quote:

Custom builder's failure means dreams deferred for would-be car owners

Frank Graham (North Platte Bulletin)


When Frank Welch gave Scott Pearson of Pearson Mustangs $60,000 for his and hers cars for his wife and himself, it was a dream come true.
“We’re both car people and thought buying two Mustangs would be great,” Welch said. “My wife wanted a convertible and I wanted a regular car.”

Welch gave Pearson half the money down when he ordered the car He would pay another $60,000 on delivery.

Welch, from North Fort Myers Fla., began to get nervous after the delivery date for the Mustangs passed. Pearson had promised to deliver the cars by March 2005.

“Then he called and said the cars were coming along but he needed 25-percent of the balance to finish them,” Welch said. Although suspicious, the lure of two 1960ish model custom built Mustangs won out. Welch sent Pearson another $28,000. But the cars still weren’t delivered by the summer of 2005.

Welch boarded a plane and flew to North Platte to check on the progress. His cars had not even been started but Pearson promised him he’d be done by October 2005.

“What could I do?” Welch said. “I encouraged him to finish and hoped for the best.”

Welch waited. He said Pearson rarely answered e-mails and answered his phone or returned calls on even rarer occasions.

October 2005 passed with no cars. Then 2005 passed into 2006 and still no cars.

Weary of Pearson’s excuses and promises, Welch again boarded a plane, flew to Denver, rented a car and confronted Pearson April 20.

What he found was heartbreaking. Both of his Mustangs were unpainted metal shells with no interiors, no engines and no drive trains. Work had not even begun on either of them.

After $88,000 and 20 months, Welch was furious.

“I’ve been lied to over and over,” Welch said. “There are other cars being finished who placed their orders after I did.

Welch threatened to load up two cars in more advanced stages of completion than his own but, in the end, decided to try to work with Scott Pearson and his father Gary who run the shop.

“What can I do?” Welch said. “I’ve don’t want to completely lose my investment.”

Pearson made more promises, according to Welch, and he tried to remain optimistic.

Then Pearson did the unthinkable. Less than three weeks after Welch’s visit, Pearson declared bankruptcy.

Pearson Mustang, 1002 Prospect Suite 100, is owned and operated by Scott Pearson of North Platte. His father, Gary, also works for the company and signs the contracts.

The company has been building 1967 replica “Eleanor” mustangs, made popular by the 2000 movie “Gone in 60 Seconds,” for two years.

The cars are built from kits and can run from $65,900 to more than $90,000, according to Pearson. One of Pearson’s mustangs won Best of Show at the 2005 Rocky Mountain Mustang Roundup, according to Pearson’s web site. It’s the web site and advertising in publications like Autobuy Magazine that attracts buyers. They come from all over the country.

Welch is just one in a long and growing line of people throughout the nation who have given Scott Pearson thousands of dollars for refurbished Ford Mustangs and have nothing to show for the money they spent.

Kevin Yamashita of California was awarded a judgment of $37,470.36 against Pearson in Lincoln County Court on Feb. 21.

Recently, Pearson got hired by Union Pacific Railroad so Yamashita got a court order and garnished Pearson’s railroad wages and his bank account.

Yamashita had filed the lawsuit Jan. 5 after Pearson didn’t deliver the Mustang he ordered on time. In his lawsuit, Yamashita said he gave Pearson $34,600 as a down payment on June 10, 2005. The suit said Pearson agreed to build Yamashita a high-performance 1968 Mustang prior to Aug. 1, 2005, in time to display the car at an auto show.

Yamashita purchased seats, mounting brackets, a front suspension, roll bar, power rack and pinion steering, a steering column, tires and transmission for the Mustang during June and July 2005 and paid $12,091 for them. He forwarded them to Pearson in North Platte specifically for the model Pearson was building.

Yamashita also purchased an insurance policy for the Mustang for $661.

When Pearson didn’t deliver the Mustang, Yamashita attempted to arrange for a refund from August through November, the suit said. He said despite Pearson’s repeated promises, he never delivered the car or the money.

In December 2005, Pearson refunded Yamashita $10,000 for the seats and mounting hardware but he didn’t return the rest of Yamashita’s deposit nor the additional parts.

