Tag Archives: fraud

Former Norton boss to sell properties

Properties owned by former Norton Motorcycles boss, Stuart Garner, have hit the market at £13m, which is £1m short of the amount he owes to investors.

Last month, Garner was ordered to pay back £14m to pensioners who invested in retirement funds not knowing he was dishonestly using the money to prop up his ailing motorcycle company.

The order to pay back the money will not affect Norton Motorcycles which was bought in April by  Indian company TVS who are investing heavily and promise to produce all current and promised models as well as some new models.

The UK Pensions Ombudsman is now chasing Garner to repay funds from three pension schemes he set up which fraudulently funnelled money into his company.

Norton boss Stuart Garner at Donington Castle
Garner in his home at Donington Castle

Properties up for sale

Garner now says he hopes to pay back all the money through the sale of property assets.

The property portfolio includes Donington Hall, the Priest House Hotel (which has recently been operated by Legacy Hotels since going into administration), Hastings House, The Lansdowne Buildings and Kings Mills Caravan Park, all set in more than 80 acres.

They are estimated to be worth about £13m.

Garner also says the administrators are sitting on £16 million cash from [the] Norton asset sale.

“The money is not ‘missing’. It is all in the business and its assets,” he told Business Live.

“No-one has agreed what the pension investor amount is yet. But with £16 million in cash and several million of property assets to come in, it looks likely they will receive all their capital back.

“I’ve lost everything with Norton, so I’ve no idea what the future holds yet.”

Norton Motorcycles Donington Hall factory crowd
Norton’s Donington Hall factory

Pensions scheme

In 2012 and 2013, 228 pensioners invested in five-year pension funds (Commando 2012 Pension Scheme, the Dominator 2012 Pension Scheme, and the Donington MC Pension Scheme) which invested primarily in Norton Motorcycles.

Garner was trustee of all funds and sole director of their provider, Manocrest Ltd.

The pensioners claim their investment was not returned years after the lock-in period had expired and £14 million in investments were lost in the company collapse.

In February, Garner failed to appear at a public hearing held by the Pensions Ombudsman to investigate complaints about the pension schemes

Pay back time

The Ombudsman issued this statement:

“The trustee [Garner] has acted dishonestly and in breach of his duty of no conflict, his duty not to profit and his duty to act with prudence.

“The investments made by [Garner into Norton] on behalf of each of the schemes were made in breach of the trustee’s statutory, investment and trust law duties.”

The ombudsman ordered Garner to make a “restorative payment” to all the scheme members as well as paying £180,000 to the original 30 fund applicants for “exceptional maladministration causing injustice”.

Garner, a former export “poster boy”, has blamed Brexit for his company’s downfall.

Norton CEO Stuart Garner Norton Motorcycles pay back
“Poster boy” Garner
Norton Motorcycles which went into administration in January following £300,000 in unpaid taxes.  While the debts were piling up, Garner and his wife, Susie, were spotted dining out at an elite restaurant, The Ivy, where a steak costs about £30 (about $A60). Motorcycle journalists also report that Garner had attended international motorsport events and put on lavish motorcycle launches. He also lived in lavish surroundings in Donington Castle where Norton motorcycles are also manufactured.

Source: MotorbikeWriter.com

Former Norton boss to pay back £14m

It’s pay back time for Stuart Garner who dined out at expensive restaurants and lived a lavish lifestyle as he ran Norton — one of the most revered bands in motorcycling — into the ground.

Now the former boss is in deep trouble, ordered to pay back £14m to pensioners who invested in retirement funds not knowing Garner was dishonestly using the money to prop up his motorcycle company.

The order to pay back the money will not affect Norton Motorcycles which was bought in April by  Indian company TVS who are investing heavily and promise to produce all current and promised models as well as some new models.

The UK Pensions Ombudsman is now chasing Garner to repay funds from three pension schemes he set up which fraudulently funnelled money into his company.

Norton boss Stuart Garner at Donington CastleGarner relaxes at home

In 2012 and 2013, 228 pensioners invested in five-year pension funds (Commando 2012 Pension Scheme, the Dominator 2012 Pension Scheme, and the Donington MC Pension Scheme) which invested primarily in Norton Motorcycles.

