[ckcarr]

TIME FOR THE LATEST CORBIN CRIME UPDATE

As I had stated in this post a long while back - stay tuned.

Now see what happens when greed and corruption become part of business as usual, freely available investor funds at their disposal, and a total co-mingling of funds.

Week of June 19, 2003
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

By KATE WOODS and TRACIE CONE
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,” one former employee said, “I thought, ‘I’d never invest in this company.’”
While the Corbins ran the now bankrupt car company, the complaint alleges that Wilson set up a dummy company to “unlawfully dispose of assets.”
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 CorbinMotors.com 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,” 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 debt” 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,” 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,” 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,” 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,” 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.”
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.”
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,” 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,” she said. “I knew the end could come any day.”
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,” 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.”
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,” 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,” 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.”
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,” one former employee said. “We tried to deal with the Sparrows, getting them fixed for customers. Things Tom couldn’t have cared less about.”