Car dealer lawsuit expands

By Kevin Woster, Journal Staff Writer | Wednesday, March 22, 2006

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Lawyers have expanded a lawsuit charging a now-defunct Rapid City auto dealership with fraudulent sales practices to include more than 90 plaintiffs and additional business associates of bankrupt auto merchant Dan Nelson.

The lawsuit, originally filed five years ago in Seventh Circuit Court in Pennington County, has since been expanded to tribal courts on the Cheyenne River, Rosebud and Pine Ridge Indian reservations, as well as to circuit court in Minnehaha County.

The suit alleges that the J.D. Byrider dealership in Rapid City, which later operated as Dan Nelson Isuzu, Dan Nelson Hyundai and Family Hyundai, engaged in deceptive sales techniques, charged excessive interest rates, inflated vehicle prices and failed to meet warranty obligations.

The Rapid City lot was one of a string of auto dealerships once owned by Nelson, a Rapid City native who once did business in Sioux Falls and Rapid City, as well as Iowa deadlerships in Sioux City, Council Bluffs and Des Moines. Those lots closed last year after the bankruptcy of Dan Nelson Automotive Group, which was the target of a consumer-fraud lawsuit filed by the Iowa attorney general’s office.

That lawsuit was a factor in the eventual downfall of Nelson’s car network.

The suit against the Rapid City dealership began years before the Iowa action. Rapid City lawyer Mark Koehn filed the original suit in Pennington County and in 2004, amended that complaint and filed a new action in tribal court on Cheyenne River Indian Reservation.

On March 10, Koehn and co-counsels Robin Zephier of Rapid City and Luke Wallace of Tulsa, Okla., filed amended complaints in Pennington County and in tribal court on Cheyenne River Indian Reservation. They also filed new action in Minnehaha County and in tribal courts operated by the Rosebud and Oglala Sioux tribes.

Along with Dan Nelson, his brothers, Tim and John, and father, Allen, are named as defendants. Also named, for the first time in the recent action, is Chris Tapken, who was a partner with Dan Nelson in the failed automotive group.

Koehn declined to comment about the suit Wednesday. But during an interview last year, he said the Rapid City dealership followed a pattern within the Nelson system of targeting low-income buyers, many of them American Indian, who had troubled financial standing and were unable to get car loans elsewhere.

The Nelson dealerships offered cars and car loans in one location. Koehn said last year that the Nelson lots used that buy-here, pay-here system to take advantage of customers who had few options.

Dan Nelson’s involvement with the buy-here, pay-here car lots began in 1992 when he opened the first of several J.D. Byrider dealerships in Sioux Falls, the complaint says. It also says Nelson later assisted his brother and father in opening the J.D. Byrider lot in Rapid City.

Several years later, Nelson obtained the first in a series of large loans with First Federal Savings Bank, an Iowa-based lending institution, which has since become MetaBank. That became a side issue to Nelson’s bankruptcy proceedings last year, because U.S. Sen. John Thune, a friend of Nelson’s, sat on a MetaBank board.

Thune, R-S.D., said he didn’t use his position to help Nelson with the bank and wasn’t even aware of his friend’s deepening financial problems.

In the most recent complaint, Koehn and his co-counsels added MetaBank and its affiliates to the list of dependants. The plaintiffs are seeking damages that include the purchase price of vehicles and extended warranties, finance charges, repair expenses and costs they incurred through vehicle repossession. They also want other damages for “emotional and mental anguish” resulting from fraud, invasion of privacy, punitive damages and the costs of the suit and lawyer’s fees.

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