Jd Byrider Ripoff fraudulent practices OH YOU NAME IT Internet

Here is an interesting article about the downfall of an ex-JD Byrider franchisee. He owned multiple locations in Iowa and South Dakota. It mentions that his affiliation with JD Byrider was the beginning of his problems. He promised a reliable car with an in house warranty and credit repair to people with bad credit. Sound familiar??? The same promises made by every JD Byrider throughout the country, but the Iowa Atty. General was tired of broken promises. JD Byrider de-franchised him earlier this year claiming that he was not operating according to their standards and principles. What standards are those?Interesting...

High times and swift fall of Dan Nelson
Lawsuit, bankruptcy derail rapid rise of politically connected auto dealer

JON WALKER

Published: 07/24/05

Former auto dealer Dan Nelson made money and political friends equally fast. But lawsuits and bankruptcy abruptly changed matters.

(Argus Leader File Photo)

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In the small world of South Dakota politics, Dan Nelson has never moved more than a few feet from the spotlight.

He's impressed governors, senators and Capitol Hill gofers, then soared to success as a car dealer whose work ethic and broad smile made him a poster child as one of Sioux Falls' young millionaires. At age 37, he spans generations of Republican leadership as a businessman whose story, under other circumstances, would be Exhibit A in the party's message about risks and rewards in a free society.

But now the luster is gone. It vanished in the summer heat of a consumer-fraud lawsuit in Iowa and the subsequent bankruptcy of the Dan Nelson Automotive Group in South Dakota.

As agencies in both states field questions from customers and workers about service and back wages, some wonder whether the cave-in of his business will have broader consequences because of his ties to other Republicans.

Most apparent is his loyalty to U.S. Sen. John Thune, who once sat on the bank board that approved loans for Nelson. Critics targeted Thune, including state Democratic chairwoman Judy Olson Duhamel, whose news release was a grenade toss aimed at the senator as it lumped Nelson's bankruptcy with recent scandals in the U.S. economy.

"In politics, appearance is everything," said professor Ross Baker of Rutgers University. "Things that might seem to us totally innocent or kind of marginally ethical ... can be taken by political opponents and magnified into the great train robbery."

In reality, Nelson is so well connected that his ties to Thune might be only a footnote in the network of South Dakota relationships.

Nelson's wife, Jill, is the former wife of Kevin Schieffer, who worked with Nelson for Sen. Larry Pressler in Washington. His partner in the car business has been Chris Tapken, whose mother, Michelle Tapken, once was expected to be Thune's choice for U.S. attorney. His friends include Russell Janklow and Mark Mickelson, both Sioux Falls lawyers and sons of governors. Even Duhamel, the Democratic leader suspecting political fallout from the bankruptcy, has a history with Nelson. Her son, Jason Olson, and Nelson were high school friends who co-organized barbecues and movie parties for their basketball teammates back in the 1980s.

"We've chopped carrots together in my kitchen," Duhamel said of Nelson. "I just love the kid."

The web of names has an element of coincidence. Daniel A. Nelson, 37, the car dealer, is not to be confused with Daniel C. Nelson, 46, the public affairs director for the Sioux Falls Area Chamber of Commerce, though both men once worked for Pressler in Washington. And it's part substance. Republicans have said it's the Mickelson connection, not Thune, that led Nelson in the 1990s to start borrowing from what now is MetaBank, where Mickelson is a board member and longtime friend of bank president Tyler Haahr.

"It's a small state. Because of that we end up knowing each other," said Don Frankenfeld, whose run for Congress in 1990 was helped by a young door-knocking volunteer in Vermillion named Daniel A. Nelson.

The yearbook at Rapid City Stevens High School, where he graduated in 1986, told of "dynamic Dan Nelson" and his contributions to the senior class. He was co-president, "most inspirational" on the basketball team, and a student whom Pressler recommended for enrollment at West Point.

"He was an all-American, gorgeous young man - absolutely wholesome, clean cut, hardworking," Duhamel said. She said Nelson's parents, Allen and Diane Nelson, noted Rapid City Republicans, always have been civil and friendly in an age of political polarization. She found the same in their son.

"This pains me," she said last week in an interview concerning the bankruptcy.


Political climber

Not everything about the young Republican was so diplomatic. A colleague in Pressler's office in the 1990s said Nelson could talk anyone into anything and wasn't above taking credit for another's ideas. Nelson himself broke the Eleventh Commandment by blaming a political teammate, consultant Arthur Finkelstein, for Pressler's loss in the 1996 Senate race. Last year, Nelson bought space in the Rapid City Journal to scold Frankenfeld, his fellow Republican, for backing Democratic incumbent Tom Daschle in the race against Thune.

