It was the automotive story for almost a decade: former GM superstar John DeLorean had set out to build his own high-tech sports car, only to end up in handcuffs. This week, we present the complete saga of the DeLorean Motor Company and the DeLorean DMC-12, a strange tale of grand ambition, political intrigue, and cocaine.
JOHN DELOREAN: THE METEOR FROM PONTIAC
John Z. DeLorean’s 12½-year career at Pontiac has become the stuff of legend. He joined the division as director of advanced engineering in 1956, playing a key role in that division’s rebirth under Semon “Bunkie” Knudsen and Elliot (Pete) Estes. DeLorean became assistant chief engineer in 1959 and chief engineer two years later, leading the development of the unusual “rope-drive” Tempest, Pontiac’s novel OHC six, and the immortal GTO, along with an impressive array of patents and technical innovations.
By the time DeLorean became the division’s general manager in 1965, Pontiac led the domestic industry in engineering, styling, and merchandising. Nearly all of the division’s many successes, from the sporty Firebird to the stylish Grand Prix, bore DeLorean’s fingerprints.
Along the way, DeLorean had become a favorite of the automotive press. Tall (6’4″/192 cm), lanky, and athletic, he was a striking figure, with an ever-fashionable wardrobe and looks that were variously compared to Tyrone Power and Tom Jones. In a company known for gray flannel suits and stolid Republican values, he was a bit of a bad boy: more outspoken than was customary for a Detroit executive, often called on the carpet for some minor breach of corporate protocols, and raising conservative eyebrows by driving expensive foreign sports cars and dating (and eventually marrying) models and actresses half his age. In short, he was perhaps the ultimate fantasy figure for every underpaid automotive hack or working-class car nut in America.
Whatever DeLorean’s conflicts with GM’s conservative upper management — and there were many — no one could say the corporation didn’t reward results. DeLorean was only 40 when he became a GM vice president, the youngest general manager in the corporation’s history. Less than four years later, he was promoted to run Chevrolet, the largest and most important of GM’s automotive divisions. Three years after that, he became a group vice president, responsible for the entire car and truck group, with salary and bonuses totaling $650,000 a year and a $25,000 annual expense account. There was even talk that he would succeed Ed Cole as president of the corporation.
In April 1973, seemingly at the pinnacle of his success, DeLorean resigned. His own explanation was that he quit, frustrated with GM’s monotonous products and insular corporate culture. Afterward, there were rumors that his departure had not been entirely voluntary, but none of these whispered allegations was ever substantiated. The industry and the motoring press watched DeLorean’s exit with great interest, eager to see what he would do next.
By his own admission, DeLorean didn’t need to do anything. He was still drawing six-figure compensation from GM in the form of deferred bonuses and consulting fees and he had enough assets to maintain a comfortable lifestyle for himself, his adoptive son, and new wife Cristina Ferrare indefinitely, without ever having to work again. However, DeLorean was still relatively young and no one expected him to remain idle for long.
DeLorean spent a year as president of the National Alliance of Businessmen and made vague noises about developing a line of travel trailers. By early 1974, however, his thoughts were turning back to the auto industry and the idea of developing a car of his own.
THE ETHICAL SPORTS CAR
Given DeLorean’s tastes in automobiles, which ran to the likes of the Maserati Ghibli, it was inevitable that he would set out to build his own sports car. He saw a viable niche between the Chevrolet Corvette and the Porsche 911: expensive enough to be profitable at small volumes, but not so expensive as to compete directly with the high-end European exotics. DeLorean had tried several times to launch a new sports car at GM, first with the Pontiac Banshee (discussed in our articles on the Pontiac Fiero and OHC six), then with Chevrolet’s ill-fated mid-engine Corvette. On his own, he would finally have his chance.
The first problem was that his exit agreement included a non-compete clause. DeLorean apparently hoped that GM wouldn’t consider an expensive, limited-production sports car to be a threat to their business, but as soon as he began talking to dealers, GM terminated his bonus payments. In response, DeLorean commissioned Business Week editor J. Patrick Wright to co-author a scathing tell-all memoir, entitled On a Clear Day You Can See General Motors: John Z. DeLorean’s Look Inside the Automotive Giant.
In the past, DeLorean’s public statements had often been characterized by a curious ambivalence. He would be frank and impolitic in one breath and in the next would studiously uphold the corporate party line. Now, he was positioning himself as the ultimate insider rebel, challenging GM on everything from its minority hiring policies to its attitude toward safety. Among other things, his book would include a condemnation of the controversial Chevrolet Corvair that would have gladdened the heart of Ralph Nader. DeLorean got cold feet about the book shortly after its completion in mid-1975, but Wright finally opted to publish it himself.
