The automaker said many of the vehicles submitted for warranty claims for failed engines “never had an engine problem before they reached” Napleton Automotive. In 2017, the alleged scheme generated about $180,000 in profits for the retailer’s West Palm Beach dealership, which helped it show higher profits than other Napleton stores, according to Hyundai’s complaint.
“All of this was done as part of a pattern to deceive and defraud HMA and to profit from HMA’s goal of helping real consumers with legitimate engine problems covered by the recall campaign,” Hyundai claims in its 22-page lawsuit.
The lawsuit claims that top Napleton executives learned of the alleged scheme orchestrated by Khaytin and Revuelta in mid- to late 2017, when parts discrepancies became apparent at the store. It also claims that executives from the dealership group including CEO Ed Napleton Sr. met with Khaytin, Revuelta and Napleton Jr. and ordered them to stop the practice. But Hyundai’s complaint alleges that didn’t happen, that the fraud continued and that by January 2019, defendants “were destroying as many as 22 engines in a month.”
“Hyundai has always made quality and safety a priority,” the automaker said in a statement. “Hyundai has zero tolerance for warranty fraud and has taken aggressive action to stop this fraudulent activity.”
Napleton denies the allegations.
“Napleton Automotive Group is a family-owned business that takes great pride in its reputation for representing its brands and providing exemplary customer service,” said Russell McRory, a lawyer and partner in the Arent Fox law firm in New York who represents the dealership group. “The claims against Napleton have no merit and Napleton denies any wrongdoing.”
Napleton of Oakbrook Terrace, Ill., ranks No. 17 on Automotive News‘ list of the top 150 dealership groups based in the U.S., with retail sales of 36,053 new vehicles in 2019.