Garner was trustee of all funds and sole director of their provider, Manocrest Ltd.

The pensioners claim their investment was not returned years after the lock-in period had expired and £14 million in investments were lost in the company collapse.

In February, Garner failed to appear at a public hearing held by the Pensions Ombudsman to investigate complaints about the pension schemes

Pay back time

The Ombudsman has now issued this statement:

“The trustee [Garner] has acted dishonestly and in breach of his duty of no conflict, his duty not to profit and his duty to act with prudence.

“The investments made by [Garner into Norton] on behalf of each of the schemes were made in breach of the trustee’s statutory, investment and trust law duties.”

The ombudsman ordered Garner to make a “restorative payment” to all the scheme members as well as paying £180,000 to the original 30 fund applicants for “exceptional maladministration causing injustice”.

Garner has not made any media comment about the determination, but in the past the former export “poster boy” has blamed Brexit for his company’s downfall.

Norton CEO Stuart Garner Norton Motorcycles pay back“Poster boy” Garner

The pensions payback is not Garner’s only worries as the UK government may investigate almost £8m in funding and loans to Norton Motorcycles which went into administration in January following £300,000 in unpaid taxes.

While the debts were piling up, Garner and his wife, Susie, were spotted dining out at an elite restaurant, The Ivy, where a steak costs about £30 (about $A60).

Motorcycle journalists also report that Garner had attended international motorsport events and put on lavish motorcycle launches.

He also lived in lavish surroundings in Donington Castle where Norton motorcycles are also manufactured.

Source: MotorbikeWriter.com

6 Automotive Industry Attorneys Explain Common Auto Dealer Fraud

(Contributed post on common auto dealer fraud for our North American readers)

Most everyone goes into the process of purchasing a motorcycle or car with a healthy degree of skepticism.

However, while you may be prepared for aggressive sales tactics, some dealers also engage in blatantly fraudulent behavior that may catch you by surprise.

When you are an automotive attorney, you reach the point where nothing surprises you anymore. From filing fraudulent loan applications to rebuilding salvage titles and hoisting them on unsuspecting consumers, some auto dealers have almost turned fraud into an art form. And their favorite victims are those with limited incomes and poor credit.

There are many federal and state laws that penalize fraudulent sales, marketing, and financing schemes. However, thousands of consumers still fall victim to fraud every year. Below, we review what attorneys have to say about some of the most common types of auto dealer fraud.

Knowingly Selling Bad Vehicles

When you think of auto fraud, one of the first things that probably comes to mind is dealers making false claims about a vehicle’s condition.

Thomas R. Breeden, a consumer rights attorney in Virginia explains, “One of the most common types of fraud is selling a vehicle without disclosing that it has a history of damage, such as a salvage title due to extensive body and frame destruction or other title blemishes.”

When you complain, the dealer may try to hide behind an “as-is” clause in your contract to avoid responsibility. However, this does not excuse them from failing to disclose known problems with a vehicle. In fact, some states prohibit “as-is” sales completely, and other states severely restrict them.

Even if the dealer claims you’re out of luck, you should consider consulting an attorney about the problem. They can advise you of any options you have for making an auto dealer fraud claim.

False Odometer Readings

Texas attorney Allen Stewart Odometer also points out that “odometer tampering is a common fraudulent scheme.” Used car dealers will roll back the odometer to make it look like it has fewer miles on it.

Stewart points to data from the National Highway Traffic Safety Administration stating that more than 450,000 vehicles with false odometer readings are sold each year. This fraud costs American consumers more than $1 billion yearly.

Fraudulent Charges

Another way car dealers commit fraud is to inflate prices above sticker value. They can also add hidden charges without disclosing or explaining them to the customer. Sometimes they will even represent that certain upgrades or services are “required” to get the customer to pay for things they don’t need or want. 

George O. West III has a law practice in Las Vegas that focuses on representing fraud victims. He observes that “[i]t is not uncommon for people to begin to realize they were the victim of auto fraud only after speaking with” an attorney. “Often people have a general feeling that something did not go quite right when they bought their car but may think it is part of the process.”

West explains that although “hidden charges or overcharging . . . may look suspicious, . . . the consumer may not understand exactly what or why they are being charged.” Consumers expect some degree of nickel and diming, so they may just overlook some of these charges. But in fact, many of these types of charges are blatantly fraudulent.

