advertisement

Justice Department looking into Fiat Chrysler sales reporting

Fiat Chrysler Automobiles NV, which is facing a lawsuit brought by an Arlington Heights dealership over the way the company reports monthly sales, is now under investigation by U.S. authorities over its sales reporting.

The automaker is cooperating with investigations by the Justice Department and the Securities and Exchange Commission into the reporting of vehicle sales to customers in the U.S., FCA said in a statement Monday.

Bloomberg News reported earlier that prosecutors had opened a criminal investigation into potential securities fraud, according to people familiar with the matter. The Justice Department inquiry is in an early stage, according to two people, who asked not to be identified because the investigation is confidential.

"In its annual and quarterly financial statements, FCA records revenues based on shipments to dealers and customers and not on reported vehicle unit sales to end customers," Fiat Chrysler said in the statement.

A Justice Department spokesman and an SEC spokeswoman declined to comment. Investigators from the Federal Bureau of Investigation and the SEC visited Fiat Chrysler offices and the homes of current and former employees in Michigan, Orlando, Dallas and California on July 11, according to a report Monday by Automotive News, citing an unnamed person.

The federal investigation follows lawsuits that challenged the company's sales numbers. In a suit filed in January, Napleton's Arlington Heights Motors alleged FCA inflated its U.S. car sales by paying dealers to report selling more vehicles than they actually did. Napleton said in the complaint that one competing dealer reported 85 false new-vehicle sales and got tens of thousands of dollars, and alleged the sales are removed from the books the following month.

The dealership group accused FCA of fraudulent conduct and racketeering because dealers who participate get thousands of dollars in rewards compared with dealers that refuse.

Two other complaints against the automaker are also pending. A federal judge in Chicago is considering Fiat Chrysler's request to dismiss the Napleton lawsuit while a judge in Brooklyn is deciding whether to merge two other cases.

A criminal investigation could deliver a blow to the automaker, which has posted record vehicle sales since Fiat acquired full control of Chrysler in 2014 through a government-backed bailout that brought the maker of Jeep and Dodge brands out of bankruptcy in 2009. In December, Fiat Chrysler said it had the best month of U.S. sales in the company's 90-year history with 217,527 vehicles sold - recording its 69th consecutive month of year-over-year sales gains.

Article Comments
Guidelines: Keep it civil and on topic; no profanity, vulgarity, slurs or personal attacks. People who harass others or joke about tragedies will be blocked. If a comment violates these standards or our terms of service, click the "flag" link in the lower-right corner of the comment box. To find our more, read our FAQ.