Corbin In a SPOT?  More Execs at Play?


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State attorneys: Corbins lied to investors
Lawsuit filed in San Francisco Superior Court says owners of Corbin Motor Co. used investors’ money to fund extravagant lifestyles

Pinnacle Staff Writers
The Corbins lied about the financial solvency of their electric car company in an attempt to gain investors, attorneys for the State of California have alleged in a lawsuit filed against them.
Tom Corbin, his wife, Jennifer Wilson, and his father, Mike Corbin, then used the money to finance extravagant lifestyles – including the purchase of motorcycles, wine dinners, trips to Disneyland and a leased Bentley – rather than develop the Sparrow, according to the complaint.
The victims named in the suit are investors, buyers and those who bought would-be dealerships.
“When I found out that Bentley was being paid for with investors’ money,â€￾ one former employee said, “I thought, ‘I’d never invest in this company.’â€￾
While the Corbins ran the now bankrupt car company, the complaint alleges that Wilson set up a dummy company to “unlawfully dispose of assets.â€￾
As the state Department of Corporations has wrapped up its initial investigation, employees are coming forward with tales of apparent widespread financial mismanagement: paychecks held for weeks awaiting funding, health premiums unpaid and employees stuck with medical bills as high as $500,000, all the while Tom and Mike Corbin – the latter with a Sparrow tattooed inside his right forearm – painted a rosy financial picture of the company in an effort to gain new investors.
If the complaint proves true, the rise and fall of Corbin Motors will be among the biggest financial scandals in the history of San Benito County. It marks the end of a smooth-talking salesman who, at the height of the stock market boom, convinced starry-eyed investors to part with life savings by continually misrepresenting the financial status of the company.
Many investors bought the sales pitch to the tune of $10 million. Along the way, the three-wheeled electric Sparrow, touted as the commuter car of the future, was featured in automotive magazines and in major motion pictures, including Austin Powers. In actuality, fewer than 300 were made and probably fewer than 100 are still on the road.
While the intention to build an eco-friendly get-about was good, all agree, company executives took their eyes off the goal when they began to treat company investments as their personal bank accounts after they began soliciting investors in April 1999.
“Corbin Motors and have been in dire economic condition for most of their existence, and have used incoming cash primarily to pay debts and fund the lifestyles of officers and controlling persons, including defendants,â€￾ the complaint said.
The Corbins repeatedly downplayed the risks involved in the company, dropping names such as Apple Computer founder Steve Jobs in an effort to gain trust. They promised investors that the company soon would go public. In fact, the complaint said, the Corbins were “heavily in debtâ€￾ to such a degree that it could not produce vehicles.
The company then diverted money invested in the electric Sparrow to make its gas-powered Merlin. The company folded in March before the product made it to market.
“He (Tom Corbin) really believed it would happen, and in my worst hours he made me believe it too,â€￾ one former employee said.
A hearing date has not yet been set for the case. The suit seeks to freeze the Corbins’ assets in Hollister and Daytona Beach and have them surrendered to repay duped investors. It also calls for civil penalties against them and Michael D’Andrea, the vice president of sales, and Frank Anthony Luzi, who sought Florida investors for a factory in Daytona Beach. All are accused with the Corbins of the fraudulent sale of unqualified securities.
“I do not want to comment,â€￾ D’Andrea said before hanging up on a reporter.
The lawsuit was filed in San Francisco Superior Court by the California Department of Commissions, which oversees the sale of securities and franchises.
“Defendants have omitted or misrepresented the true facts concerning the performance and health of the company to potential investors and franchisees,â€￾ the complaint said.
The Corbins did not return telephone messages left at Corbin Pacific asking either for comment, or for referral to an attorney who could respond to the charges on their behalf.
The IRS also is investigating, according to multiple employees who have been contacted by a federal agent.
Attorney Linda Rasmussen said that three people – two employees and one close associate of the Corbins – have told her that Tom Corbin’s $4,500 weekly paychecks were made out to Jennifer Wilson’s Bay City Development, a fact confirmed for the newspaper by two former bookkeepers. When she questioned Corbin about his paychecks at a recent bankruptcy creditors meeting, Corbin’s lawyer directed him not to respond.
“He was not paid out of the payroll account,â€￾ said Rasmussen, attorney for Steve Carter, a Delta airlines pilot who had paid for an Atlanta dealership that never came to fruition. “These guys are just bad seeds, I’m afraid.â€￾
Bay City Development Corporation, Rasmussen said, is a P.O. Box in San Juan Bautista.
The Corbins were ruthless, the complaint implies, in their efforts to gain investors. Knowing the company was financially unstable and its product questionable, the Corbins still were “bringing tours of senior citizens through the factory to market and sell stock.â€￾
California law makes it illegal to sell a security by making untrue statements or omitting material facts. The true financial health of the company must be disclosed.
Lori Landry, who worked as the company finance manager for seven months in 2000, said she left because of the Corbins’ mismanagement of company finances and confirmed that Tom Corbin used his company credit card for personal expenses.
“Every living expense you could think of,â€￾ said Landry. “Anywhere from 10 to 15 percent were legitimate expenses for the company. But the rest was treating his family and living off the card. It was annoying to have to tell vendors right here in Hollister, ‘Sorry we can’t send the check.’ Within three months of working there I said to myself, ‘Oh man, these people don’t want to build cars. They just want to sell stock and move down the road.’