If DeLorean was to be the consummate foe of Detroit hypocrisy and shortsightedness, his car would have to be the perfect exponent of DeLorean’s purported values. It would be sporty, since DeLorean’s reputation had been built on sporty cars, but it would also be rationally sized, durable, fuel-efficient, and safe — the thinking man’s Supercar for the post-OPEC age. DeLorean called it an “ethical sports car.”
To engineer his new car, DeLorean hired a former colleague from Pontiac, Bill Collins, then leading the development of GM’s downsized 1977 full-size cars. For the exterior styling, DeLorean turned to Giorgetto Giugiaro’s Italdesign, whose resume included the Maserati Bora and Merak, the Volkswagen Golf and Scirocco, and the Lotus Esprit. DeLorean specified that the car should have a mid-mounted engine, a plastic body, and stainless steel exterior panels. A target weight of only 2,200 lb (1,000 kg) would allow both sports-car performance and economy-car fuel economy. Despite its lightweight construction, the new car would have neatly integrated 10 mph (16 km/h) bumpers, with a bank of airbags providing 40 mph (64 km/h) barrier crash protection, far better than federal law required. The body would even be impervious to rust.
Early on, DeLorean called the new car the DSV, DeLorean Safety Vehicle, in part to secure an investment from the insurance company Allstate. The commercial failure of the Bricklin Safety Vehicle (SV-1) led him to deemphasize the safety aspect and by 1976, the car had been rechristened the DeLorean DMC-12.
THE BIRTH OF DMC
Although DeLorean was by most standards a wealthy man, his own fortune was far short of what he would need to launch even a low-production sports car. To get his new car off the ground, he would need considerable support from dealers, suppliers, and investors.
To that end, his greatest assets were his reputation and his singular charisma. DeLorean once claimed that he had always been an introvert, but in his early twenties, he had decided to bolster his people skills with a stint as a door-to-door insurance salesman. By the seventies, he was a formidable salesman of considerable personal magnetism. Some skeptical observers, like Irish politician Des O’Malley, found DeLorean’s charm more suspicious than ingratiating, but even people who were predisposed to dislike him (like inventor Pete Avery, who alleged that DeLorean cheated him out of thousands of dollars in patent royalties) found him hard to resist.
With DeLorean’s impressive resume and persuasive powers, he had little difficulty finding wealthy backers. He sweetened the deal with canny financial maneuvering. Although the DeLorean Motor Company was incorporated in 1975, much of DeLorean’s fundraising was conducted through a convoluted array of holding companies, including the John Z. DeLorean Corporation, the DeLorean Sports Car Partnership, the DeLorean Manufacturing Company, and the DeLorean Research Limited Partnership. The main purpose of these corporations was to maximize the potential tax benefits for investors, but the array of different companies made a thorough analysis of DeLorean’s financial holdings a daunting proposition. To the end of his life, DeLorean maintained that it was all perfectly legal, but the complex paper trail would add fuel to later charges of financial malfeasance.
THE PROTOTYPE DELOREAN DMC-12
By October 1976, DeLorean and Collins had a running prototype, built by Triad Manufacturing Co. The prototype was cosmetically finished, but it was far from production spec. The chassis was based on that of the Fiat X1/9, with the engine and transaxle borrowed from a Citroën CX and a front suspension cobbled together from Ford Pinto/Mustang II parts. Some features, like the promised airbags, existed only on paper and the Elastic Reservoir Molding (ERM) process that was supposed to form the frameless plastic body structure was still just a talking point.
DeLorean allowed the press to see and sit in the prototype in early 1977, but he refused to let them drive it, saying it wouldn’t be representative. It didn’t matter — DeLorean’s name was still golden and the gullwing prototype made the cover of nearly every car magazine in the world.
Although the Triad prototype had a four-cylinder Citroën engine, DeLorean and Collins wanted a V6 for the production car. (Early talk of using the two-rotor Comotor Wankel from the Citroën GS Birotor died with Citroën’s bankruptcy in 1974.) They considered Ford’s Cologne V6, used in the Ford Capri, Granada, and Mustang II, but they ultimately settled on the new PRV engine, a 90-degree V6 developed as a joint venture between Peugeot, Renault, and Volvo. The 2,664 cc (163 cu. in.) PRV engine was more expensive than the Cologne V6, but was lighter and more powerful. Since Renault had more capacity than they could use, they were also more open to a deal. Furthermore, Renault and Volvo already had plans to federalize the PRV engine, which would allow DMC some money-saving shortcuts in the EPA certification process.
The adoption of the PRV engine imposed the first of many compromises to the original design. Since the DMC-12 was going to use a Renault engine, it was expedient to use Renault transaxles as well: the five-speed manual and three-speed automatic units from the Renault 30. While these were far less expensive than developing a bespoke transmission, their use necessitated mounting the (longitudinal) engine behind the rear axle rather than in front of it, making the DMC-12 a rear-engine car. (Renault did much the same thing with its rear-engine Alpine A310 sports car in 1976.) DeLorean dismissed the switch from a mid-engine to a rear-engine layout as trivial, but the move raised some eyebrows, especially after his attack on the handling of the rear-engine Corvair became public.
