and prosecute the dealer ownership. I am curious to see how things will go down legally....

 

[Philly]

I almost think that the appropriate solution would be to make Vik and whoever was in the deal with him to have to pay the differences. If it leads them to financial ruin, so be it. Although I doubt he has nearly the worth needed to cover it, which makes it difficult again.

 

[McLaren]

I almost think that the appropriate solution would be to make Vik and whoever was in the deal with him to have to pay the differences. If it leads them to financial ruin, so be it. Although I doubt he has nearly the worth needed to cover it, which makes it difficult again.

Unfortunately, what Vik owed was $4 million (the total price for all the cars was $12 million w/ $8 million paid). But, there is nothing people can do. The Feds have seized all the cars and will continue to do so. If the owners want them back, they'll most likely have to try to get them through the cars' auction.

 

[McLaren]

Update Today:
Vik Keuylian of Lamborghini Orange County today, plead guilty. He faces 5 & 1/2 years minimum according to sources.

Report goes more in detail.

UPDATE: Viken Keuylian was scheduled to formally change his plea to guilty today (May 4), but the hearing was postponed because his attorney’s wife had a baby. Stay tuned for news on when the hearing is scheduled).
Lambos seized by feds

Lambos seized by feds

The owner of Lamborghini Orange County, formerly the world’s largest Lamborghini dealership, has agreed to plead guilty to federal criminal fraud for bilking $12 million from the finance company that fronted him money to sell the luxury cars.

Viken Keuylian, 45 of Laguna Hills, could face up to 30 years in prison and a fine of $1 million according to his plea agreement. The agreement must be approved by a judge. Keuylian is scheduled to appear on Monday in U.S. District Court in Santa Ana.

Keuylian and his family owned the Lamborghini dealership in Santa Ana and Calabasas, which closed last fall after Volkswagen Credit Inc. pulled financing for the dealerships and sued for fraud in Orange County Superior Court.

According to Keuylian’s criminal plea agreement, he sold about 5 percent of all the Lamborghinis in the world in 2008, including 54 vehicles during a two week discounting spree in October of last year as he struggled to pay off debts for a vineyard, a show room on Coast Highway in Newport Beach and other debts.

Keuylian sold Lamborghinis to celebrities and professional athletes, including Lakers star Kobe Bryant. He also supported fundraisers for AIDS hosted by Hollywood stars like actress Sharon Stone.
Sharon Stone & Vik Keuylian

Sharon Stone & Vik Keuylian

A list of the sales attached to the plea agreement shows he received $8.1 million for cars that VW Credit financed for $12.6 million. The list of vehicles included 23 sold to Newport Beach entrepreneur Levon Gugasian, who owns Newport Collectibles, an auto dealership.

According to the plea agreement, Gugasian paid $60,430 cash to Keuylian for a 2009 Lamborghini LP640 that VW Credit had financed for $387,720. Gugasian declined to comment and referred questions to his attorney, Gary Waldron.

Waldron said he was unfamiliar with the criminal charges against Keuylian but that his client sued VW Credit in November to protect his rights to the cars he purchased, long before the criminal allegations emerged.

http://ocbiz.freedomblogging.com/2009/03/11/lamborghini-dealer-pleads-guilty-to-fraud/9731/

The full outline of his plea agreement is also available in the link.

 

[Omnis]

I don't understand how the people who bought the cars from this guy are at fault for anything. They should at least have the cars refunded instead of seized.

 

[McLaren]

I don't understand how the people who bought the cars from this guy are at fault for anything. They should at least have the cars refunded instead of seized.

They all knew what they were getting into when they saw how much Vic was knocking off the MSRP. A few of our FChatters including Roy Cats were offered cars at extremely reduced prices.

If someone is selling a brand new Lamborghini at $100,000+ under retail, it's probably to good to be true.

 

[Omnis]

They all knew what they were getting into when they saw how much Vic was knocking off the MSRP. A few of our FChatters including Roy Cats were offered cars at extremely reduced prices.

If someone is selling a brand new Lamborghini at $100,000+ under retail, it's probably to good to be true.

That's not their problem.

 

[McLaren]

That's not their problem.

It is now. But, I guess common sense doesn't exist anymore.

 

[Speedy Samurai]

If you go to a pawn shop and buy a nice, new something that turns out to be stolen, what happens?

These cars, not being paid for, were stolen.