“It was getting to the point where I was seeing people in the grocery store, and I would turn my cart down the aisle because I knew they were investing money in the company. I couldn’t just say, ‘Don’t put your money in it!’ I didn’t want to leave town. But it was either take all these people off my Christmas card list or move,â€￾ she said. “I knew the end could come any day.â€￾
Some former employees asked that their names not be used until the investigation is complete. The Pinnacle normally does not use unnamed sources, but in this case has printed some information if verified by at least two additional sources.
A former bookkeeper for three years confirmed lavish expenses placed on Tom Corbin’s American Express company credit card.
“The card was always $25,000 to $75,000 a month,â€￾ she said. “Shows, dinners, fancy furnishings for their home, Starbucks coffee, car washes, $600 a night at the Inn at Tres Pinos, three new motorcycles, a family vacation in Disneyland, a new ring, hotels – you name it. They even put Safeway purchases on it. And they did this when they couldn’t meet payroll.â€￾
The former Corbin bookkeeper is stuck with a $10,000 hospital bill because she didn’t know that Tom Corbin had cut her and the other employees’ off of medical benefits last year.
When the company folded, some employees were left with up to four weeks of paychecks that they had been asked to hold as Tom Corbin promised investor funding would be forthcoming. Multiple interviews with a dozen former employees paint a bizarre picture of chaotic paydays. Often Tom Corbin would ask employees to hold their checks until the next round of funding. Other times, he told them to “do what you normally do to get your checks cashed,â€￾ which meant simultaneously hitting check-cashing businesses and shops from Salinas to Los Banos, the employees said. Eventually the company would repay the businesses with cashiers’ checks.
“Tom is a sick man,â€￾ one former employee said. “I enjoyed working with him, but he has no boundaries, no rules. Tom’s sin was arrogance and ignorance, in my opinion. He’d write as many checks as there were in the checkbook.â€￾
Once when a carload of employees arrived at Community Bank in Hollister on payday, another employee chatting in the parking lot abruptly ended the conversation and ran inside, hoping to cash her check first – while funds might still be available.
Still, employees stuck by the company “because we believed it would happen, too,â€￾ one former employee said. “We tried to deal with the Sparrows, getting them fixed for customers. Things Tom couldn’t have cared less about.â€￾
The 14-page complaint substantiates several articles written by The Pinnacle since April 2002, when dissatisfaction with the company and its product became public knowledge. Investors who have been complaining about the Corbins’ business practice for months – including six figure salaries and the $2,500 a month Bentley – felt vindicated that their complaints were heard and substantiated.
“They cheated everybody and tried to keep everything for themselves,â€￾ said Ron Huch, the former company president whom the Corbins ousted in late 2001. In February of this year, Huch won a judgment against the company for $680,000, but claims the Corbins owe him more than $1 million.
“This is not one that Tom is going to be able to dance around,â€￾ said Huch. “These (state investigator) guys aren’t going to listen to his bull---t.â€￾
Huch was named president at a time when the company was hoping to go public and Tom Corbin, who has had two felony convictions sealed, would not have passed scrutiny by the Securities and Exchange Commission.
“I can only speculate,â€￾ said Gerard Rose, Huch’s attorney, “but they needed somebody that was clean.â€￾
The company made fewer than 300 vehicles, said the complaint, and most were returned with significant problems. Franchise dealers did not receive cars after putting money down for dealerships. The complaint also states that warranty service was not provided, and when buyers sent cars back to the company for repairs, often the work was done using parts taken from other vehicles also there for repairs.
The state Department of Motor Vehicles was a part of the investigation.
“They didn’t take the money they got from investors and address all the shortcomings,â€￾ said Peter Sankowski, former Corbin vice president of production, speaking from his home in Clear Lake, Calif. He said he tried to get the Corbins to focus on design flaws, but they were more interested in ramping up production.
“The flip-over problem was a design I inherited. I wanted to change the configuration,â€￾ Sankowski said of the three-wheeled vehicles’ tendency to roll. “We made some headway to make it somewhat more manageable, but the Corbins just didn’t care. They just wanted to get them out the door. It was like pulling teeth. They didn’t tell people the truth about those cars.â€￾
Mike Hanagan, aka Mike Corbin, runs Corbin Pacific, the motorcycle seat manufacturing company, which is not named in the complaint. He is, however, accused of abetting his son in the holding of and disposing of assets.
Investigators have been trying to place Mike Corbin at the helm of Corbin Motor Co., in an apparent effort to make the motorcycle seat company accountable for the debts. Tom Corbin now works at Corbin Pacific.
Despite the problems, eco-minded buyers are loyal to the concept of a three-wheeled electric vehicle that spares the air and can be parked in a motorcycle parking place.
“Surprisingly, there are a lot of people who still love the Sparrow and want to see this company succeed,â€￾ said Huch. “They just don’t want the Corbins in it.â€￾
A lot of those people, according to Huch and others, are now searching for the Sparrow patents, which they believe are owned by Corbin Pacific.
It is not clear what will happen next to the Sparrow concept, or if outsiders will be able to resurrect Corbin Motors. Many sources, former investors, dealers and their lawyers have said they and other Sparrow enthusiasts want to rebuild the company and its groovy mod-colored Sparrow, this time the right way.
Huch believes that since he is first in line to receive lost assets – several million dollars -- the company could fall into his hands, something about which he has mixed feelings.
“I’d like to try and revive this thing,â€￾ he said. “It would take a while with all the debts and it would have to be financed. But it’s like a dog chasing a car. What do you do when you catch it?â€￾
haha. it's gotta be close.. but it was fairly interesting.. guess i'll not be buying a corbin out of principle.. not that I had plans to anyway.. but thats pretty effed up.
reason number 6,432,108 why I dont pour my money into company stocks.