Bait & Switch 

Another common type of fraud occurs when a dealer tells you one thing and then changes their tune later. When it comes to marketing, this often takes the form of a “bait and switch.” 

A bait and switch occurs when the dealer advertises something to get you into the store, such as a particular price or a financing deal. However, when you actually try to take advantage of the deal, they tell you that the car is no longer available and sell you something similar—or even the same car advertised—at a higher price. 

Pauliana Lara, an auto fraud attorney in Southern California, explains, “They get the client very excited, and the client is very emotional, and they end up buying the car.” Lara had a client who fell victim to this scheme and ended up paying $3,000 more than the advertised price for a Prius. When he checked the ad again after getting home with his new car, he realized the car he bought had the exact same VIN as the car in the advertisement.

Yo-Yo Sales

“Yo-yo” sales also involve dealers changing their tune after you’re already on the hook. Missouri attorney Summer Masterson-Goethals explains that a yo-yo sale involves delivering the car to the consumer without finalizing the transaction: “The consumer believes they have a deal but later, the dealer informs the consumer that the transaction fell through for one reason or another and makes the consumer either return the car or agree to different terms than originally bargained for . . . .” Masterson-Goethals warns that sometimes the dealer will even sell the consumer’s trade-in vehicle before going back on the deal. 

Credit Application Fraud

Credit application fraud is extremely common among car dealers. In fact, the Maryland firm of Whitney, LLP reports that 1 in 5 credit applications it reviews for clients reveals credit application fraud and sometimes even forgeries.

Common tactics used in credit application fraud include:

  • Falsely inflating the applicant’s income;
  • Misrepresenting a person’s job title or how long they have worked for an employer;
  • Falsely reporting that the applicant has a job they don’t have;
  • Faking a trade-in so it looks like the borrow has made a larger down payment;
  • Inflating the value of the vehicle so it looks like the borrower has made a down payment when they haven’t or so that the loan-to-value ratio appears greater;
  • Not reporting the applicant’s other financial obligations; and
  • Stating that the applicant’s rent or mortgage payments are lower than they are.

Georgia auto fraud attorney Michael Flinn relates the example of a retired truck driver he represented. Despite Flinn’s client making only $1,500 a month, a dealership sold him a $35,000 vehicle by falsifying his credit application. Eventually, employees at the dealership received federal fraud charges.

Flinn advises consumers to “[a]sk to see the credit application filled out before you sign it. Don’t let there be blanks for your income. Do not agree to providing false income information. . . . Be suspicious if you are being sold more car than you thought you could afford.”

It’s never a good idea to obligate yourself on a loan you can’t afford to pay. This is especially true if the dealer talked you into a more expensive car by fraudulently securing your loan. If you can’t afford to pay your loan, your car will be repossessed. This will affect your credit score and can even lead to bankruptcy.

Source: MotorbikeWriter.com

Norton Motorcycles boss under investigation

Failed Norton Motorcycle boss Stuart Garner is in more strife with the UK Pensions regulator now investigating his role in a pension scheme to fraudulently fund his company.

In January, Norton Motorcycles went into administration amid claims of pension fund frauds and a £300,000 unpair tax bill.

In 2012 and 2013, 228 pensioners invested in five-year pension funds (Commando 2012 Pension Scheme, the Dominator 2012 Pension Scheme, and the Donington MC Pension Scheme) which invested primarily in Norton Motorcycles.

Trustee of all funds and sole director of their provider, Manocrest Ltd, was Stuart Garner.

The pensioners claim their investment was not returned years after the lock-in period had expired and £14 million in investments were lost in the company collapse.

In February, Garner failed to appear at a public hearing held by the Pensions Ombudsman to investigate complaints about the pension schemes. 

Norton boss Stuart Garner at Donington CastleGarner in his home at Donington Castle

Under investigation

It’s taken until now for the Pensions Regulator to launch an investigation.

Last year the Pensions Ombudsman criticised Garner for a “clear” conflict of interest as trustee of schemes that invested all funds into his business.

