Archive for March, 2010

Authorities: Prius seen near Border Patrol vehicle (AP)

Wednesday, March 17th, 2010 | Finance News

EL CAJON, Calif. – A California Highway Patrol report released Wednesday says an officer responding to a report of a runaway Toyota Prius arrived to find a Border Patrol agent near the driver with lights flashing.

The Border Patrol presence raises the prospect that there were other witnesses, but the report offers few new details and does nothing to clarify wildly divergent explanations from Toyota Motor Corp. and the driver, who says his gas pedal got stuck and sent him to speeds topping 90 mph March 8 on a California freeway.

Toyota has dismissed James Sikes' account, saying its tests show he pressed the gas and brakes rapidly 250 times, the maximum amount of data that the car's self-diagnostic system captures.

CHP Officer Todd Neibert wrote that he approached the Prius from behind to find a Border Patrol agent in an unmarked Chevrolet Tahoe with emergency lights flashing from the rear window.

"It was staying ahead of us and it was later determined that the agent driving the Chevrolet Tahoe was aware of the situation," Neibert wrote.

The report does not say how long the Border Patrol agent, who was not named, was in Sikes' proximity or whether the agent saw anything significant.

The CHP officer does not recall the Border Patrol agent stopping after Sikes safely came to a stop, said CHP spokesman Brian Pennings. He said the CHP had notified the Border Patrol after the driver called 911.

"The CHP is attempting to obtain a statement from the (Border Patrol) agent," Pennings said.

Jerry Conlin, a Border Patrol spokesman, said he had no immediate comment because he was unaware of any agent's involvement.

The CHP report is consistent with what Sikes and the CHP officer told reporters shortly after the incident. Pennings on Monday reaffirmed his agency's view that no evidence has emerged to doubt the driver's account.

"There's no factual information that can discredit Mr. Sikes' statement," he said.

The report was released the same day that investigators from Toyota and the U.S. government inspected a crashed 2005 Prius in a suburb of New York City to see if a black box-like device or its wreckage could point to problems with the brakes or accelerator.

The black box, known as an event data recorder, yielded information on engine speed and pedal position, Toyota spokesman Wade Hoyt said. Investigators were expected to return Thursday.

A housekeeper who was driving the car told police that it sped up on its own as she eased forward down her employer's driveway on March 9 and hit a wall across the street. She was not hurt. Harrison Police Department Capt. Anthony Marraccini said driver error had not been ruled out or indicated.

Hoyt said Toyota will share the results with local police. Marraccini said that any definitive information on the cause of the crash will be released to the public after that.

The California officer's report released Wednesday said he trailed Sikes' Prius at 95 mph on Interstate 8 east of San Diego, and the car slowed to about 50 mph before the officer told the driver over a loudspeaker to hit the floor brake and emergency brake simultaneously.

Sikes, 61, gradually came to an unassisted stop and was not injured.

The lights were on "for a period of time and would turn off, indicating the driver was possibly pumping the brakes," Neibert wrote in his seven-page incident report, which was accompanied by dozens of photos.

"I was within 1/4 mile of the vehicle and could smell the heated brakes which indicated they had been used extensively," it states.

Neibert said he Sikes' Prius was 20 miles from a steep downgrade and sharp left turn.

"If the Prius made it to that location, the ultimate result would have most likely led to a catastrophic ending," the officer wrote.

Sikes later told Neibert he had tried three times to lift the gas pedal with his hand but was unsuccessful, the report states.

The driver was initially reluctant to speak with reporters, but the officer urged him to go to the station to "put the media at ease," according to the report.

"I advised him the media would most likely seek him out if he did not speak to them voluntarily," Neibert wrote.

Toyota has stopped short of saying that Sikes fabricated his story but has said his version of events is inconsistent with its technical findings. Tracy Segal, a company spokeswoman, said she had no immediate comment on the CHP report because she had not received a copy.

The episode was among the highest-profile headaches Toyota has suffered in recent months. It recalled more than 8 million cars and trucks worldwide because gas pedals can become stuck in the down position or be snagged by floor mats. Dozens of Toyota drivers have reported problems even after their cars were supposedly fixed.


Associated Press writers Dan Stumpf and Jim Fitzgerald contributed to this report.


Convicted embezzler given tax break, then arrested (AP)

Wednesday, March 17th, 2010 | Finance News

LANSING, Mich. – A convicted embezzler who snagged a $9.1 million business tax credit from the state of Michigan was arrested Wednesday on a parole violation, a day after he appeared on stage with Gov. Jennifer Granholm as she announced the credits.

RASCO CEO Richard A. Short, 57, was arrested by Department of Corrections officers and state police, Corrections Department spokesman Russ Marlan said.

Authorities say they arrested Short after realizing the company CEO he may have violated his parole by not informing the Corrections Department he had a job. Short owes $96,000 in restitution from fraud convictions, money he should be paying if he's working, Marlan said.

Short shared the stage Tuesday with Gov. Jennifer Granholm as she introduced the leaders of companies awarded $55 million in tax credits. She said RASCO — short for Renewable and Sustainable Companies LLC — planned to invest $18.4 million to establish a new headquarters in Flint.

The company filed articles of organization with the state last June. In it, Short said the company was formed "to engage in any activity within the purposes for which a limited liability company may be formed" under Michigan law. No more detailed purpose was given.