Companies now a days are a total joke. they are nothing more than a endless money pit being ran worse than the government.

The measure of success used to be how rich you made your investors, now it's how much money you steal from them to fund your bullsh*t lifestyle. They need SEVERE punishments for people like this. I mean 20 year, 30year and life sentences for these people. Whenever another story like this comes out it devestates families and ruins the economy.

Alot of people think it's because of war that the economy is down. I dont think so. I think it's because investors have zero confidence in corporate america. Without investors, your business will not grow. But considering every single company is hiding this, swindling that, and practicing shady accounting, it's not worth the risk.

Here are 2 really good movie about stocks and investing-

"Wall Street" and the new one "Boiler Room"

Michael Douglas said it best when he said "If you are not inside, you are outside". Meaning if you are not in the loop on current company events, you and your money are sheep for the slaughter.

Real Estate, its one of last true money makers

Does this win the longest post award?  BTW, your avatar is killer!
if he had typed it, yes... since it was c/p, no.
Does this win the longest post award?  BTW, your avatar is killer!
if he had typed it, yes... since it was c/p, no.  
YEAH, I thought I would save folks the leg work. Thus Cut and Paste...Sorry for the length...

I am just bothered by this because I had allways felt that Corbin was one of the good guys, Cared about the customer and the product. To damn Bad...

The Avatar isn't mine...I stole it from the TREE ...Waiting 4 him to claim it...
More corporate Top Level Greed...........
At least this time they can't hide their identity behind a corporate name! (Since in this case it is their name.)
I'm still buying Beetle Bags and Gunfighter saddle. As long as the motorcycle division stays alive, I love their gear...had 2 other saddles and both held up wonderfully...
Man I thought they were one of the good guys to, guess not.
, but heck they still make one heck of a great seat