We conclude our account of the life and career of John Zachary DeLorean.
The DeLorean Motor Company was, from January 1982, under the control of the receivers. Their job, in the first instance, is to see if a buyer can be found for the company. If none is forthcoming, they are required to dispose of the company’s assets in an orderly manner and raise as much money as possible to repay creditors in order of seniority, either fully or, more usually, in part (cents on the dollar). There is rarely anything left over for shareholders after this is done.
DeLorean’s biggest asset was its large inventory of unsold cars, which was increasing as production continued into the spring of 1982. Deep discounts offered on 1981 stock and exhortations to dealers to buy inventory failed meaningfully to improve the situation, and production at Dunmurry was halted in May 1982.
DMC filed for bankruptcy in October, although a skeleton staff completed around 100 partially built cars before the year end. Consolidated International, a US company based in Columbus, Ohio, acquired the remaining stock from the liquidators at a deep discount and attempted to sell the cars off at bargain prices.
Production records are incomplete but, according to one source, an estimated 8,563 cars were built, of which more than two-thirds are believed to survive(1). Needless to remark, the UK government, DeLorean’s biggest creditor, was apoplectic at the collapse of the company, and more than a little embarrassed.
What of DeLorean himself after his company failed? In a desperate attempt to raise finance to relaunch the business, he became ensnared in an FBI ‘sting’ operation and was arrested and charged in October 1982 with involvement in trafficking cocaine with a street value of $24 million. DeLorean spent ten days in custody while he attempted to raise bail. That was all the time he would ever spend in jail. DeLorean was acquitted of those charges two years later on the grounds of entrapment. He was subsequently indicted but found not guilty of fraud and tax evasion.
The UK Government attempted to extradite DeLorean to face charges of fraud in connection with the collapse of the company, but was frustrated by the US authorities’ refusal to comply. A judge involved in the extradition case accused DeLorean of a “…barefaced, outrageous and massive fraud.” for which he should serve at least ten years in prison. It was a measure of the anger directed against DeLorean that a judge would speak out in such a way, potentially rendering a subsequent trial and conviction unsound.
DeLorean’s personal fortune remained largely intact, at least initially. He owned a $9 million apartment in New York and a $4 million 434-acre estate in New Jersey. He also owned a ranch in California but had to hand over the deeds to that property to his defence attorney in the cocaine case, Howard Weitzman, in lieu of fees. Even though he succeeded in achieving a ‘not-guilty’ verdict in the case, Weitzman was allegedly left with $2 million in billing unpaid.
DeLorean’s attorney in around forty subsequent fraud and embezzlement cases, Mayer Morganroth, pursued DeLorean for $4 million in unpaid fees for over a decade, winning two judgements against his former client but failing to collect.
Unable to pursue DeLorean, the UK government turned its fire onto Arthur Andersen, the accounting firm that had acted as auditor to his company, accusing the firm of negligence in failing to spot a raft of errors and much evidence of fraud in the accounts. Andersen, fearful of the effect of a court case on its reputation(2), agreed an out-of-court settlement of $35 million in 1997. Two years later, the firm agreed a further settlement with 260 commercial creditors of $27.7 million.
DeLorean’s personal bankruptcy proceedings in the US courts were finally settled in May 2000, following the sale of the New Jersey estate in March. The New York apartment had been sold in 1992 to fund his enormous legal costs. Creditors received a surprisingly good 91 cents on the dollar settlement. With his bankruptcy settled, DeLorean embarked on another venture, selling stainless steel watches branded ‘D=MC2’ on the Internet for $3,495 each. The still-outstanding debt to Morganroth meant that any profits from this venture had to be held by a third-party.
DeLorean’s private life was nearly as colourful as his business dealings. He was married four times. He divorced his first wife, Elizabeth Higgins, in 1969 after 25 years of marriage and shortly thereafter married 19-year-old Kelly Harmon, 25 years his junior. This upheaval in DeLorean’s life seems to have been provoked by a mid-life crisis: he began dying his greying hair jet black and even had plastic surgery to (over?) correct what he thought was a weak jawline.
His second marriage ended in divorce after just three years and he then dated Ursula Andress and Tina Sinatra before marrying again in 1973. His third wife was Cristina Ferrare, a successful model and aspiring actor who was, again, 25 years his junior. Ferrare and DeLorean had two children, an (adopted) son and a daughter.
In 1979, while was preparing for production of the new car, DeLorean settled some old scores by publishing an exposé of his time at GM, titled On a Clear Day, You Can See General Motors. The highly partisan account would go on to sell over 1.5 million copies.
DeLorean and his wife became Born-Again Christians after the collapse of the company in 1982. Ferrare stood by DeLorean through the subsequent court case but the couple divorced in 1985. His fourth and final marriage was to Sally Baldwin in 2005, who survived him and by whom he had a daughter. DeLorean died at the age of eighty on 19th March 2005 and is buried in Troy, Michigan, just 25 miles from Detroit, the city where he was born.
Was John DeLorean no more than a fraudster and DMC a giant scam, designed to enrich DeLorean at the expense of an enthusiastic but gullible UK government(4) and its taxpayers? I do not believe so or, at least, not initially. DeLorean was a highly talented and ambitious man, but hopelessly overreached himself with DMC. In papers released by the UK government in December 2012 under the thirty-year rule(2), DeLorean admitted to an enquiry that he had “hopelessly underestimated” the difficulties of establishing a car plant in Northern Ireland.
DeLorean appeared to be genuinely remorseful for the failure of his life’s great ambition. Tellingly, in a memorandum contained in the released papers, DeLorean was described as being “in a disturbed state, and possibly not wholly rational” in a meeting with NIDA officials in January 1982. There was certainly fraud uncovered in the ruins of the company and his subsequent life was dominated by further such accusations and litigation, which drove him to bankruptcy.
One allegation made against both DeLorean and Colin Chapman was that they conspired illegally to move $34 million out of DMC into a Geneva based shell company. Chapman’s untimely death at the age of 54 in December 1982 prevented his trial on these charges. It is likely that both DeLorean and Chapman were driven to crime by the prospect of seeing the companies in which they had invested so much energy and personal reputation in ruins. This is not offered as an excuse, but an explanation.
Before anybody thinks I am in any way excusing or exonerating DeLorean, I will conclude with one nugget that I came across in researching this story: the DMC company receivers uncovered a lunch receipt from the Beverly Wilshire Hotel in Los Angeles which DeLorean had submitted for reimbursement. The amount on the receipt had allegedly been altered from $17 to $191.50. Perhaps his impoverished childhood left more of a mark on DeLorean than he could ever understand or acknowledge?
(1) This is partly because the DeLorean found unlikely posthumous fame as the automotive star of the ‘Back to the Future’ movie franchise which began in 1985. The story of the DeLorean Motor Company was dramatised in the 2018 film ‘Driven’ which starred Lee Pace as John DeLorean.
(2) Arthur Andersen was dissolved in 2002 following its culpable role in the Enron scandal, one of the largest accounting frauds in US corporate history.
(3) UK Government papers that are adjudged to be commercially or politically sensitive, or might have implications for national security, are not released until thirty years after their internal circulation. In this case, the rule appears to have been applied merely to save individuals from embarrassment.
(4) The total cost to the taxpayer of the collapse of DeLorean was put at £77 million. It is not known if any UK civil servants or government advisors suffered any reprimands or sanctions in light of this loss.