Retailers urged to tread carefully when dealing with small auction houses

Publish Date: 
Feb 22, 2012
By Holly J. Wagner

Editor's Note: Many who attended this year's Dealer Expo and the American V-Twin Dealer Show witnessed how a vehicle auction is conducted, courtesy National Powersport Auctions (NPA). And retailers were able to meet with other national and regional auction giants, such as Manheim, Eastern and others, on ways to boost their used-vehicle business by participating in the auction process.

But there is a more precarious side of the auction business, involving smaller houses who flit from state to state and dealers who say they were misled into believing they would make more from their consigned vehicles than they actually did.

The following is the latest in a series of investigative reports by contributing editor Holly J. Wagner on the perils of participating in vehicle auctions, especially when one has not done proper due diligence on the auction provider. It's a long read, but a worthwhile one, so get yourself a cup of coffee and settle in.

A POWERSPORTS AUCTIONEER who’s facing possible disciplinary action in Tennessee and criminal charges in Georgia has gone into bankruptcy. But take note: Some colleagues charged with him in the Georgia case are still doing business.

Furthermore, some powersports dealers say they are victims of business practices that are unethical, if not illegal.

The bankruptcy petition for John Vincent Trotter and his Trotter Auction Co., which did business under the shingles My Auction Connection (MAC), The Auction Connection and National Public Auction, show at least 21 powersports dealers and several marine and small engine dealers as unsecured creditors claiming they are owed money. Trotter is disputing most of the claims.

The bankruptcy comes as Trotter and a handful of his colleagues are facing criminal charges in Georgia, but the real scope of what authorities are calling theft and racketeering may stretch much further across time and jurisdictions than the government charges suggest.

Though a Georgia grand jury indicted four people  – Trotter, Leon McGregor, Mary Mingle and Justin Wrenn  – on theft, fraud and racketeering charges related to a single business deal, a trail of lawsuits and bankruptcies document the same conduct and overlapping personnel  – including some of those named in the Georgia indictment  – at several active and defunct powersports auction businesses.

The auctioneers say they’ve done nothing illegal and they plan to fight the charges.

The Tennessee Auctioneer Commission (TAC) summarily suspended Trotter’s auctioneer license and charged him with fraud early last year, but an administrative law judge threw the charges out on the eve of a June hearing. An attorney for TAC was able to get those charges reinstated, but Trotter appealed the decision, which is awaiting a hearing in Rutherford County Chancery Court.

Meanwhile the grand jury in Glynn County, Ga., returned its indictment on charges of theft by conversion, theft by deception and four racketeering counts on each of the named parties late last year. Those charges stem from an auction in which a Georgia marine dealer claims he lost $400,000, and another in which a powersports dealer claimed they were misled into a bad business deal.

Trotter and the other defendants could get 15 years for each of four racketeering counts and 10 years for each of two theft counts if they are convicted.

McGregor and Mingle pleaded not guilty Feb. 9; Wrenn has failed to appear in court and is subject to an arrest warrant as a result, according to Assistant District Attorney Jonathan Miller.

Trotter’s attorney, Joe East, has asked to withdraw from the case, delaying Trotter’s arraignment, but Trotter maintains his innocence.

“I feel like there is a misunderstanding. It’s totally about a contract issue. The disagreement came up because at the end of the auction [a marine dealer] felt we did not get enough money for his vehicles,” Trotter says. “The misunderstanding is over a reserve vs. absolute auction.”

In a reserve auction, the dealer consigning the vehicles may set a minimum price the item must bring, and the item is not sold unless that minimum is reached. In an absolute auction, the item sells for the highest bid, with no minimum.

Trotter says part of the issue may be with contract sales staff that solicited vehicles for auction. He acknowledged that McGregor was a contractor soliciting dealers.

“I’ve always used independent contractors, they are responsible for finding the inventory. They have lists of dealerships across the country. They contract them,” Trotter says. “Basically the way that relationship works, the [solicitors] would say they have this or that to sell, I would check the contracts and that was it.” (continued)