Inevitably, there were several conflicting accounts of how John DeLorean ended up being led out of the Sheraton Plaza hotel in handcuffs in October 1982. The common thread was a man named James Timothy Hoffman, who had once been DeLorean’s neighbor in Pauma Valley, California, where they first met in April 1978. By the time they met again in 1982, Hoffman — unbeknownst to DeLorean — was now a paid federal informant, working with FBI and DEA agents to snare suspected cocaine smugglers W. Morgan Hetrick and Stephen Arrington.
According to Hoffman, DeLorean contacted him in July 1982 to ask for Hoffman’s help in setting up a drug deal to save DeLorean’s failing company. According to DeLorean, Hoffman called DeLorean’s New York offices in July 1982 with an unsolicited offer to help DeLorean raise $15 million from what he later described as “offshore” investors in exchange for a commission and expenses totaling $1.8 million. Either way, Hoffman subsequently introduced DeLorean to Morgan Hetrick, Stephen Arrington, a purported trafficker named “Vicenza” (actually DEA Agent John Valestra), and a “Mr. Benedict,” supposedly an official of Eureka Federal Savings and Loan (actually FBI Special Agent Benedict Tisa).
Federal agents alleged that DeLorean offered to put up $1.8 million toward the purchase of 100 kilos (220 lb) of cocaine. The agents further claimed that the deal, which DeLorean and Hoffman had allegedly discussed in Washington, DC, in September, was for Hetrick and Arrington to import the drugs from Colombia, “Vicenza” to distribute them, and “Benedict” to launder the money. DeLorean would receive the cash proceeds of the sale in exchange for giving “Vicenza” a 50% stake in the reorganized DeLorean Motor Company.
In a 1983 interview with Rolling Stone, DeLorean insisted that he was not initially aware that the deal involved drugs, only a potential investment in his ailing company. He also alleged that Hoffman had threatened DeLorean’s children when DeLorean attempted to pull out of the deal. Furthermore, DeLorean pointed out that the $1.8 million “commission” was not even his money. It was actually loaned to him by Special Agent Tisa, still in his guise as a crooked banker, in exchange for stock in a new shell company called DeLorean Motor Cars Incorporated.
After 10 days in Los Angeles County Jail, DeLorean was released on a $2.5 million bond, loudly proclaiming his innocence. Nonetheless, his arrest was front-page news for more than a year, particularly after the press received leaked copies of the FBI surveillance tape of DeLorean’s final meeting with “Vicenza” and “Benedict” prior to his arrest, which showed DeLorean hefting a packet of cocaine and declaring it “better than gold.”
The DeLorean case generated endless jokes and tabloid gossip and DeLorean’s newfound notoriety spawned a series of magazine stories and unauthorized biographies that painted his past business dealings in a very negative light. Even his much-publicized embrace of born-again Christianity — the product, he said, of a jailhouse epiphany — did little to salvage his reputation.
DeLorean was tried in a Los Angeles federal court in the summer of 1984. He never took the stand during the 62-day trial. Defense attorney Howard Weitzman told the jury that not only was DeLorean not guilty, federal agents had lied to him and tricked him to maneuver him into an incriminating position on the word of an informant who by his own admission had cooperated with the sting at least partly in order to avoid prison time. Particularly damaging to the government’s case was federal agents’ admission that they had shown DeLorean the cocaine (which they, not he, had brought to the hotel room) specifically to elicit his reaction for the surveillance tape.
On August 16, the jury acquitted DeLorean of all charges. Although some jurors expressed doubts about DeLorean’s guilt or innocence, Judge Robert Takasugi had instructed them to find DeLorean not guilty if they believed he had been entrapped, which the panel unanimously agreed he had been.
Although DeLorean was set free, the victory was costly, both personally and financially; Christina Ferrare filed for divorce after the trial was over, requesting custody of their two children.
DEAD MEN TELL NO TALES
Despite his acquittal, DeLorean’s legal problems were far from over. Shortly after shutting down DMC Ltd. in October 1982, the British receivers began sorting through the company’s labyrinthine financial records, looking for evidence of financial impropriety.
The receivers found that DeLorean’s 1978 deal with Colin Chapman for the re-engineering of the DMC-12 had called for Lotus to be paid through a Geneva-based holding company called GPD Services, allegedly run by two of Chapman’s longtime friends. DeLorean had transferred $17.65 million to GPD, $5.1 million from DMC Ltd., the rest from one of his U.S. research partnerships. When the receivers investigated, however, they reported that none of those funds had gone to Lotus and that Lotus had billed DMC Ltd. directly for for its engineering services, which totaled about $23 million. The receivers claimed that the GPD money had simply disappeared.
After DMC of America filed for Chapter 11, its creditors appointed a committee to investigate further. During the course of that investigation, the committee, led by attorney Malcolm Schade, representing the British government, reported that about half the missing GPD funds had eventually ended up in one of DeLorean’s personal accounts, where it was used to finance the purchase of a Utah-based snowplow company called Logan Manufacturing. The remaining GPD money was never accounted for. Schade alleged that the GPD deal was only one facet of a systematic effort to divert DMC funds to unrelated business ventures.
In 1985, federal prosecutors in Detroit charged DeLorean with fraud, tax evasion, and racketeering. Northern Ireland’s Department of Economic Development (later renamed the Department of Enterprise, Trade and Investment) also sued the accounting firm Arthur Andersen, which had audited DMC Ltd.’s books, for not reporting the questionable transactions.
At DeLorean’s trial in October 1986, attorney Howard Weitzman admitted that his client had received the money from GPD, but insisted that it was a legitimate personal loan from Colin Chapman. DeLorean denied any knowledge of fraud or of the fate of the missing money. Since Chapman had died of a heart attack in December 1982, the prosecution was unable to disprove or discredit DeLorean’s account and DeLorean was acquitted two months later.
The British government was not satisfied with that verdict and Scotland Yard’s Special Fraud Office continued its own investigation. In June 1989, British police arrested former Lotus managing director Fred Bushell, who later pleaded guilty to fraud charges. The crown also filed charges against DeLorean, but his attorneys successfully resisted all attempts to extradite him.
Although the DeLorean Motor Company was now defunct, the DMC-12’s finest hour arrived in July 1985 with the premiere of the popular science fiction film Back to the Future. The film’s DeLorean, converted into a nuclear-powered time machine by Dr. Emmett Brown (played by actor Christopher Lloyd), became a cinematic icon, also appearing in the film’s two sequels, a 26-episode Saturday morning cartoon show, and later a theme park ride. The Back to the Future franchise did much to restore the tarnished image of the DMC-12. Shortly after the original film’s release, John DeLorean sent director/writer Robert Zemeckis and screenwriter Bob Gale an earnest thank-you letter.
The film helped more than DeLorean’s name recognition; the licensing fees he earned from toy versions of the movie car helped to pay his mounting legal bills. Aside from the criminal charges, DeLorean was also faced with a host of civil lawsuits, including one filed by his brother Charles, a former DMC dealer. DeLorean always came out on top, but the constant legal battles were expensive. One of DeLorean’s attorneys, Mayer Morganroth, later sued DeLorean for $4 million in unpaid legal fees.
His personal finances drained, DeLorean filed for bankruptcy in 1999. Most of his assets were auctioned off by the court. He tried various other business ventures, but his remaining legal bills ate up most of the profits. A plan to build a lightweight sports car in partnership with aviation entrepreneur Burt Rutan came to nothing.
DeLorean died on March 19, 2005, at the age of 80. He was buried in blue jeans and a black motorcycle jacket, playing the rebel to the end.