Although DeLorean and Collins had yet to install the V6 in an actual car, they didn’t hesitate to offer projected performance figures: 0-60 mph (0-97 km/h) in a bit under 8 seconds, a top speed of 130 mph (209 km/h), and EPA city/highway mileage of 22/29 (25.2 mpg combined, 9.3 L/100 km). Those figures promised to make the DMC-12 almost as fast as a 12-cylinder Jaguar XJ-S with about half the Jaguar’s thirst.
DeLorean optimistically proclaimed that production would begin by the fall of 1978 and he had already hired Dick Brown (who had previously established Mazda’s U.S. distribution network) to line up dealer franchises. All DeLorean needed to start building the DMC-12 was a factory, workers, and another $87 million to pay for it all.
A MODEST PROPOSAL
DeLorean had already lined up some financing and was confident that he could find more, but it would not be nearly enough. He also recognized that he could not expect to raise the rest of the money through stock offerings alone. The target for DMC’s initial public offering, floated in mid-1977, was 2 million shares at a starting price of $5 per share, still insufficient.
However, DeLorean soon discovered an intriguing alternative. The economic travails of the seventies had led governments in many areas to offer substantial incentives to industry in hopes of creating local jobs. Many of those incentives were in the form of tax credits, but some governments were willing to make direct equity investments. If DeLorean played his cards right, it might be possible to build his factory with taxpayer money.
DMC made overtures to various state and local governments in the U.S. as well as the governments of Spain and Portugal, but none offered the kind of investment DeLorean was looking for. In early 1977, he learned that the Commonwealth of Puerto Rico was very interested in establishing an automotive plant outside Aguadilla, on the site of the former Ramey Air Force Base. With the support of the U.S. State Department, the Puerto Rican government put together a cash incentive package worth some $64.8 million, enough to put DMC’s initial funding targets within reach.
Although the Puerto Rican deal sounded very promising, the negotiations dragged on into 1978. During that time, DeLorean sought to hedge his bets by making a similar pitch to the Republic of Ireland’s Industrial Development Authority (IDA). Although the IDA ultimately rejected his proposal, his trip was not in vain. A local attorney suggested to DeLorean that there might be a richer opportunity in British-controlled Northern Ireland.
Northern Ireland was then in the throes of the Troubles — an almost comically banal euphemism for a decade of riots, bombings, and assassinations that had left more than 2,000 dead. Roy Mason, the Labour Party’s Secretary of State for Northern Ireland, responded by jailing hundreds of suspected insurgents, but a devastated economy and harrowing unemployment provided a steady stream of recruits for the Provisional Irish Republican Army. Mason concluded that the only effective way to undermine support for the IRA was to improve the local economy, which meant creating new jobs.
In the spring of 1978, DeLorean approached the Northern Ireland Development Agency (NIDA), proposing the establishment of a DMC factory in Ulster that would create at least 2,000 jobs in the region. The factory would be a symbol of hope for the troubled Belfast area and potentially the beginning of a new industrial base. NIDA chairman Sir Kenneth Cork was skeptical, but Roy Mason and Northern Ireland Minister of State Don Concannon supported DeLorean’s proposal and a deal was reached in only 46 days.
In late July 1978, the British government agreed to give DMC £16.5 million (about $31.7 million) in loans and £22 million (about $42.2 million) in grants, plus an additional £17.8 million (about $34.2 million) as an equity investment in a new holding company, DeLorean Motor Cars Ltd. The holding company’s principal asset would be the new factory, to be built on a 72-acre (29-hectare) marshland in the village of Dunmurry in West Belfast. The package brought DMC’s total capitalization to a claimed $156 million.
The DMC deal sat ill with Britain’s Conservative Party. The previous Labour government’s nationalization of the troubled British Leyland auto consortium a few years earlier had been a disaster, leaving the Conservative opposition extremely wary of direct subsidies to industry. Nonetheless, the violence in Northern Ireland was an ongoing political liability and the Tories were hesitant to block a deal that seemed to offer some hope. Whether they liked it or not, the British were now stuck with DeLorean.
LOTUS AND DELOREAN
With the British investment, DMC’s future looked bright, but the car itself was still not ready. To the frustration of Bill Collins, the second prototype, built by Detroit’s Creative Industries, had been a poorly finished mess. With groundbreaking on the new factory slated for October 1978, Collins admitted that DMC needed outside engineering help.
Collins and DeLorean approached Porsche and BMW, but both companies wanted far more money and more time than DMC could afford. DeLorean then turned to Colin Chapman of England’s Lotus Group, which had considerable experience with plastic bodies. That fall, Chapman signed a contract for Lotus to re-engineer the DMC-12 for production.
