Auction company's license suspended, dealer lawsuits lining up

Publish Date: 
Apr 26, 2011
By Holly J. Wagner

A Tennessee-based auction company that solicits powersports, marine and recreational vehicle dealers has had its auction license suspended and faces several lawsuits by dealers from California to the Carolinas who say they were duped.

The Tennessee Auctioneer Commission (TAC) on April 4 summarily suspended the auctioneer license for John Vincent Trotter. Trotter does business under the names My Auction Connection, The Auction Connection, National Public Auction (not to be confused with National Powersport Auctions, see separate article), National Public Auction Co., and Trotter Auction Sales. The company is a successor to Elite Auctions, which the Trotter family bought out of bankruptcy in 2009, and operates from Elite’s former address in Murfreesboro, Tenn.

Download a copy of the TAC April 4 filing here.

The TAC action was the second summary suspension for Trotter and his Auction Connection this year; the first one was overturned for insufficient evidence. A hearing on the expanded charges is scheduled for June 8 and is expected to take two to three days. Depending on the outcome of the June 8 hearing, the TAC may reverse the suspension or make it permanent, and can levy fines for violations. The commission may also refer its findings to other agencies for possible legal action.

The April 4 summary suspension was an unusual measure, said Tom Stovall, an administrative law judge for Tennessee’s Commerce and Insurance Department. In most TAC cases, the board would not suspend a license until after a hearing. However, the TAC suspension order cited unusual concerns involving Trotter and his companies.

“The misrepresentations, failures to timely remit proceeds, and unlicensed activity of respondents appear to be flagrant and continuous in nature and will likely continue, resulting in further harm to the public health, safety and welfare, unless an emergency action is taken,” the April 4 TAC order states.

The TAC cited 21 separate complaints in its 31-page suspension order. Among the common offenses alleged:

  • promising dealers to set reserve prices, then failing to do so or selling well below reserve; and/or
  • excessive delay in paying or failing to pay dealers after auctioning their vehicles.

The order says the company’s below-reserve sales resulted in at least $420,000 in losses to the consignors. Plus the company allegedly never paid another $86,000 in proceeds to the consignors, the state alleges.

At least five lawsuits against Trotter and his various companies are pending in Tennessee. One suit even seeks damages under federal racketeering statutes.

Still, some people think civil penalties aren’t enough. “Even the U.S. Attorney in our district has tried to get the feds on it. On its face it looks like a bad business decision and a civil case – until you look at the pattern and see how many [cases] there are,” said Greg McMichael, investigator for the Brunswick (Ga.) District Attorney’s office.

Plaintiffs’ attorneys say the auction company has been bilking dealers since it secured a license in 2009, and since then they have struggled to get law enforcement to pay attention. “If it were only a story with a knife, a gun or a sex organ in it, it would get national attention,” said attorney Steve Hixson, who represents a Kentucky marine dealer in one of the lawsuits.

The Tennessee order also states that Trotter, who was not licensed as an automobile dealer, sold 62 vehicles he was, therefore, not licensed to sell. (Note: Under Tennessee law, an auctioneer may sell any vehicle that doesn’t require a street registration without having automobile dealer’s license. That means ATVs, PWC, snowmobiles and boats are fair game.)

Finally, the order alleges that Trotter withdrew $50,000 in auction funds to post bail on a Georgia governor’s warrant alleging theft by deception in that state.

No one acting on Trotter’s behalf appeared at the April 4 TAC hearing; however, answers to some of the complaints have been filed, according to TAC counsel Adrian Chick. Trotter could not be reached for comment directly and did not return phone calls by press time. Attorney Matthew Wright, listed as representing Trotter in the TAC action, also did not return multiple phone calls by press time.

G. Christopher Holder is an attorney representing Trotter in some of the Tennessee cases but not the Georgia case nor the TAC complaint. He told Dealernews that he doubts the validity of the Georgia case.

“There are some very suspect reasons why those charges were ever filed, and they will be vigorously defended,” he said.

Regarding TAC actiions, he said, “To my knowledge, all previous complaints filed have been dismissed....There is a commission action pending, the gravamen of which is quite similar to previous matters which were ultimately dismissed.”

‘People do desperate things.’ The website makes a strong pitch for business: “We provide a service for dealers, finance companies, banks, and businesses across the country, with over 20 years experience and have built a professional reputation as a quality auction facility throughout the Southeast,” reads a statement on the site. “Over the years we have created new markets for dealers by helping them move stale inventory, lowering costs and interests, and by making space for newer inventory to be sold.”

Many dealers say the lure of National Public Auction/The Auction Connection’s promised selling prices indeed persuaded them to do business with the company. Several now say they’re sorry they did.

“In desperate times, people do desperate things. This guy comes along and looks like a salvation,” Georgia investigator McMichael said.

The TAC cites the following dealers and loss figures:

  • B&J Cycle, Winner, S.D., $20,000;
  • Delano Sports Center, Delano, Minn., $60,000;
  • Holiday Cycle Sales, Michigan Center, Mich., $58,960;
  • Monmouth Cycles, Middlesex, N.J., $116,000;
  • Nestegg Marine, Marinette, Wis., unspecified amount;
  • Pagosa Power Sports, Pagosa Springs, Colo., $87,000;
  • Pops Cycle, Hamburg, N.J., $25,000;
  • Texas Motor Sports, Killeen, Texas, unspecified amount;
  • TNT Marine & Storage, Bartonville, Ill., unspecified amount;
  • Vetesnik Powersports (a Top 100 Dealer), Richland Center, Wis., unspecified amount;
  • Victory Lane Powersports, Swansea, Ill., unspecified amount; and
  • Yamaha SeaDoo of Beaufort, Denver, Colo., $53,800.

