LONG RIDE HOME: Terry Edwards visits the vacant dealership where he purchased his current bike. He left another motorcycle there for consignment, and now it’s gone.
Credit union sued after Ozark motorcycle dealer disappears
After an Ozark motorcycle dealer abruptly closed earlier this month, customers began filing police reports, online complaints and now a class-action lawsuit.
Midwest Cycle Center1 LC, Pro Action Auto LLC and Powersports Protection LLC operated at 1949 W. Boat St. near Lambert’s Cafe and were all owned by Nate Powers, aka Nathan Powers McClellan, according to state registration and lawsuit documents. All three closed without notice May 23.
Springfield law firm Aleshire Robb & Rapp filed a class-action suit in Greene County Circuit Court on June 12 against BluCurrent Credit Union. The financial institution provided loan contracts for motorcycle dealer Midwest Cycle Center and used car seller Pro Action Auto, as well as extended warranties and guaranteed auto protections sold by Powersports Protection, according to law firm partner Greg Aleshire. The lawsuit claims BluCurrent is liable as a signer of the loan contracts.
Aleshire, who received calls from over 15 concerned customers, said the policies sold by Powersports Protection are worthless – since the businesses that should fulfill claims no longer exist and because they were illegally sold.
“In order to sell those products, you have to be registered and qualified by the Missouri Division of Insurance,” he said. “And the Missouri Division of Insurance requires you to either purchase an underlying insurance policy that backs that up or post a security bond through a bonding company – or I believe you have to have a $50 million net worth. None of those things were done.”
Aleshire claims BluCurrent was responsible for ensuring Powers and his companies were properly registered with the state. Because the three businesses ceased operating, Aleshire said BluCurrent is subject to the claims of the consumers, as the holder of the retail installment contracts.
“In those contracts there is a holder clause,” he said. “And the holder clause provides that any claims or defenses the buyer has against the seller, they also have against the holder of that retail installment contract.”
BluCurrent President and CEO Craig Tabor was caught off guard by the lawsuit. After consulting with attorneys at Lathrop Gage, credit union officials sent Springfield Business Journal a prepared statement June 20 outlining the credit union had no knowledge of the alleged wrongdoing when it offered financing and was committed to finding a satisfactory solution to the concerns of its customers.
“We did not participate in the sales transactions giving rise to these allegations,” the statement reads. “We only provided financing for the purchasers.”
BluCurrent now has until July 12 to file a response to the suit. Aleshire said a discovery period would follow for each side to record depositions. Then the court would determine if the suit certifies as a class action.
“If that happens, notice goes out to all of the potential class members, letting them know that they are involved,” Aleshire said, noting former customers are not required to hire an attorney to join the suit.
Aleshire said anyone who purchased an extended warranty or gap insurance and financed through BluCurrent would be identified in the class. Additionally, anyone who didn’t received a title after a sale also would qualify.
The case could go to a judge or jury trial – or get resolved out of court. Either way, class members would be notified and have the right to opt-in, opt-out or object to the lawsuit results.
The amount of damages sought is not yet determined, but Aleshire said it has the potential to exceed $1 million, with hundreds of customers involved each claiming thousands of dollars.
Other lawsuits could follow.
“There are other potential responsible parties out there, in some people’s cases, that don’t have anything necessarily to do with BluCurrent,” Aleshire said.
According to those involved with the case, it’s a mystery why Powers closed the businesses and his whereabouts are unknown.
Midwest Cycle Center’s voicemail box is full, its website is down, its Craigslist account is empty and Google Maps lists it as permanently closed.
Ozark Police Chief Tim Clothier said his department received complaints from eight customers and four of them have been resolved. Authorities were directed to the name and contact number of Mary Powers for customers seeking to address problems.
SBJ’s call to Powers was not returned by deadline. An attempt to contact Nate Powers through his LinkedIn account was unsuccessful.
At issue for the Police Department are customers who did not receive the title for a vehicle purchased or who left motorcycles on the property for consignment that now are missing.
Aleshire said around June 2, Automotive Finance Corp., the company that financed the dealership’s inventory, repossessed the vehicles and took them to auto auctions.
A legal representative from AFC, who declined to be named, said the dealer willingly surrendered the property but also specified which bikes were on consignment so they would not be taken. AFC is able to verify ownership of the vehicles, based on vehicle identification numbers.
“When the dealer goes to the auction to buy a motorcycle, we pay the auction directly. So that auction then releases the vehicle to the dealer. Then the auction gives us the title,” the representative said, adding anyone who is missing a vehicle should contact the dealer.
Terry Edwards purchased two motorcycles from Midwest Cycle, and one of them is gone.
After retiring in 2014, Edwards bought a 2001 Honda Shadow, with 28 percent interest financing through American Credit Acceptance LLC. Later, he bought a 2008 Harley Davidson Road King with a loan through BluCurrent at a much better rate. He said Midwest Cycle agreed to receive the Honda on trade and take over the loan payments.
“My Honda, was sitting there on consignment,” said Edwards, who lives in Charity, about 30 miles northeast of Springfield. “I don’t even know where it is. American Credit still wants me to make payments on it, and I said, ‘The bike has been stolen.’ It is nowhere to be seen.”
It took three months for Edwards to receive the title on the Honda and five months to receive the Harleys, he said. Since the closure, Edwards has paid hundreds of dollars in repair work, he said, that should have been covered by his extended warranty.
Edwards was surprised Midwest Cycle closed, citing the Better Business Bureau’s positive rating. He has since complained through the BBB and the Missouri attorney general websites.
“I had some [warranty] work done that was $1,200, when I first got the Harley, and they paid it right up front – boom – just like that,” he said.
Police Chief Clothier said the department now is communicating with the Christian County prosecuting attorney’s office.
“Not because we think there will be criminal charges but so that the Christian County prosecutor has knowledge of what’s going on, in the event that is an avenue we have to proceed with later on,” he said.