Bill Collins left the company for AMC in March 1979, frustrated that his suggestions for improving Lotus’s engineering efforts, which he considered slapdash, were being ignored. To replace him, DeLorean appointed Mike Loasby of Aston Martin as director of engineering and hired former Chrysler president Gene Cafiero as DMC’s president and CEO.
The DMC-12 project was a major undertaking for Lotus, involving more than half its modest staff. Since time was short, Lotus engineers discarded much of Collins’ original design, substituting features from the contemporary Lotus Esprit. The biggest casualty was the ERM plastic body, which was replaced by a two-piece fiberglass structure using Colin Chapman’s patented Vacuum Assisted Resin Injection (VARI) process, licensed from Lotus at considerable cost. Because fiberglass lacked the strength and rigidity of ERM, Lotus was obliged to add a steel backbone frame, similar to that of the Esprit. Discarded in the process were the long-promised 10 mph (16 km/h) bumpers and airbags. The latter would have posed a great challenge; at the time, few off-the-shelf airbag systems were available and neither Lotus nor DMC had the resources to design and test their own.
Other than the Giugiaro styling, the main element carried over from the original design was the PRV engine. Renault had decided not to federalize the R30, but Volvo had introduced a U.S. version of the 2,664 cc (163 cu. in.) PRV V6 in the Volvo 260 Series in 1976 and federalized the larger 2,849 cc (174 cu. in.) engine for 1980. The engines used by DMC were of a hybrid specification, combining the cylinder heads and Bosch K-Jetronic mechanical fuel injection of U.S.-market Volvos with the bottom end of the Alpine A310 version. Since the DMC-12 was lighter than the Volvo 260 Series and the DMC engine was tuned identically, the EPA allowed DMC to skip the otherwise-mandatory 50,000-mile (81,000-km) durability test, which Volvo had already successfully completed.
The DMC-12’s engine had the same output as its Franco-Swedish cousins: 130 hp (97 kW) and 162 lb-ft (220 N-m) of torque. That was about what Bill Collins had anticipated, but Lotus’s structural redesign had left the production car some 500 lb (227 kg) heavier than originally planned. The DMC-12 still met its EPA mileage targets, but the extra weight and taller gearing would take their toll on performance.
Although the Dunmurry factory was finished by early summer 1980, the work at Lotus ran months behind schedule and DMC Ltd. eventually had to finish some of the contracted work itself. Those delays left DMC painfully short of cash, so in late 1980, DeLorean persuaded the British government to put in an additional £24 million (about $53 million) in development grants and loan guarantees.
Pilot production began in December and the first true production cars rolled off the line on January 21, 1981. It was none too soon; despite the last-minute infusion of government money, DMC entered 1981 with an $18.6 million shortfall, which was actually more than DeLorean had estimated when he asked the British for the additional money.
Still, the excitement surrounding the new car was reaching its peak. The motoring press had faithfully reported each new development, hoping for a chance to drive the car they’d heard so much about. Dick Brown had lined up more than 340 U.S. dealerships, many of whom were accepting deposits of up to $5,000. Celebrity investors like Johnny Carson and Sammy Davis Jr. were waiting eagerly to collect their promised early-production cars.
Spirits were also high in Ulster. Although many employees at Dunmurry were new to the auto business, they were enthusiastic and dedicated. Absenteeism was very low and despite the fact that the plant employed nearly equal numbers of Catholics and Protestants, internal strife was reportedly minimal. DMC Ltd. could not paper over the conflicts outside the factory walls — for example, the death of hunger-striking political prisoner Bobby Sands in May may have led to an apparently accidental firebombing of the factory — but DMC employees and many local residents regarded the operation with pride.
Sadly, the early cars didn’t live up to the hype. The factory had planned an ambitious and rigorous testing schedule, but by spring, there was too much pressure to bring the car to market. Build quality of the first few hundred cars off the line was embarrassingly shoddy; most had to be extensively rebuilt in the U.S. at great cost. The fact that many went to prominent investors only made matters worse.
The American press tried to be generous, acknowledging but excusing the poor build quality while praising the DMC-12’s styling and interior design. Reactions to the DeLorean’s handling were mixed. Despite its pronounced rear weight bias, the fat rear tires mostly eliminated oversteer and the DMC-12 rode and handled well in relaxed driving. Pushed too hard, however, it could feel twitchy and unsettled, suggesting excessive deflection of either the suspension bushings, the mountings joining the fiberglass body and steel frame, or perhaps both.
The greatest disappointment was straight-line performance. With the standard five-speed, DMC claimed 0-60 mph (0-97 km/h) in 8.5 seconds, but most testers found that figure optimistic by a least a second. The factory’s claim of a 125 mph (201 km/h) top speed was generous by perhaps 6-7 mph (10-11 km/h) and top-gear acceleration was leisurely.