Ambition has guided Nelson in politics and business. In 1986, fresh out of high school, he drove congressional candidate Dale Bell to campaign stops around the state. "He was a really solid young man who was going to go places," said Bill Kunerth, who was Bell's press secretary and now is a newspaper publisher in Idaho.

Nelson crossed paths often in 1986 with another candidate, Sen. Jim Abdnor, a connection that led to a job for Nelson as an intern at the Small Business Administration, where Abdnor landed after losing the election to Daschle.

After two semesters at Oral Roberts University in Oklahoma and earning a political science degree at the University of South Dakota in 1990, Nelson worked for Pressler in Washington.

"He was young, focused and eager, extremely likable. I was struck that he was one of those guys who always had a knack of being a hard driver but doing it without an edge," said Schieffer, who was Pressler's chief of staff.

Nelson moved up as a staff member who attended committee hearings and took on more responsibility for Pressler.

"In an environment like that, going up through the ranks, if you're going ahead of somebody, there's 'why didn't I get that assignment?' " Schieffer said. "Dan did it without any hard feelings. We promoted him into that position pretty young. There just wasn't any concern. I would attribute it to his nature."

In 1995, three years after Nelson opened his car lot in Sioux Falls, Gov. Bill Janklow appointed him to the state's economic development board, a position he filled for five years. That's notable if only because Janklow never was tight with Pressler or Thune and was a loser to Abdnor in the 1986 Senate primary that divided the party.

"He's the only guy I know who was extremely close and a confidante of Senator Abdnor, Senator Pressler and Governor Janklow," Schieffer said. "That is a spectrum I don't know too many people can span. I certainly couldn't. ... I don't know that it's a matter of pulling it off as much as three smart people seeing something there and listening."


'Tired of D.C.'

His decision in 1992 to open a J.D. Byrider car lot along West 12th Street surprised friends who thought Nelson too much a political junkie to leave Washington. Others thought it a natural move.

"There's a point in time you just get tired of D.C.," said Michael Samp, a financial planner in Sioux Falls. "You want to be around politics, but you don't want to be in it."

As a businessman, Nelson's aggressive advertising and knack for scoring media attention set him apart. His chain named him entrepreneur of the year. He started an Internet-savvy repair business called eCar Care to let customers follow service on their vehicles through a digital camera. Last year he began a promotion with the school district to give one employee free use of a new Subaru for a month while making over the employee's old car.

He entered the new car market when he bought the Isuzu franchise in 2002 and, in 2003, the Subaru franchise that he operated on South Minnesota Avenue. But it was with the J.D. Byrider business model that he made a mark that points to his predicament today.

The Byrider plan was an appealing model because it put car keys into the hands of customers whose credit ratings were too poor to qualify for conventional loans.

"There are two flip sides," said Frankenfeld, 57, a Rapid City forensic economist. "The cost of the car you purchase is probably higher than if purchased from the local Chevrolet dealer, and the second is the financing costs are higher."

The program expected a high number of loans to fail but would turn a profit if customers made enough payments on cars where the price was inflated. It never was intended to be charity.

"People in that market segment have fewer choices than somebody who doesn't have to worry about it," Frankenfeld said. "Fewer choices means higher prices. Is that fair? You have to talk to people who bought the cars. Some are happy with the transaction. Others are not because it was too expensive."


150 complaints in Iowa

In Iowa, where Nelson's growing empire had three of his six dealerships, the attorney general's office received about 150 complaints concerning the program. In January, the attorney general sued Nelson, Tapken and their automotive group, accusing them of gouging customers with 25 percent loans for cars that were unreliable in deals that made consumers' credit standing worse, not better. The number of consumers represented has tripled to 450 since the suit was filed.

Customers complained that details are not made clear for buyers, including the down payment and full vehicle price.

"The contract we signed was close to $9,000, plus 24.9 percent interest," said Rosana Olson Hedahl, 46, who bought a 1993 Lincoln Town Car at the Des Moines dealership in 2003.

That price was three to four times too high, she thought, but she needed a car and was given a fuzzy promise about moving up to other vehicles.

"We were told if you make 12 to 18 on-time payments, Dan Nelson will turn around and pay off the loan himself," she said.

That approach takes the focus off price, but it piles up debt, she said. The dealer recovers the cost of the car in the early payments. Anything else the dealer receives before the customer backs out of the loan is gravy.

In South Dakota, the consumer complaint tally was lower - 22 in five years directed toward Nelson's business from 2000 to 2005. Another Sioux Falls-based dealer had 40 complaints during the same period.

"We get complaints on every car dealer in South Dakota. Dan's did not stick out on our radar," said Attorney General Larry Long.