“It appears to me that the investment of all of the scheme’s assets in Norton Motorcycle Holdings is potentially in breach of the restrictions on employer-related investments under section 40 of the Pensions Act 1995,” the ombudsman said.

Garner faces a fine and/or jail if found guilty of a conflict of interest.

Despite being chased by investors, customers, the government and now the Pensions Regulator, Garner and his wife, Susie, were last month spotted dining out at elite London restaurant, The Ivy, where a steak costs about £30 (about $A60).

Norton Stuart and Susie GarnerStuart and Susie Garner dining out

The photo was published on the Twitter account Notnorton Moto as another example of Garner’s extravagant lifestyle.

At least in Australia, importers Brisbane Motorcycles have returned deposits to those who paid for bikes not yet delivered.

The UK government is now being called on to investigate almost £8m in funding and loans amid claims that Garner squandered the money on fast cars and a lavish lifestyle.

Click here to read the whole sordid tale.

Buyers sought

Norton Motorcycles Donington Hall factory crowdNorton’s Donington Hall factory

The company ceased production in February, but administrators BDO UK say they have “significant interest” from potential buyers.

BDO spokesman Lee Causer says they are “taking all necessary steps to ensure that customers, staff and suppliers are supported through the administration process, as we seek the sale of the business and assets”.

“We have had a significant volume of interest and are hopeful that a sale of Norton Motorcycles (UK) Ltd can be secured,” he says.

That’s good news for Norton fans and customers.

Norton boss Stuart Garner at Donington CastleGarner relaxes at home

The rumour mill has been running hot with talk of Japanese and Chinese motorcycle companies and even motorcycle fan Keanu Reeves being interested in buying the venerable brand.

Norton KeanuKeanu on a Norton Commnando

A petition to Triumph Motorcycles boss John Bloor to buy the company has only received 61 signatures.

Meanwhile, another petition to the government to launch an official inquiry into Garner has more than 7000 signatures.

SuperBike Magazine claims the company’s biggest single investor, Steve Murray, could be interested in buying the company.

They say he invested his entire life savings or about £1 million for 10% equity and loaned the company an extra £500,000.

He was a company director for three months, but chose to be “hands-off”.

The deadline for bidders closed on 21 February 2020. There has been no update from the administrators.

Source: MotorbikeWriter.com

Warning on potential RiderBuds fraud

Riders are warned not to support the crowd-funding campaign for RiderBuds earphones nor to buy them because of a suspected fraud.

The campaign launched in November 2018 but the earphones have still not been delivered to many customers.

We published an article that month ($US199, $A275, €175, £150) that said they were claimed to be the smallest, softest, toughest, quietest and most secure earphones for riders.

Like other previews of prospective motorcycle products, we included a warning to our readers that supporting a crowd-funding campaign for a product not yet manufactured is not without risk.

Kickstarter and Indiegogo do not offer refunds to supporters who pledge money for products that either fail to reach their goal or do reach their goal and then fail through fraud.

The latter was the case with the infamous Skully head-up display helmet where the founders blew $US2.4m in supporters’ money on fast cars and women!

Unless a crowd-funding campaign specifically mentions a refund, supporters are advised they will have to contact the campaigner to get their money back.

RiderBuds ‘fraud’ warning

Riderbuds earphones

In the case of RiderBuds, many customers have complained on the campaign page that the product has still not delivered despite the delivery deadline of May 2019.

They also claim Indiegogo and the founder are not responding to emails.

We contacted Indiegogo and RiderBuds founder Maurice Dziubinski for comment and but have also received no reply.

Maurice told us on the launch of the campaign he spent hundreds of hours testing the earphones, talked with more than 1000 riders around the world and had a few dozen Beta testers, including in Australia and New Zealand.

His crowd-funding campaign was fully subscribed in three hours, 200% in 12 hours and raised $A164,255 from 688 backers within a month.

The campaign page is still live and has now amassed $A213,415 from 885 backers.

Indiegogo has a duty to remove or at least suspend the page and stop taking money when they have been alerted to potential fraud by several backers until it can be resolved.

The comments on the crowd-funding page seem to suggest Maurice of Poland is now living in Vietnam.

A reader who tested the prototype said it’s “a great product so I really hope they come through”.

“There have been delays for sure which has been frustrating but I don’t think he has any intention of ripping people off,” the tester said.

