Malcolm Bricklin Sues Chrysler's Chinese Partner, Chery AutomobileBy Michelle Krebs July 21, 2008
By Michelle Krebs
Entrepreneur Malcolm Bricklin, famous for successfully establishing Subaru of America and infamous for bringing the failed and quality-deprived Yugo to the States, announced Monday he has sued Chinese automaker Chery Automobile Co. along with some of its affiliates and officials for corruption, stealing his ideas and reneging on a contract to make him the exclusive North American distributor of the China-built Chery cars.
Filed in U.S. District Court in Detroit, the suit stems from a 2004 deal supposedly negotiated between Bricklin's company, then called Visionary Vehicles, LLC and now known as Cars, LLC, and Chery to produce vehicles in China with Bricklin as the exclusive importer and distributor of the cars North America.
Bricklin's suit claims his company would have made in excess of $14 billion on the deal over the life of the agreement. To that end, Bricklin said he raised excess of $26 million before realizing Chery had no intention of executing the contract. The suit seeks to recover what money Bricklin raised, some of the future profits he would have made and his costs in the lawsuit.
Indeed, as Bricklin rightly asserts, the deal garnered international attention and made Chery a household name in the U.S.
However, Chery supposedly went behind Bricklin's back and negotiated another deal with the then DaimlerChrysler as well as Israeli-based Quantum LLC and its subsidiaries. Chrysler claims it is continuing to work with Chery on a jointly developed vehicle.
Filed under the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO), more often reserved for cases involving mob activity, the suit calls Chery a "rogue" Chinese automobile company. Under the RICO laws, the suit claims Chery "committed, and agreed and conspired to commit, dozens of acts of mail and wire fraud."
The lawsuit's language is as colorful as the publicity-hound Bricklin's.
"Since its illegal inception under Chinese law," the lawsuit charges, "Chery's operating modus has been to serially plunder Western technology and subvert employees of both partners and competitors to obtain valuable business information. Throughout its short history, Chery and its top management and others working in concert with it, have systematically broken contractual obligations, stolen plans for vehicles, made cars designed by Western companies without paying for their rights, and made deals without the slightest intention of carrying them out, all to the detriment of virtually every Western automobile and automobile-related company that has crossed its path."
"In reality," the 72-page lawsuit adds, "continuing a pattern of lies and deceit that had marked its previous involvement with Western companies, Chery used the high-profile attention that the announcement of the deal made in the Western and international press, and the plans and investments made by Visionary Vehicles and its investors, as a means to cut out Visionary Vehicles and secretly make two other deals for North America."
In addition to Chery, the suit also is filed against Quantum and its entities, Chery CEO Yin Tongyao and Kan Lei, identified as a German citizen residing in China.
Chery is no stranger to lawsuits by American enteritis. General Motors sued Chery in China over the Chery QQ, a knock-off of the Chevrolet Spark, GM contended - unsuccessfully in Chinese courts.
The suit, sent to AutoObserver by Bricklin's New York public relations agency, apparently was filed over the weekend in U.S. District Court in Detroit by Bricklin's Southfield, Mich., attorneys.
AutoObserver is attempting to reach Chery representatives for comment.