A few individuals also have made complaints. The dealers tell similar tales: Representatives of National Public Auction, The Auction Connection or cold-called them and asked whether they had inventory they wanted to move.

The auction company provides references and a list of recent sale prices; however, an affidavit from a former employee, Jennifer Ann Price, says the prices were “falsified” and “substantially inflated.”

“They call dealers. They ask if they have any inventory to move. They send a list saying they are getting $7,000 to $8,000 per ATV,” says Kristin Fecteau, a Tennessee attorney who won a Florida dealer’s civil case against Trotter and National Public Auction and now represents several other clients in cases against them. “Then they get 50 cents on the dollar, and tell him it was just a bad day at the auction.”

That 50 cents on the dollar is a generous estimate, several dealers told Dealernews. “It’s mostly the new, non-current stuff that they go for. They get items with reserves and they flat ignore the reserves,” says Perk Bearden, whose father founded Texas Motorsports in 1972. “I sent about $28,000 worth of motorcycles – that is what they would have brought at wholesale with National Powersports Auctions in Dallas. [With Trotter’s company] they sold for about 30 cents on the dollar.”

For example, a Harley-Davidson which Bearden had valued at $6,000 was sold for $2,700, he said. Even after that, Bearden says it took weeks to get any money at all from the auction company.

David Freed, former GM at Victory Lane Powersports in Swansea, Ill., which closed its doors in January, says dealing with Trotter’s company was instrumental in the failure of the dealership. “When we didn’t have money to pay the floorplan lenders, we couldn’t serve our customers,” he said. “GE has no mercy when it comes to floorplan stuff.”

Freed asserts that Victory Lane Powersports lost about $112,000 in its auction deal. And because Freed says he never signed a contract with My Auction Connection because he had questions about the one he was offered, Victory Lane’s insurance company won’t pay his claim.

“The police report says the stuff has been stolen, but the insurance company won’t pay because there was no contract,” Freed said. He added that he has contacted the FBI as well as the TAC about the matter.

Other dealers are equally as incredulous. “I flipped out at what they sold the stuff for -- about 55 or 53 cents on the dollar,” said Tony Donahue, GM of Delano Sports Center in Minnesota. He sent 24 Arctic Cat ATVs to My Auction Connection last August. “I lost about $100,000,” he said.

Donahue believes the only reason he was paid at all or got his shipping crates back is because he personally went to Tennessee to collect. “I got in my truck and drove down there just to get the crates, because I figured I would never get them back,” he said. “I went and sat in front of his banker for about three hours one day to get a cashier’s check.”

Plaintiffs, beware. Dealers who sue the Trotter-affiliated companies can expect countersuits, Fecteau said. She represents Dixon Polaris, a Sacramento, Calif.-area dealer, and Anderson Motorsports of Anderson, S.C., in cases against Trotter and his companies. Both dealers filed suits in their home states; judges, granting Trotter’s venue change requests, sent the cases to Tennessee. Trotter then countersued Anderson Motorsports for libel over posts to complaint websites, and The cases are working their way through the courts in Tennessee.

Fecteau says most of Trotter’s countersuits against her clients allege breach of contract, because the consignors reportedly refused to give Trotter’s companies the Manufacturer Statements of Origin after vehicles were sold below the expected prices.

Trotter agreed to pay a $5,000 fine to the State of Tennessee in March 2010 rather than face further discipline from the Motor Vehicle Commission in a case that found he sold motor vehicles without a dealer’s license.

The charging documents also say Trotter sold 14 vehicles that belonged to Anderson Motorsports for 40 percent of Anderson’s reserve price — in total, $228,000 below invoice.

Dixon Polaris reportedly sent Trotter 44 vehicles with invoice prices totaling $318,650 to be auctioned in late 2009. According to the complaint, Dixon Polaris received just $181,550 for the vehicles. The auctions also cost the dealer nearly $40,000 in dealer credits, the lawsuit states. The complaint also alleges that Trotter’s company never returned the dealership’s 18 metal shipping crates.

So far Fecteau has won one jury award in Rutherford County Chancery Court on behalf of a Florida RV dealer, and she is seeking treble damages in post-trial motions. A jury awarded her client $131,236, finding that Trotter and National Public Auction violated the duty of an auctioneer and that there was no contract between it and the dealer. Because the company was not licensed to auction motor vehicles, the jury also awarded the dealer $226,236 on a finding that Trotter’s company violated the Tennessee Consumer Protection Act, she says. That act allows recovery of treble damages and attorney fees.

Some dealers are hanging their hopes on any criminal conviction against Trotter and his companies. “We’ve been waiting on the insurance, but they are waiting for a criminal offense,” Donahue says. “Until then, it’s a bad business practice.”

Justyn Amstutz of National Powersport Auctions offers some tips for dealers who are approached by auction houses. Click here for the article.