The company hasn't begun receiving the credit.

The Michigan Economic Development Corp. said in a statement Wednesday that it was "embarrassed" by the slip-up and would perform a background check of all company officers before handing out any future tax credits.

The state's economic development arm requires applicants to disclose current, pending or expected legal action that may affect a company's ability to meet its obligations under the tax credit agreement. It said it will now will ask specifically for applicants to disclose any prior felony convictions by senior company executives.

Short was convicted in 2002 of embezzling money from Harding Energy Inc., of Norton Shores and was sentenced to at least two years in prison. He also pleaded guilty in 2002 to earlier fraud charges in Oakland and Genesee counties, according to Corrections Department and state police records.

Short was paroled in April 2004, but was returned to prison the following February for violating his parole with additional fraudulent activities, Marlan said.

He was released on parole again in January 2007. His parole was recently extended to January 2011 because he hadn't repaid the money he owes, Marlan said.

"If he is in fact the CEO of a company and is being paid, that is something we would want to be aware of because we would want to make sure we get some of that money for restitution," Marlan said.

Short did not respond to phone messages left Wednesday before his arrest.

He spoke briefly but eloquently Tuesday about how RASCO would improve the lives of poor people overseas by using renewable energy to provide electricity, clean drinking water, sanitation and Internet service.

In a statement issued late Wednesday afternoon, Granholm spokeswoman Liz Boyd said the MEDC has been directed to review its procedures so that future tax credits aren't given to someone like Short.

"She is disappointed," Boyd said of the governor. "The MEGA tax incentives have proven to be a great incentive for creating jobs, and it would be unfortunate if the program was in any way diminished by this incident."

The tax credits are awarded by the Michigan Economic Growth Authority Board, whose members are appointed by the governor. It awards the credits based on the recommendation of the MEDC, a public-private organization that is separate from state government even though it is largely funded with state tax dollars.

In its application for the seven-year tax credit, RASCO said it planned to hire up to 765 people for research and development, engineering and assembly. The city of Flint was considering offering a 15-year tax abatement in support of the project, but has dropped that idea.


More than 100 complaints lodged over fixed Toyotas (AP)

Wednesday, March 17th, 2010 | Finance News

WASHINGTON – Complaints of sudden acceleration in Toyotas repaired under recalls have nearly doubled in the past two weeks, according to an Associated Press analysis of government data.

The complaints from 105 drivers raise questions about whether Toyota's repairs will prevent the cars from speeding up on their own or if there is another reason for the problem.

Toyota has said it is confident in its repairs and has found no evidence of other problems, such as faulty electronics. The automaker did not immediately comment Wednesday on the latest complaints.

The National Highway Traffic Safety Administration said it was contacting owners who have complained about their repaired vehicles. David Strickland, NHTSA's administrator, said in a statement Wednesday the agency has found "several instances in which a dealer made mistakes in applying one of the recall remedies."

He said NHTSA has discussed the issue with Toyota, which is trying to improve instructions to dealers.

Toyota has recalled more than 8 million vehicles worldwide since October over complaints that gas pedals can become sticky or trapped under floor mats.

An AP review of a NHTSA database found reports of repaired cars continuing to accelerate on their own had jumped to 105 since March 4, when the government reported 60 such complaints.

The complaints are submitted online or through a NHTSA hot line and have not been independently verified.

In many of the comments, which can be filed anonymously, owners said the sudden acceleration issue reappeared only days after their cars were fixed at their local dealership.

"I went in for the recall and it seems there is a worse problem now," wrote the owner of a 2008 Toyota Tundra in Boynton Beach, Fla., who reported unwanted acceleration in early March. "I truly believe this is an electronic problem."

John Moscicki, of Lake Oswego, Ore., told the AP his 2007 Camry accelerated on its own five times before he got the vehicle fixed under the floor mat recall last month.

On March 4, his repaired Camry took off from a standing stop on the freeway and accelerated to 50 mph before Moscicki managed to stop it by shifting into neutral, hitting the brake with his left foot and pulling back the gas pedal with his right.

"It just went to the floor like some other system had control of it," said Moscicki, who raced high-performance sports cars and previously owned a Porsche restoration business.

His Toyota dealer had the Camry for a week, and Toyota sent in a field engineer to examine the car without finding anything wrong. Moscicki said he had planned to give the vehicle to his college-age daughter but now intends to get rid of it. "I wouldn't let her anywhere near this car," he said.

The safety concerns are difficult to pinpoint because they could be related to any number of factors, said Diane Steed, who served as NHTSA administrator during the Reagan administration.

Besides telephone interviews with owners, the agency will look at how dealers fixed the cars, whether the problems involved common parts or the same manufacturing facilities or whether human error might be involved, she said.

Steed, who led the agency during a lengthy review of sudden acceleration complaints in Audi sedans, said there is no specific threshold that would automatically lead the agency to demand that Toyota, or any other automaker involved in a recall, come up with a new fix.

"It's really an engineering judgment call," she said. "The real challenge is not so much the numbers but digging to get to the bottom of what is the problem."


Associated Press Auto Writers Dee-Ann Durbin and Tom Krisher in Detroit, Dan Strumpf in New York and AP writers Allen Chen in New York and Dibya Sarkar in Washington contributed to this report.