Fraud in the Dino Auction Action? Not good for buyers & sellers

Most of us by now are aware that the Ponder 246GTS sold for $187,000 (including commission) at RM's Ponder Collection Auction. My question is, how much fraud, AND BY WHOM, was involved? "None," you say, well . . . .

The car was described as having an odometer showing 4,284 miles "believed to be original," a "superb and highly original example that, aside from a repaint in the original rosso corsa, remains completely unrestored."

The internet link <http://www.rmauctions.com/CarDetails...P07&CarID=r116> states very clearly, and I quote:

"The interior is all original, with black seats and red inserts, power windows, air conditioning and a Blauplunkt stereo. A very rare option, the Dino is believed to have been originally delivered with Borrani wire wheels, and including the spare in the front, retains all five. Mr. Ponder purchased the Dino for the collection over 15 years ago and has driven it only sparingly since then, maintaining its outstanding authentic and correct overall condition."


"With 4,284 miles, believed to be original registered on the odometer, the Dino shows only minimal wear in both the interior and the engine bay. Remarkably preserved, overall the 246 GTS displays a quality of fit and finish that a Ferrari with less than 5,000 miles should."


According to Rick Carey's analysis of the auction that appears in the May 5, 2007 issue of the Ferrari Market Letter:

At the 1996 Kruse Scottsdale auction, this Dino had "rust blooming in the door bottoms. There was no mention of the Borrani wires, suggesting that it was riding on alloy wheels, nor of the then-evident mileage. It sold for $53,000 then."

According to Carey's story, the same car had appeared for sale by European Auto in 1995 in the FML "with 103,000 miles."

Others here have pointed out many obvious incorrect items on the car (see the thread started by synchro here on FerrariChat "Ponder Dino for auction - No Reserve" and all of the postings there about incorrect door panels, the incorrect steering wheel, non-original seat covers, incorrect shift knob, incorrect location for the Pininfarina badge, etc.).

In the end, all of these add up to a car that I cannot imagine a legitimate seller would have described as "completely unrestored."

More importantly, if this Dino had 103,000 miles on the odometer in 1995 as reported by Rick Carey, then how the H*LL can the seller and the auction house claim with a straight face that the car had "4,284 miles, believed to be original registered on the odometer," unless they really, really, REALLY meant that the current odometer itself has "4,284 miles," and to H*LL with the rest of the car. (ROARING LAUGHTER IN THE BACKGROUND)

Right about now I want to puke.

Now, under Washington law (and in most other states) it sure would seem that the buyer would have a classic action in tort for fraud or misrepresentation. The basic elements of such an action include misrepresentation, deceit, or fraud in the inducement where a persion has been misled by a false statement which caused a plaintiff to suffer foreseeable monetary damages. A false statement of a material fact by a defendant seller with actual or constructive knowledge of its falsity, or an action such as turning back a car's odometer, may be sufficient.

The specific kind of active representations made in the associated auction materials (mileage, completely never restored, etc.,) need to be distinguished from puffing, general sales talk, curbside subjective opinions which generally do not rise by themselves to fraud or misrepresentation. And, this situation also differs from nondisclosure, which usually does not constitute deceit -- "caveat emptor" is the general rule in nondisclosure cases.

Now, what about remedies?

Well, they could include damages for the benefit of the bargain, to put the buyer in the same position as if the representations were all true. Or, rescision of the transaction and recovery of the money paid in restitution.

Theories other than tort misrepresentation/fraud might also apply, and include negligent representation and active concealment.

This type of situation truly sucks for both buyers and sellers as it undermines the interests of buyers and sellers in legitimate auction arenas, in dealer transactions, and in private party sales.

Mark (who is now well and truly P*SSED OFF)

 

I made no specific allegations of fraud, I only asked a question, then pointed to some widely reported comments about this particular Dino that appeared on FerrariChat and in the Ferrari Market Letter, and offered my personal opinion and expressed my personal disgust. And, with respect to sticking my nose into this mess, I firmly believe that this type of situation needs to be publicized to protect legitimate owners, sellers, and buyers from potential fraud and abuse, and that this is the perfect forum within which to do so. Heck, if people on FerrariChat go on and on about whether a Dino tool roll or a Dino pouch was a reproduction, or whether LSR was committing fraud or not on items worth a few thousand dollars, then why shouldn't there be an open and frank discussion about a transaction that was within a hair's width of $200,000?

