Allegations of 'unsafe' motorcycles probed

Federal and state authorities are investigating allegations that the country's largest Honda power sports dealership sold unsafe motorcycles, all-terrain vehicles and dirt bikes.

The investigations of Southern Honda Powersports in Chattanooga, Tenn., were launched by the National Highway Traffic Safety Administration (NHTSA) in May and by the U.S. Attorney's Office in Nashville and the Tennessee Attorney General's Office last month.

Former Southern Honda marketing consultant Ernest Vickers III says federal regulatory agencies failed to act five years ago - and in 2010 - when he told them that about 25,000 new motorcycles, ATVs and dirt bikes were assembled unsafely when he consulted for the dealership February 2004 through May 2007.

Vickers, who uses the nickname Pug, and former Southern Honda employees say unsafe vehicle assembly continued until at least 2010. They say the dealership illegally sold, from 2004 through 2010, hundreds to thousands of new vehicles that were under safety recall by the federal government without first correcting the problems.

If the accusations of Vickers and former Southern Honda employees are true, tens of thousands of people are riding potentially unsafe motorcycles, ATVs and dirt bikes. Their accusations may also point to an ineffectiveness of federal safety regulators in ensuring product and highway safety.

"It's extremely troubling that NHTSA did not independently investigate the claims brought to them by Mr. Vickers that were apparently corroborated by many others who worked with him," says consumer auto safety advocate Sean Kane of Safety Research & Strategies. "Unfortunately, this appears to be in line with a trend that NHTSA believes its 'regulatory partners' are the companies it regulates rather than the motoring public."

Southern Honda's owner, Tim Kelly, says there "is no substance" to Vickers' allegations, and says alleged assembly problems are "utter balderdash."

Kelly says "some bikes were delivered" before recall work was performed, but their owners were notified and their vehicles were repaired. He says he recently fired a salesman for selling a vehicle under recall.

"Safety is our first priority," Kelly says.

However, nine former employees besides Vickers - including seven who, in 2010, signed notarized affidavits alleging safety problems - report a disregard for vehicle safety at Southern Honda.

Vickers sent letters, e-mails and the signed affidavits detailing his allegations to: the manufacturer, American Honda; NHTSA, which regulates motorcycle safety; and the Consumer Product Safety Commission (CPSC), the regulator of ATV and dirt bike safety.

Neither federal agency contacted him to discuss the allegations or took enforcement action, Vickers says.

In May - after USA TODAY asked questions about Vickers' accusations during the course of the newspaper's eight-month investigation - NHTSA confirmed it was launching an investigation of Southern Honda's alleged sales of vehicles that were under 10 recalls.

Similar questions were raised with the U.S. Attorneys Office in Nashville and the Tennessee Attorney General's Office. Both offices subsequently began investigations last month in meetings with Vickers and John Gore, Southern Honda's general manager from 2007 through 2010.

"It's incomprehensible that American Honda, NHTSA, CPSC and other federal and state agencies I contacted during the past five years didn't act, because the safety of many consumers who bought vehicles was endangered," Vickers says. "Now that the agencies are investigating, every vehicle that Southern Honda ever sold should be recalled to ensure it is safe."

He said, they said

Vickers says American Honda was fully aware of Southern Honda's alleged unsafe assembly of vehicles and illegal sales of recalled vehicles. American Honda should have cracked down on its biggest dealer and, by law, reported the safety problems to federal regulators, he says.

In a prepared statement, American Honda says it "always has complied with all applicable regulations issued by NHTSA and CPSC, including those related to product safety defects and the conduct of safety recalls."

American Honda spokesman Bill Savino says Vickers has "a vendetta" against Southern Honda, and "nothing has come out of" his allegations.

Savino says NHTSA and CPSC "did some investigation of the dealership years ago." The spokesman says he's "not denying there were some issues," but "everything was addressed," and "Southern Honda Powersports rectified the situation."

Deano Swims, who worked in Southern Honda's sales and service departments from June 2006 through January 2009, says he reported to American Honda in August 2009 his concerns about Southern Honda's disregard for safety.

Swims says vehicle assemblers were untrained and didn't use the manufacturer's set-up checklists to ensure safety, and sales personnel did not go over safety checklists with customers.

Southern Honda management ordered Swims to sign documents falsely certifying the checklists were adhered to, including documents related to vehicles he had never seen, Swims says. When he refused, management created a stamp with Swims' name on it for other employees to use to sign the documents, Swims says.

Vickers says he informed American Honda lawyers that Southern Honda assemblers were not using torque wrenches for safe assembly of vehicles, and that Southern Honda was not following safety checklists.

"All critical nuts are supposed to be torqued by the builder, which has never been done the entire time I was at Southern Honda," David Ray Tyler, who assembled ATVs at Southern Honda from mid-2006 through January 2008, states in an affidavit.