The DeLorean’s real-world performance was hardly awful by the standards of 1981, but it lagged well behind other GTs in the DMC-12’s price class. By 1981, inflation and exchange rate fluctuations had pushed the DMC-12’s U.S. retail price to $25,500, more than twice the original target. The DeLorean was still cheaper than a Porsche 911SC, albeit not by much, but was fully 25% more expensive than a Corvette, Datsun 280-ZX Turbo, or Porsche 924 Turbo, all of which were significantly faster. DeLorean dismissed such concerns, saying the typical buyer was more concerned with cruising in style than drag racing. He also promised that a future twin-turbo version would put the DMC-12 firmly in the Supercar category.
Although DeLorean remained buoyantly optimistic throughout 1981, saying the company would soon be selling 30,000 cars a year, DMC was losing money at an alarming rate. Fixing the early build problems cost more than $2.5 million while warranty claims amounted to another $1.5 million. DMC was also obliged to pay the British government £185 (nearly $400) for each car sold, cutting into the company’s per-car margins. DeLorean, meanwhile, was living as lavishly as ever with an annual salary of $500,000 and a generous expense account.
Some observers, including DeLorean’s British office manager, Marion Gibson, wondered how the company had burned through so much money so quickly. In October 1981, Gibson went first to Tory MP Sir Nicholas Winterton and then the British tabloids with allegations that DeLorean was diverting company funds for his own use, but a brief police investigation found nothing.
DeLorean’s solution to the company’s cash deficit was to hire hundreds more workers and double production in hopes of boosting revenues. Customers, however, were becoming scarce. The American economy took a turn for the worse late in the year, thanks in part to an unusually severe winter. Most of the early speculators and wealthy gadflies were now sated. DMC dealers were left with large stockpiles of unsold cars and banks began to cancel dealers’ floor-plan financing.
All the while, the factory kept churning out more cars. With no customers, DeLorean Motor Company of America simply stopped paying for cars. By the end of the year, the American company owed DMC Ltd. around $10 million for cars already delivered, leaving the Belfast subsidiary unable to pay its own suppliers.
DeLorean pressed the British for even more money: another £35 million (about $70 million). Since the Conservative Thatcher government was understandably nervous about the £77 million-odd (approximately $154 million) it had already invested, Secretary of State for Northern Ireland Jim Prior hired Sir Kenneth Cork of Coopers & Lybrand — who had opposed the DeLorean deal as chairman of the NIDA — to conduct an extensive study of DMC’s operations. Sir Kenneth’s report advised against offering further credit without a complete reorganization.
By February 1982, DMC was more than $800,000 in arrears on its interest payments and suppliers like Renault were making threatening noises. On February 19, the British forced DMC Ltd. into receivership, appointing Sir Kenneth and Paul Shewell as the official receivers. DeLorean was no longer in control of DMC Ltd.’s operations. Unless he could come up with another $20 million to pay off its outstanding debts, the company was doomed.
The receivers agreed to keep the Dunmurry factory operating until May 31, albeit with a dramatically reduced staff. There were no new cars, but workers completed the remaining half-assembled vehicles to facilitate liquidation.
Meanwhile, DMC executives were beginning to jump ship. Gene Cafiero was already gone and Dick Brown was fired in March. DeLorean brought in his old business partner Roy Nesseth to clean house and keep creditors at bay; DMC of America’s offices in Irvine, California, had trouble even paying its utility bills.
DeLorean spent the spring and summer of 1982 playing for time. Coopers & Lybrand would not allow him to resume production without an earnest payment of at least $10 million, which DeLorean didn’t have. Finally, in early October, he offered the receivers a deal: DeLorean would invest $10 million of his own money — actually a short-term loan from Virginia-based Financial Services Inc. — and the investment firm Minet Finance Management would then loan him an additional $100 million to cover all the outstanding debts and purchase the DMC Ltd. factory outright.
Sir Kenneth Cork, who was neither charmed nor intimidated by DeLorean and had become increasingly annoyed with what he perceived as DeLorean’s stalling tactics, was skeptical of this convoluted scheme. However, Sir Kenneth said it would be acceptable provided it was completed by October 20.
DeLorean didn’t make it. In the evening of October 19, 1982, he was arrested in a Los Angeles hotel room for conspiracy to distribute more than $24 million of cocaine.
Upon learning of the arrest, Sir Kenneth contacted DeLorean’s New York office and found that the loan transaction had not been completed; with DeLorean behind bars, there seemed little chance that it would be. The receivers immediately shut down DMC Ltd., sending its 35 remaining employees home. DMC of America filed for Chapter 11 bankruptcy protection six days later. In November, Consolidated International, the parent company of the Big Lots discount store chain, purchased many of DMC’s unsold cars along with the distribution rights. Some of the remaining cars were re-serialed and sold as 1983 models, but the DeLorean Motor Company was finished. John DeLorean’s troubles, however, were only beginning.
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.