Floyd Lee of Edina, Minn., gave Pearson $7,000 on Oct. 12, 2004 and another $20,000 on Oct. 24, 2004, to build him a modified Shelby. The car, with a total purchase price of $50,000, was to be finished six months later, by April 1, 2005.

Lee said that as the deadline got closer, Pearson began avoiding him.

“He ignored me for months,” Lee said. “He disappeared off the face of the earth.”

Lee said that on March 23, 2005, he finally spoke with Pearson, who told him that he could not finish the car and would return his $27,000.

But according to Lee, the money never came.

After nearly a month with no word from Pearson, Lee filed a lawsuit in Lincoln County District Court seeking the return of his down payment.

“I finally did get all my money back but it cost me a lot in attorney’s fees,” Lee said. Lee said he called the Better Business Bureau and learned there had been other complaints.

“But they wouldn’t tell me exactly how many,” Lee said. “Only that there had been several.”

Richard Freeze of North Platte filed a lawsuit against Pearson March 9 for more than $250,000. His lawsuit says he contracted with Pearson to build five custom cars in 2005.

When Pearson didn’t deliver the cars by December 20, 2005, he was required by the contract to pay Freeze $55,000 per car, according to the suit.

The lawsuit says Pearson has only paid Freeze $12,000 per car. Freeze is suing for the remainder, $7,900 late charges $42,900 in additional late charges as spelled out in the contract.

The lawsuit says Pearson’s debt is accruing at the rate of $500 per day.

There are many more.

James Kramer of Boring Oregon paid Pearson $25,000 to build a car in July 2005. He has seen neither the car nor the money.

Steve Brown of Anchorage Alaska paid Pearson $36,900 to build a car in Oct. 2005. He has not received either his car or his money.

Rod Holmes of Pearland Texas paid Pearson $50,000 down for a Mustang in April 2005 but says Pearson won’t even talk to him, let alone refund his money or deliver a car.

Terry Favazza of Tuscon Ariz. Gave Pearson $35,000 for a Mustang in August 2005. He says he hasn’t seen anything and Pearson is extremely difficult to reach.

There are a few lucky people who have gotten cars delivered but they seem to be few and far between.

Clint Studebaker of Granite Bay Calif. paid Pearson $46,000 to build a car in April 2003. He finally got his car shipped to him in February 2004 after hiring private investigator John McNeel.

Todd Beckman hired an attorney and an investigator and was able to get his $22,500 returned to him after 17 months of waiting.

But most people, like Welch, are worried that their money and their dream cars are going to simply disappear like one of Pearson’s promises.

Pearson Mustangs is not incorporated. It’s wholly owned by Scott Pearson.

Pearson filed personal Chapter 7 bankruptcy May 4 in U.S. District Court.

Chapter 7 bankruptcy, sometimes call a straight bankruptcy is a

(in reply to tylerdru)

quote:

Pearson worker laid off as jobs piled up

Frank Graham (North Platte Bulletin)


A former employee of Pearson Mustang said he believes Scott Pearson’s actions at his shop were criminal.
“He’s defrauded a lot of people,” said Terry Elliott of Hemmingford.

Elliott, 46, is an experienced auto body mechanic who owned his own shop for 21 years. He worked for Pearson Mustang for eight months – from June 2005 through February 2006. He said the shop had orders for at least 16 cars but laid him off.

Elliott said that left Gary Pearson, Scott’s dad, and one other employee to get the cars out.

“It’s crazy,” Elliott said. “They should be turning out a car a month, but they’re not.”

Elliott said during the eight months he worked there, Pearson Mustang only completed and shipped two cars.

“And one of them was nearly completed when I started,” Elliott said.

Elliott said Scott Pearson rarely came into the office. Elliott could work there for weeks without laying eyes on Pearson.

“He’s a mystery man,” Elliott said.

“They had a rule not to answer the phone,” Elliott said. “People called like crazy but we never answered the phone, just let the answering machine get it.”

Elliott said he believed it would take at least six more employees to meet the workload.

“They still get calls from people wanting Mustangs, sometimes as many as 40 a month” Elliott said. “I don’t know if they’re still taking orders or not.”