In addition, as mentioned by Yasmin above, there is a lot of information available about this Dino on dinoregister.com. If you look this car up (serial # 07902) on dinoregister (searching either Ponder or the serial # that was provided in the RM Auctions listing) you will find that this Dino's first entry shows it was owned from 1983 to 1995 by Mike and Donna Wardlow, that it had Standard Cromodora Wheels (NOT BORRANIS) at the time, and had 72,920 miles in 1984. The badge bar/grilleguard was on the car at that time.

The second entry shows that it was at European Auto Restoration in Costa Mesa, CA, and was for sale in July 1995 with an indicated 103,000 miles, and was still listed as having Standard Cromodora Wheels.

So, again, how could anyone claim that this car has 4,284 miles "believed to be original registered on the odometer" and "believed to have been originally delivered with Borrani wire wheels" with a straight face?

Mark (now that you mention it, I AM an attorney)

 

Who knows what the buyer knew? But, RM and the seller? RM is in the business, and the seller, well . . . .

Mark

 

Gregg:

Mighty fine day in Seattle, and I assume, a fine day in Portland, OR (and the surroundings).

Speaking of Leonetti, J. and I had a great time this past weekend in Walla Walla for the Spring Wine Release . . . . Came back with 8 cases . . . .

Mark

 

Bryan -

You are correct - caveat emptor DOES NOT APPLY to an affirmative claim, completely false, regarding an essential element of the bargain which the seller knows (or should have known) that a buyer would rely upon (reliance - a belief which motivates an act, Berry v. Robotka, 9 Ariz.App. 461, 453 P.2d 972, 979.), and is not a defense to a claim of FM.

Mark

 

Am I missing something here? At one point you state that "it would be hard for anyone to argue the seller didn't mislead the auction company" and then three sentences later you state that "it will be very tough to prove that the seller mislead (sic) the auction company."

"SOME murkyness (sic)?" I would suggest that being off by over 99,000 miles is a little more than "SOME murkyness." I don't see how it would be so tough to prove that the seller misled RM and that RM should have known about the affirmative misrepresentation in any event. Remember, the mileage claim is clearly an affirmative claim, and not an issue of nondisclosure, and thus, caveat emptor would not generally be a defense.

Not to put too fine a point on it, but RM is in the business, and the catalog description shows that SOMEONE put more than a little effort in researching the general history of the 206 and the 246. Are we really supposed to believe that RM is apparently absolutely clueless and so naive that it could have missed the obvious issues (at least to us) concerning this Dino? If that is in fact the answer, it doesn't say much of anything favorable for RM.

With respect to "as is," you still can't make demonstrably false affirmative claims (especially in writing), and then try to hide under the "believed to be" and "as is" cloaks). I'd sure like to meet the person who supposedly "believed to be . . . ." I have a nice pointy cap waiting for him/her. (BTW, I've got a nice "believed to be" Bugatti sitting in my garage - maybe RM will be willing to handle its auction for me too???)

To suggest that "any real buyer should have accepted the car as is when they bid" would truly destroy the market in instances of clearly false affirmative claims (as opposed to nondisclosure issues). Would anyone really believe that if I falsely claimed to have title to a car and then sold it at auction that I should, and would, be protected by claiming that the car was "sold as is?" How about if I put it in writing that my "believed to be Bugatti" had the engine rebuilt 500 miles ago, when in fact it was rebuilt 55,000 miles ago, which you discovered when it blew up while loading it into your car hauler after you bought it from me at auction?

With respect to the seller disclosing "so many relevant things," I am having a hard time sorting out what the seller disclosed that was correct, other than that the car is red, had been repainted, has an engine, and four tires/wheels and a spare, and THAT is just about it. Much of everything else "disclosed" about this car pretty much appears to be incorrect or false.

As to why any seller or auction house would have hidden anything, I think that the answer is pretty self-evident. A $135,000 car (and that is being generous) falls into a time warp and miraculously comes out worth $187,000 and minus 99,000 miles? That seems to me like $50,000+ worth of motivation.

When all is said and done, does this mean that a no BS (but not necessarily perfect) 246GTS is really worth $200,000+?

Mark