BACK TO THE FUTURE
In 1997, Arthur Andersen settled with the British government for $35 million, followed two years later by a $27.75 million settlement with other DMC creditors. With that accomplished, the DeLorean Motor Company’s bankruptcy proceedings were belatedly settled in 2000.
Former Lotus executive Fred Bushell died on January 14, 2006, at the age of 78. Although he ultimately served more than three years in prison, Bushell shed no light on the fate of the missing GPD money. With Chapman, DeLorean, and Bushell all dead, the truth may never be known.
Sources vary as to exactly how many DeLorean DMC-12s were built; the total was something between 8,500 and 8,900. A remarkable number of those cars survive today. As DeLorean had planned, the DMC-12’s body does not rust and once the build problems were sorted, the car proved to be reasonably reliable. The overproduction of mid-1981 also proved an unexpected blessing, ensuring a robust supply of spare parts.
In 1997, Houston, Texas mechanic Stephen Wynne bought the remaining parts inventory along with the original engineering diagrams and the rights to the DMC name and logo. Initially, Wynne’s revived DeLorean Motor Company offered spares and restoration services, but in late 2008, the company also began selling new-build DMC-12s assembled from a combination of new and original parts.
REQUIEM FOR A REBEL
We suspect it will be some time before history decides exactly what to make of John Zachary DeLorean. When he died in 2005, the British press showed little mercy, characterizing him as a slick con artist and noting that when he died, the crown still had an outstanding warrant for his arrest on fraud charges. The American press was kinder, remembering the heyday of Pontiac and the GTO first, the drug bust and the collapse of DMC second.
It’s worth noting that for all the accusations and allegations, John DeLorean was never convicted of any of the crimes of which he was charged and accused. He always had a ready explanation for every setback and he never admitted any wrongdoing. Moreover, DeLorean’s achievements were as spectacular as his eventual downfall. To successfully launch a new car company is no small feat. Even Henry Kaiser, one of the greatest industrialists of the 20th century, fell short in that difficult arena, but DeLorean came remarkably close to pulling it off.
If the DMC-12 was not a great car, it was at least a workable one. Bill Collins, who had been very critical of its re-engineering, eventually admitted that Lotus had done a surprisingly good job. According to the late Sir Kenneth Cork, Coopers & Lybrand’s 1982 study concluded that there was a sustainable market for the DMC-12, albeit not as large as DeLorean had hoped. Even Malcolm Schade thought the company could have survived had it not been for the financial improprieties.
DeLorean always said that the DMC-12 was just the beginning. Aside from the mooted twin-turbo version, he had been toying with ideas for a follow-on luxury sedan since at least 1979. The maximum capacity of the Dunmurry factory was 300,000 units a year, BMW-rivaling volume in those days, and the mid-eighties were a boom time for luxury cars. If DMC had weathered the storm of 1981–82, DeLorean’s larger ambitions might not have been so far-fetched.
Perhaps that is the ultimate tragedy of DeLorean — the car, the company, and the man: not how far they fell, but how much higher they could have climbed.
The author would like to thank Kathy Adelson of the GM Media Archive, which supplied the GM file photo of John DeLorean; Dave Parry, for the use of his photo; the docents at the Automobile Driving Museum in El Segundo, California; and Tamir Ardon, whose extensive study of DeLorean’s life and career provided an invaluable starting point for research for this article.
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NOTES ON SOURCES
