Car buyers wonder whether they were taken for a ride

By Kevin Woster, Journal Staff Writer | Thursday, July 14, 2005

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Janet Noble didn't know a thing last week about the crumbling automobile empire of Rapid City native Dan Nelson or the political troubles it could cause for South Dakota Sen. John Thune.

She was just looking for a new car. And Family Hyundai had the new Hyundai she wanted.

"I did a car comparison on the Internet, and the Hyundai was one of the ones that had come up," Noble said Wednesday afternoon as she sat in her shiny 2005 Accent. "It had a better warranty. I checked that out. But then, I didn't check out the dealer."

Family Hyundai was a familiar, well-stocked car lot on Cambell Street. Noble couldn't imagine there was a problem. So she bought her Hyundai there Friday morning, leaving the lot with a new car and a new car owner's smile.

About four hours later, Family Hyundai closed down, the victim of the legal troubles and crushing debt load that pushed the two-state auto network known as Dan Nelson Automotive into bankruptcy.

It also left Noble wondering what to do next.

"I have this new car and all that great extended warranty and no dealership," the Rapid City woman said. "Really, it's all up in the air right now."

It's up in the air for many former customers of Nelson car dealers in Rapid City and Sioux Falls in South Dakota, and Des Moines, Council Bluffs and Sioux City in Iowa.

The dealerships have either closed or been taken over by MetaBank, an Iowa-based bank with operations in Sioux Falls. MetaBank was the lead lender for a package of almost $30 million in loans to Dan Nelson Automotive Group, Inc., which was headquartered in Sioux Falls before the bankruptcy proceedings.

The auto network and its financial arm, South Dakota Acceptance Corp., also face a consumer-fraud lawsuit by the Iowa Attorney General's Office. Hundreds of customers of Nelson lots in Iowa have signed complaints about deceptive business practices and harassing debt-collection techniques.

Consumer protection officials in South Dakota have received about two dozen complaints about the company this year.

Nelson is a close friend, longtime political ally and campaign contributor to Thune, the former three-term Republican congressman who defeated incumbent Democratic Sen. Tom Daschle in the 2004 general election. In between his House service and the election last November, Thune sat on the audit committee and board of directors for MetaBank.

That connection has led some Daschle supporters and former staffers to question whether Thune acted improperly to help his friend secure financing. Thune labeled those charges as politically motivated and said he never acted improperly to help his friend, who had been borrowing from MetaBank — formerly known as First Federal Savings Bank — for years before Thune joined the board.

That was all distant political chatter to Noble on Wednesday afternoon. She simply wanted to know when and how she might get the title to her olive-green Accent and who would handle the warranty and service contract that came with it.

Noble said that on the day she bought the car, employees at Family Hyundai never mentioned the legal trouble, bankruptcy or possibility that the dealership might close.

"All they told me was that they had a new owner and that they were training this new guy, so everything was taking a little longer," she said. "It would have been nice to have been told about it."

Chuck Lee would have liked that information, too. The Baker, Mont., resident bought a 2005 Hyundai Tucson sport utility vehicle July 5 at Family Hyundai. He traded in a 2003 Ford van that had an outstanding loan balance. Family Hyundai was supposed to pay off that balance as part of the deal.

But the loan remained unpaid Wednesday, and Lee already had sent the title for the van to Family Hyundai.

"So I don't even know where my title is at this point. The van isn't paid off. It's sitting on their lot. I don't have the title or the keys," Lee said. "I've got two car loans, and I don't even have one of the cars. At this point, I'm so sick of the whole thing I'd just as soon give up the new car and go find a reputable dealer."

Lee said he called the state Division of Consumer Protection in Pierre but hadn't heard back from them. He also called Hyundai USA, where a representative was surprised to learn Family Hyundai had been closed.

Lee then contacted MetaBank in Sioux Falls and received an e-mail address, dnagquestions@metabank

online.com, for concerned Nelson customers to contact with questions. He has done that and is waiting for a reply.

Noble also is waiting to see what comes next. She hopes a new buyer will pick up the Family Hyundai dealership and provide the service she needs. A federal bankruptcy judge in Sioux Falls pushed things in that direction Tuesday by dismissing the Chapter 11 reorganization request by Dan Nelson Automotive Group.

That could allow MetaBank to sell the $6.4 million in assets formerly owned by the group. The separate financing arm of the auto network remains in bankruptcy court, along with its $16.8 million in assets.

MetaBank president and chief executive Tyler Haahr said Wednesday that there was interest in all the dealerships.

"I can't get into specifics about what's going on. But we have had significant interest in acquiring assets that were in the Dan Nelson group," Haahr said. "There's been more or less interest in certain properties, but there has been interest in all."

Few people are more interested than Janet Noble and Chuck Lee.

Contact Kevin Woster at 394-8413 or kevin.woster@rapicityjournal.com