Tyler states that no Southern Honda assemblers had any training to "properly build" a vehicle, and he was told "for months" to sign safety checklists for vehicles he did not assemble "in order to get these old files ready" for American Honda auditors.

Tyler states that he signed many safety checklists for new motorcycles, "but I have never built a motorcycle in my life."

Vickers says that after he informed American Honda about the safety checklists, the manufacturer then informed Southern Honda it would be inspecting the documents.

Before American Honda inspected documents months later, Kelly ordered employees and hired temporary workers to falsify or forge signatures of employees and customers on the documents, Vickers and Gore say.

Kelly says Southern Honda "never falsified anything, to my knowledge," and "no Honda lawyers ever came to look at paperwork."

'Mind-blowing' possibility

Gore, the former general manager, says that from 2007 through 2010 more than 1,000 motorcycles, ATVs and dirt bikes were assembled unsafely, and at least 1,000 of the vehicles under recall were sold without first being fixed.

Former Southern Honda sales manager Gary Griffith says untrained, low-paid workers assembled the vehicles, and he sometimes had to get a wrench to fix them. "Hundreds of units went out under safety recall before being fixed," he says.

Gore says he was never contacted by NHTSA about unsafe motorcycles but, while managing the dealership, received a letter from CPSC stating that Southern Honda had sold recalled ATVs without first repairing their safety problems.

The letter, dated Sept. 22, 2010, and obtained by USA TODAY, says the CPSC "has obtained information demonstrating that Southern Honda Powersports sold recalled ATVs without the required recall repairs being made."

The CPSC said, "It appears that Southern Honda Powersports sold recalled ATVs without repairs after multiple stop sale notices were issued by American Honda ... in the last five publicly announced ATV recalls."

The CPSC said it received copies of two American Honda letters in 2008 "cautioning" Southern Honda about selling recalled products, but "information in our possession indicates that your dealership continued to sell recalled products" after receiving the letters.

The CPSC requested that Southern Honda immediately stop selling recalled vehicles before repairing them and contact all customers who had bought such vehicles.

The agency said Gore and Southern Honda might be liable for a fine up to $15 million and requested "a detailed report of all sales of unrepaired, recalled products."

Gore tells USA TODAY that the letter frightened him and Kelly, and he helped prepare - for a return letter to the CPSC - a list of ATVs that had been sold under recall without first being repaired. .

Southern Honda also sent "thousands of postcards" to buyers who had bought such ATVs, but only 10% or fewer of the buyers came back for repairs, Gore says.

"We sold ATVs to buyers in 50 states, and a lot probably didn't get postcards," Gore says. "It's probably mind-blowing how many ATVs are still out there that didn't get fixed."

Gore says the CPSC didn't contact him again. Kelly says the CPSC matters occurred "some years ago," and he cannot recall what response he made to the CPSC.

CPSC refuses to talk

The CPSC refused a request from the U.S. Attorneys Office for documents about these matters, and it refused to answer repeated USA TODAY questions.

The CPSC said that, by law, it could not discuss a specific company, and all questions must be submitted under a Freedom of Information Act filing.

When USA TODAY told the agency that Vickers' information met three criteria in the law that allows the CPSC to comment, the agency did not reply.

Last month - weeks after refusing to answer USA TODAY's questions - CPSC spokesman Scott Wolfson said the agency couldn't answer, because it had launched a related investigation.

A day later, Wolfson said that he had misspoken - the agency is looking into a related "matter" but hadn't begun an investigation.

Wolfson said the CPSC would provide a statement to USA TODAY that would first have to be "cleared through Honda." USA TODAY has not received a statement.

In written statements, NHTSA says it didn't act in 2010 on information provided by Vickers because it primarily pertained to "repair-related internal inspection protocols and company-specific standards that NHTSA does not regulate."

NHTSA also said Vickers made "a broad allegation about recalls but did not provide information to support that claim."

Two consumer groups - Safety Research & Strategies and the Consumer Federation of America - say federal and state agencies should have acted on the information Vickers provided and taken steps to ensure consumer safety.

Kane of Safety Research & Strategies says it's "remarkable" that NHTSA didn't respond years ago to Vickers' allegations.

"Given the first-hand accounts of what was happening by multiple employees, it is unfathomable why the agency wouldn't have pursued this vigorously," he says.

Rachel Weintraub, a Consumer Federation of America product safety director and senior counsel who has worked on many state and CPSC ATV safety issues, says she "was struck" by the "compelling evidence" Vickers provided.

"The information raises very serious potential safety issues involving all-terrain vehicles and dirt bikes, how they are sold, how they are repaired and how consumers who bought ATVs and dirt bikes from this particular dealer are unwittingly at greater risk of severe injury or death," she says.

"Federal and state authorities must review this information seriously, must conduct in-depth investigations and must use their full authority to protect consumers."

USA Today