Our sources for the life and career of John DeLorean, the history of DMC, and the DMC-12 included Kurt Anderson, Barbara B. Dolan, and Joseph Pilcher, “A Life in the Fast Lane,” TIME 1 November 1982, pp. 34-36; Jason Barlow, “Grand Theft Auto,” CAR June 2005, pp. 68-73; the the BBC4 documentary Car Crash: The DeLorean Story (producer: Jezz Wright, director: Paul McGuigan, United Kingdom: Mint Productions/BBC4, May 2004); Gene Booth, “Man in the Tiger Suit,” Car Life, August 1965, pp. 13-15, 26; Greg Gorman, “Howard L. Weitzman,” Emily Couric, ed., The Trial Lawyers: The Nation’s Top Litigators Tell How They Win (New York: St. Martin’s Press, 1988), pp. 79-113; Michael Daly, “The Real De Lorean Story,” New York Magazine 8 November 1982, pp. 30-38; Remarks of Bill Collins, “DMCTalk Interview: Bill Collins” (posted by “Ilan,” 12 April 2008, DMCTalk.com, www.dmctalk. com/ showthread.php?t=8692, accessed 27 July 2010); Sir Kenneth Cork, Cork on Cork (Basingstoke, Hants: Macmillan, 1988); Mike Covello, Standard Catalog of Imported Cars 1946-2002 (Iola, WI: Krause Publications, 2001); Jeff Daniels, “DeLorean,” Autocar 18 October 1977, pp. 23-24; David E. Davis, Jr., “Road Test: Lotus Esprit: Rediscovering the back-roads berserker,” Car and Driver June 1977, pp. 72-81; “DeLorean: Cutting through the hype to discover an exciting GT car,” Road & Track December 1981, pp. 46-50; “De Lorean’s aim: an Irish BMW,” Autocar 14 March 1981, p. 23; “DeLorean Sale Cleared,” The New York Times November 17, 1982; John DeLorean, “Vega 2300,” Motor Trend August 1970, pp. 30-32, 80; John S. DeMott, Bonnie Angelo, and Peter Stoler, “Finished: De Lorean Incorporated,” TIME 1 November 1982, pp. 37-38; “Failed car maker DeLorean dies,” BBC News, 21 March 2005, news.bbc. co.uk, accessed 5 August 2010); William Flanagan, “The Dream Car of John De Lorean,” Esquire 19 June 1979, pp. 74-81; Robert Flowers, “The Women-and-Wheels Life of Johnny DeLorean,” For Men Only January 1969, pp. 32-33, 67-68; Richard Gadeselli, “DeLorean: the man who fell to earth,” Autocar & Motor 21 March 1990, pp. 46-51; Richard Gadeselli, “DeLorean: Living the Dream,” Performance Car January 1984, pp. 43-47; PJ Grady, “Mike Loasby” and “William T. Collins,” PJ Grady Europe, n.d., www.pjgrady. co.uk, accessed 29 July 2010; Larry Griffin, “De Lorean versus the World,” Car and Driver, December 1981, pp. 39-47, reprinted in Car and Driver on Datsun Z, 1600& 2000 1966-84 (Brooklands Books), ed. R.M. Clarke (Cobham, England: Brooklands Books Ltd., ca. 1986), pp. 77-83; William Haddad, Hard Driving: My Years with John DeLorean (New York: Random House, 1985); David Henry, “Everybody loves a bargain,” Forbes 17 November 1986; John Hilton, “The Decline and Fall of the De Lorean Dream,” Car and Driver July 1982, pp. 63-70; Richard Hughes, “DeLorean: Belfast’s Concorde?” CAR February 1979, pp. 32-35; “John DeLorean Builds a Sports Car: The DMC-12,” Car and Driver July 1977, pp. 37-46; “John DeLorean’s DSV,” Road & Track December 1975, p. 72; “John DeLorean: US businessman whose plans for a futuristic car seduced the Government before failing spectacularly,” The Times 22 March 2005, www.timesonline. co.uk, accessed 25 July 2010); Lucy Kaylin, “Wings of Desire,” GQ September 2000, pp. 320-324; Mike Knepper, “I Remember John Z.,” Car and Driver June 1993, pp. 113-116; Mike Knepper, “Busted Dream: 1982 De Lorean,” Special Interest Autos #147 (May-June 1995), pp. 24-31; “Labour’s Arthur Andersen links,” BBC News, 30 January 2002, news.bbc. co.uk, accessed 10 August 2010); John Lamm, “Got a Spare $90 Million?” Road & Track July 1977, p. 44; Robert Lamm, “DeLorean Sports Car Chronology,” De Lorean: Stainless Steel Illusion (Osceola, WI: Motorbooks, International, 1983), p. 21; Ed Lapham, “DeLorean revisited: AutoWeek drives latest version of DMC-12 at Lotus” and “DeLorean ready for production,” AutoWeek 11 February 1980, pp. 8-9; and “Unraveled Dream,” AutoWeek 19 October 1982, pp. 25-31 Aaron Latham, “Anatomy of a Sting: John DeLorean tells his story,” Rolling Stone 17 March 1983, pp. 18-28; L’Editrice Dell’Automobile LEA, World Cars 1979 (Pelham, NY: Herald Books, 1979); World Cars 1981 (Pelham, NY: Herald Books, 1981); World Cars 1984 (Pelham, NY: Herald Books, 1984); and World Cars 1985 (Pelham, NY: Herald Books, 1985); George D. Levy, “DeLorean Sports Car: John Z’s creation finally arrives,” AutoWeek 20 April 1981, pp. 12-13; Karl Ludvigsen, “Man on the Move: John DeLorean: He Made the Push Come to Chevy,” Signature November 1972, pp. 37-40; Ed Magnusson, Benjamin W. Cate, Steven Holmes, and Alessandra Stanley, “The Bottom Line: Busted,” TIME 1 November 1982, pp. 30-33; Charles McGrath, “He Pimped His Ride,” New York Times Style Magazine, 18 September 2005, www.nytimes. com, accessed 25 July 2010); J. Bruce McWilliams, “A Job for Jesus,” Car and Driver October 1982, pp. 95-98; “NIAO: Press Releases – DeLorean: