GM suing Iowa dealer for reporting fake sales image

General Motors is suing a Chevrolet dealership based in Davenport, Iowa, for reporting fake sales.

The carmaker said it wants to stop a “widespread fraudulent and unlawful” scheme to falsely report retail new-vehicle sales. GM accuses Leep Chevrolet, which does business as Lujack Chevrolet, of transferring vehicles to affiliated non-Chevy dealerships in Iowa and Indiana for resale. The operation is known within the Leep enterprise as “Daisy Chain” sales.

According to GM’s suit, Leep claimed incentives for “some or all of the purported buyers,” submitted fraudulent customer surveys and collected unearned GM Standards for Excellence payments. GM seeks damages for fraud, conspiracy and breach of contract and also an injuction.

GM says Leep reported “dozens, if not hundreds” of retail sales to individuals, but many of the reported purchasers did not buy the cars in bona fide transactions, did not take delivery and did not use the vehicles for personal use. Other Leep-affiliated stores, including Honda dealerships, resold the vehicles as “used” but “like new”, the suit says.

“In reviewing the notice, we disagree strongly with the allegations and consider them entirely unfounded and without merit,” said Don Reese, COO of Gurley Leep Automotive. A GM spokeswoman contacted by Automotive News declined to comment on the suit.