Nelson blamed publicity from Iowa for hamstringing his business. An additional 23 complaints came in against Nelson in South Dakota in the six months since the Iowa lawsuit. In April, he abandoned the Byrider concept and closed a dealership in Council Bluffs. In June, he closed shop in Des Moines. He then filed for bankruptcy under Chapter 11 of the U.S. code, with the stated intent of reorganizing with the court's protection and getting back on his feet. But on July 8, MetaBank, the major creditor, concluding that the business was a lost cause, seized inventory and closed the dealerships in Sioux Falls, Rapid City and Sioux City.

One former employee said Nelson's love for politics distracted him last year as Thune challenged Daschle in the Senate race.

"He took his eye off the ball," said Eric Fowler, 32, a Sioux Falls businessman. "We all know business owners who do that for a period of time. Dan spent considerable time in the political campaign. That's just a passion for Dan and always has been."

That Thune's campaign rented its office and leased cars from Nelson in 2004 became a red flag for some when the lawsuit and bankruptcy filing followed in 2005.


Thune connection

Nelson and Thune have been friends since they met in 1986 handing out stickers at the Republican booth at the State Fair. Nelson has never worked for Thune, but he has backed him with moral support, $9,000 in contributions and advice as an unofficial member of a kitchen cabinet. He was there cheering on stage at the Ramkota Inn Nov. 3 when Thune celebrated his upset of Daschle.

Thune, who served six years in the House of Representatives before losing the 2002 Senate election to Democrat Tim Johnson, served on the MetaBank board for 22 months while he was out of office.

In a press conference July 8, Thune said Nelson's ties to MetaBank as a borrower began long before he arrived. He said his friend got no special treatment.

Duhamel, the Democratic Party chairwoman, said in a July 7 statement that Americans had grown weary of WorldCom, Enron and other scandals and that Thune owed South Dakotans an explanation for what happened with Nelson. Last week, she said she was trying to raise questions, not make accusations.

"To compare WorldCom and Enron to this is perhaps a stretch. I'll give you that. But I think there's a concern in America today about all kinds of corrupt business deals," she said.

"Did John Thune do anything wrong? I'm not saying. But I do think someone who sits on a bank board with a conscience has the responsibility to encourage loans that are low risk. If there were problems existing at that time, I assume he would have said something."

Kyle Downey, a spokesman for Thune, said, "These baseless allegations from a small group of partisan Democrats are nothing more than an extension of their permanent negative campaign against Senator Thune."

A politician's role on a nonpolitical board would vary case to case. Republican Dave Munson, a longtime legislator and now the Sioux Falls mayor, once was an executive at Citibank. Democrat Stephanie Herseth, after she lost the 2002 congressional election and before she won in 2004, was a board member of a Brookings bank.

"Lots of members of Congress are asked to serve on boards when they're out of office," Baker said. "They're considered to be people who add luster and prestige. It's certainly my experience that boards are fairly passive, not terribly aggressive, that the chief financial officer makes the key decisions. The board has a lunch and they ratify what the CEO says."


Buyers line up

Politics aside, Fowler heads what he calls a group of seven or eight local investors who want to buy the Nelson dealerships, one of several inquiries the bank has reported. He said the Nelson business did $80 million in annual sales.

"It can be rebuilt. All the pieces are there to put this deal back together and make it what it used to be," Fowler said.

Nelson's next move is known perhaps to himself and his friends. He has been unavailable for an interview.

He sold his 75 percent interest in his business for $50 to Tapken, who has not returned phone calls. Nelson's home on Old Orchard Trail, with adjacent land, has an assessed value of $815,547.

Nelson's former customers and employees are focused on recovering what fell into limbo when his business filed for bankruptcy. Several reported frustration or confusion in the process.

Chuck Lee, 50, drove from Baker, Mont., to buy a car off Nelson's lot in Rapid City on July 6. Lee bought a 2005 Hyundai Tucson, a four-door sport-utility vehicle for $25,000, with no down payment. He traded in his 2003 Ford Windstar minivan and was told the dealer would pay off the final 44 payments on the van - about $16,000.

He left the van on the lot, drove home in his new SUV and, as instructed, mailed in the van title the next day, July 7. But the dealership closed July 8. Lee felt responsible for the monthly payments, yet sensed that the title would land in a Bermuda Triangle.

"I'm laughing about it, but it's enough to make you want to rip your hair out," he said. "I have no keys, no registration. I couldn't go get the vehicle if I wanted to. ...I'd be stealing it at this point."

His situation improved last week. MetaBank called Lee and said it would take care of the title and pay off the van. That was enough hope, he said. The check was in the mail.

Reach reporter Jon Walker at 331-2206 or 800-530-6397.