Elliott said he worked on customer Frank Welch’s Mustang fastback. Welch, from Florida, gave the Pearsons $80,000 to build a car for himself and his wife.

“It was a cobbled up mess,” Elliott said. “I wouldn’t give you $50 for the cars they build.”

Elliott said none of the after-market parts fit the cars. They had to be custom fitted. He said the Pearsons often buy the cheapest parts they can get instead of the best.

“The only one who knows what is going on is Gary,” Elliott said. “He’s just two years away from retiring and doesn’t want to go back to a collision shop.”

Elliott said he has no idea where the money from the customer’s orders went, but it didn’t seem to go into building cars.

“I feel sorry for those guys who ordered cars,” Elliott said. “Most of them spent at least $30,000 and their cars are piled around that garage like junk.”


Source: http://www.northplattebulletin.com/NorthPlatteBulletin/stories/?deptID=3&pageID=3&storyID=9597

quote:

Pearson records: 21 car buyers out $1 million

Frank Graham (North Platte Bulletin)


Pearson Mustang and owner Scott Pearson owes more than $1.24 million to creditors, according to his latest bankruptcy filing in U.S. District Court.
In a filing made May 19, Pearson lists assets of $33,100 and liabilities of $1,242,382.11.


Pearson Mustang, 1002 Prospect Suite 100, is owned and operated by Pearson of North Platte. His father, Gary, also works for the company and signs the contracts.

The company has been building 1967 replica “Eleanor” mustangs, made popular by the 2000 movie “Gone in 60 Seconds,” for two years.

The cars are built from kits and can run from $65,900 to more than $90,000, according to Pearson.

But Pearson has allegedly failed to deliver cars to at least 21 customers from across the nation and around the world. He faces judgments from two lawsuits in Lincoln County District Court and settled another one.

On May 4, Pearson filed Chapter 7 bankruptcy.

In his latest filing, Pearson lists 21 customers who gave him more than $1 million to build at least 22 cars. None of the cars have been delivered.

Besides the 16 U.S. customers, Pearson lists five from out of the country - two customers who invested from Australia, one from Spain, one from Canada and one from Switzerland. Some of the customers have been waiting for more than two years after giving Pearson thousands of dollars to begin work on a car for them.

Customers who have seen Pearson’s work believe they are good craftsmen and build beautiful cars. The shop still has an ad running on Autabuy.com and says, “Hurry, only five more cars to be built this year.”

Several customers who gave Pearson money said they had seen his ad.

But, according to his latest filing, Pearson owes the magazine $2,800 for the ad. The magazine did not return calls from the Bulletin.

Pearson said they just got overwhelmed. He said the company gained national attention from the web site and orders poured in. He said they had difficulty keeping up with them.

Frank Welch, a customer who gave Pearson $90,835 to build two custom Mustangs for himself and his wife, said he wondered where the all that money went.

According to the filing, Pearson lists an inventory of 17 Mustangs with a value of $21,250. The filing says Pearson owes $86,943 in loans, $7,500 in credit card debt, $29,296.61 in insurance, state and federal taxes and $2,600 in car transport costs. He also owes $5,000 in parts, according to the filing.

The filing says Pearson took $73,561 in salary from the shop during 2004 and 2005. He has taken $4,346 out in salary in 2006.

Pearson pays his dad, Gary, $61,000 annually for his work at the shop, the filing said.

Four months ago, Pearson took a job as a conductor on the Union Pacific Railroad and makes a salary of $3,900 a month. He pays $1,100 in rent.

By filing Chapter 7 bankruptcy, Pearson will turn over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor then receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".

A former employee of the shop called Pearson’s actions criminal.

“He’s defrauded a lot of people,” said Terry Elliott of Hemmingford.

Elliott, 46, is an experienced auto body mechanic who owned his own shop for 21 years. He worked for Pearson Mustang for eight months – from June 2005 through February 2006. He said the shop had orders for at least 16 cars but laid him off.

Elliott said that they only completed two cars during his eight months employment and that Pearson rarely entered the shop. He said there was a rule against answering the phone, which was constantly ringing with customer’s complaints.


Source: http://www.northplattebulletin.com/NorthPlatteBulletin/stories?deptID=3&pageID=3&storyID=9714