“He said he moved to Vietnam because of the COVID-19 outbreak; he was living in Hong Kong while he was getting the production etc sorted out.

“I’m not vouching for him in any way, just giving you some more info. I haven’t had any direct communication from months, but I didn’t expect any either. I think he underestimated the challenges of bringing a product to market!”

Source: MotorbikeWriter.com

Norton now faces fraud allegations

Not only has Norton Motorcycles gone into administration over £300,000 in unpaid taxes, but now charges of fraud have been levelled at boss Stuart Garner who blames Brexit for his company’s downfall.

It seems 228 pensioners invested in three different conventional five-year pension plans that fraudulently turned out to be Norton shares, according to an investigation by the UK Guardian newspaper and ITV News.

The pensioners also claim their investment was not returned years after the lock-in period had expired.

Allegations

Problems go back to 2008 when a £1m loan came from the proceeds of a tax fraud. Two longstanding Norton associates were convicted over the fraud in 2013.

It is one of many problems encountered by Norton:

  • Customers who paid a deposit but never received a bike have taken legal action;
  • Claims that warranties have not been honoured;
  • A high turnover of staff;
  • Failure to pay parts suppliers resulting in a lack of spares and poor quality control;
  • A threat to strike the company off the Register of Companies over a late-filing notice; and
  • TT racing legend John McGuinness claims he could not contact Garner about his contract to race this year.

Investments and grants

Norton Motorcycles Donington Hall factory crowdDonington Hall factory

Despite this long list of problems and fraud allegations, the UK government backed a £625,000 loan by Santander in 2012 and promised the company a £4m grant in 2015.

It wasn;’t the only financial boost for the company.

Last year Norton also signed a £20m deal with Japan to deliver an extra 1000 motorcycles worth £5m to Japanese riders over the next five years.

And in November, when the company launched a crowd-funding campaign to meet a £30 million order book for V4 and Atlas models an anonymous investor allegedly coughed up £1m ($1.89m), pausing the campaign.

So where has all the money gone from the Santander loan, government grant, Japanese investment and the “anonymous investor’s £1m” (if the latter ever did exist)?

Administration

Clearly Norton didn’t have the money to pay their taxes, so Metro Bank appointed global accounting firm BDO UK as administrators on 29 January 2020.

In the UK, administration protects a company from creditors and winding-up proceedings while a solution can be reached.

BDO now has eight weeks to send out formal administrative proposals to all of the insolvent company’s creditors and repay “without preference”.

However, we expect creditors will line up behind HM Revenue & Customs who are owed £300,000.

Garner blames Brexit

Prince William Isle of Man TTPrince William with Stuart Garner

Garner says he is “devastated” and “personally have lost everything”.

“However, my thoughts are with the Norton team and everyone involved, from customers, suppliers and shareholders at this truly difficult time,” he says.

“Without dialogue, Metro Bank appointed BDO administrators yesterday. We are now working positively and proactively with BDO to ensure Norton has the best possible chance to find a buyer.

“It has become increasingly difficult to manufacture in the UK, with a growing tax burden and ongoing uncertainties over Brexit affecting many things like, tariffs, exports and availability of funding.”

Australian customers

Norton Commando 961 Sport Mk II James Mutton crowdJames Mutton

In 2018, Brisbane Motorcycles took over importing Norton from NF Importers who also distribute Ducati.

Brisbane Motorcycles managing director James Muttons assures Australian and New Zealand customers who placed deposits for new models with their local dealer would receive a full refund.

“However we are not sure what is in line for those that placed orders prior to our distribution with the factory directly,” he says.

“We will obviously do our best to put those customers in touch with the correct people in the UK.

“In regards to existing Norton owners, we still have good stock of servicing parts, and will still be operating to ensure our customers are looked after.

“Ultimately we hope a larger brand with more experience will come in and continue the brand however this is purely speculation and we have had no official correspondence.”

Former Norton retailer Matt Jones of now-defunct Rocker Classic Motorcycles says he believes many other small businesses will also “go the way Rocker did”.

“Norton was a poisoned chalice and a lesson in business that I am still paying for today, both financially and mentally. Just horrendous,” he says.

Source: MotorbikeWriter.com

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