The Recovery of Public Funds” and “DeLorean: The Recovery of Public Funds (Report by the Comptroller and Auditor General, HC287),” Northern Ireland Audit Office, 12 February 2004, www.niauditoffice. gov.uk, accessed 10 August 2010; Jan P. Norbye and Jim Dunne, Pontiac 1946-1978: The Classic Postwar Years (Osceola, WI: Motorbooks International Publishers & Wholesalers, 1979); Jane O’Reilly and Richard Woodbury, “The Stingers Get Stung,” TIME 27 August 1984, pp. 23-24; “People: Fred Bushell,” GP Encyclopedia, n.d., www.grandprix. com, accessed 25 July 2010; “Reading the Mail,” TIME, 19 October 1981, www.time. com, accessed 24 July 2010; Melody Petersen, “DeLorean Jury Rules Against Arthur Andersen,” New York Times 6 March 1998, www.nytimes. com, accessed 10 August 2010); Christopher Reed, “Obituary: John DeLorean,” The Guardian 21 March 2005, www.guardian. co.uk, accessed 25 July 2010; Robert Scheer, “Playboy Interview: John De Lorean,” Playboy October 1985, pp. 64-72, 134, 158; Michael S. Serrill and Russell Leavitt, “Law: The Case of the Purloined Tapes,” TIME 7 November 1983, p. 82; David C. Smith, “Launching a Car Company: Finances are the Hard Part,” Car and Driver Vol. 23, No. 1 (July 1977), p. 40; Mark Starr and Martin Kasindorf, “DeLorean: Not Guilty,” Newsweek 27 August 1984, pp. 22-24, and “Justice: De Lorean’s Day in Court,” Newsweek 12 March 1984, p. 85; Brian Stater, “Dark clouds taint Lotus founder Colin Chapman,” The Telegraph 14 December 2002, www.telegraph. co.uk, accessed 25 July 2010; John W. Styll, “Cristina Ferrare: In God I Trust,” Contemporary Christian Magazine April 1984, pp. 20-25; Tony Swan, “De Lorean: American assessment,” Autocar 13 June 1981, pp. 28-31; Tony Swan, “DeLorean: The American Dream is alive and fighting for survival in Northern Ireland,” Motor Trend May 1981, pp. 85-90; “The DeLorean Dilemma,” Car and Driver July 1981, pp. 64-70; “The DeLorean Saga,” Top Wheels: Exotic Sports & Classic Cars September 1993, pp. 62-66; “The sad tale of John DeLorean,” 23 March 2005, GP Encyclopedia, www.grandprix. com, accessed 25 July 2010; “Trials: The Fat Man’s Song,” TIME 18 June 1984, www.time. com, accessed 10 August 2010; Alan Walker, “The white light of Ulster,” CAR April 1981, pp. 46-49; Paul Wilner, “D-Day,” US 10 October 1983, pp. 62-63; J. Patrick Wright, On a Clear Day You Can See General Motors: John Z. DeLorean’s Look Inside the Automotive Giant (Chicago, IL: Avon Books, 1980); and Brock Yates, “New Kind of Wheel at GM,” Sports Illustrated 15 December 1969, sportsillustrated.cnn. com, accessed 25 July 2010. Many of these articles are indexed on Tamir Ardon’s DeLorean website, www.entermyworld. com.
Information about the DMC-12’s famous movie role came from “Back to the Future (1985),” Internet Movie Database, n.d., www.imdb. com, accessed 31 July 2010, and Bob Gale and Robert Zemeckis, commentary, Back to the Future, writers: Bob Gale and Robert Zemeckis, director: Robert Zemeckis, producers: Neil Canton and Bob Gale, United States: Amblin Entertainment/Universal Pictures, 1985; DVD, Universal Home Video, 2005.
Some additional details on the history of the PRV V6 came from Pertti-Tapio Mäkelä, “The Brief History of the Douvrin PRV V6 Engine” (n.d., The Douvrin PRV V6 Resource Centre, members.fortunecity. com/ douvrinprv/ id20.html, accessed 24 July 2010).
Information about the revived DeLorean Motor Company came from “Car News: New DeLorean – Back to the Past?” Car and Driver August 2007, www.caranddriver. com, accessed 31 July 2010; Marc Noordeloos, “Stephen Wynne, CEO of the DeLorean Motor Company – Q&A,” Automobile February 2009, www.automobilemag. com, accessed 25 July 2010; Robert S. Rodgers, “The New DeLorean Sportscar,” DeLoreanMotorcar.com, 2008, www.deloreanmotorcar. com, accessed 25 July 2010); and Mosi Secret, “DeLorean Lives On,” Houston Press 31 March 2005, www.houstonpress. com, accessed 25 July 2010.
Historical exchange rate data for the dollar and British pound came from Werner Antweiler, “PACIFIC Exchange Rate service, Foreign Currency Units per 1 British Pound, 1948-2007” (2007, fx.sauder.ubc. ca, accessed 2 January 2010). Please note that the dollar/sterling equivalencies presented in the article are approximate, intended for the reader’s general reference. This is an automotive history, not a treatise on currency trading or the history of international exchange rates!