Special Report: Cashing out - WMC Action News 5 - Memphis, Tennessee

Special Report: Cashing out

By Andrew Douglas - bio | email | Twitter | Facebook

MEMPHIS, TN (WMC-TV) - In the world of city contracts, a winning bid can translate into big money - millions of dollars!

In a recent interview, Kent Richey, president of Landers auto dealerships in Memphis, said his company submits bids for all Memphis fleet vehicles.  Until a few years ago, Richey said, fleet business made up about 20 percent of Landers' sales.

Now, fleet sales to the city are practically non-existent.

"When we bid a vehicle, it's minuscule, with as little as fifty dollars profit built into the vehicle," Richey said.  "It probably costs me more in manpower to bill it out.  And we get beat by several hundred dollars?  You know it's not a level playing field.

Richey's complaint centers on Cardinal Leasing, a company that represents Cardinal Chrysler Jeep Dodge, a dealership in Louisville, Kentucky.  In Memphis, the company's representation is just an office.  There's no office, repair shop, or showroom - just a storefront winning millions of dollars in city contracts for all kinds of vehicles.

For example, Cardinal won a bid last November to supply 112 police vehicles in a contract worth more than $2.4 million.  That same month, a separate contract for 25 vehicles was worth nearly half a million dollars.

According to a city ordinance passed in 2005 local businesses are supposed to get preference for bids. 'If the lowest..bidder is a regional or non-local business, then all bids received from the local businesses are decreased by five percent." 

In other words, the ordinance gives local businesses a 5 percent edge in the bidding process.  Former city councilman Jack Sammons drew up the law while on the council.

"The intent of this ordinance was to keep the money in Memphis and help our local businesses," Sammons said.

Over at Cardinal's Memphis office, David Segwick, the salesman in charge, didn't want to appear on camera.  Segwick said the city picks Cardinal because the put in the best bids.

"We don't get a local preference," he said. "They go by low bid with us."

But city records list Cardinal Leasing as both a local dealership and a non-local dealership.

"The state that took our basketball coach is now going to take our commerce and automobile purchases," Sammons said. "It's offensive to me, not as an elected official - I'm not an elected official - but as a citizen."

The Arkansas Attorney General says Cardinal Chrysler and several other out-of-state dealerships broke Arkansas law when they bid and won city contracts.

The Shelby County White Collar Crimes Unit has reviewed the Arkansas AG's opinion and says Cardinal Chrysler is abiding by the ordinance in Memphis by maintaining a leasing office.  But it's still not clear why Cardinal Leasing is listed as local on some bids and not local on others.

Action News 5 requested an interview with the city of Memphis purchasing director for this story, but the request was denied.

In a written statement, a city official said Cardinal Chrysler is considered a local business, and has won 13 bids in the last two years.

Local dealerships say they've complained formally through the proper channels, and will continue to do so.

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