Dave Gould Ford at Ellsworth’s Triangle has been in business locally for nine years.—STAFF PHOTO BY JENNIFER OSBORN

ELLSWORTH — Ford Motor Credit Co. has filed a complaint in Hancock County District Court against Dave Gould Ford alleging that the local auto dealer owes Ford $2.4 million.

The complaint — titled a summons, forcible entry and detainer action — states that Gould has defaulted on his wholesale agreement with Ford.

Gould allegedly has failed to repay advances that Ford has issued to finance Gould’s purchase of vehicles and failed to pay outstanding amounts under the wholesale agreement upon Ford’s demand, according to the complaint.

Gould also is in default for having spent or otherwise used proceeds that were to be held in trust for Ford, the complaint states.

On Sept. 14, Judge Bernard Staples issued a temporary restraining order against Dave Gould by agreement of both parties requiring Gould to stop selling vehicles belonging to Ford.

Dave Gould said yesterday afternoon that he and Ford had settled the issues described in the court filing. He said he had signed a confidentiality agreement and was constrained from commenting further.

Bangor attorney Nathan Dane III of Rudman & Winchell represents Gould. Attorney F. Bruce Sleeper of the Portland law firm Jensen Baird Gardner & Henry represents Ford Motor Credit Co.

Sleeper stated in a court document that Ford is being caused “irreparable damage” by Gould’s continued use of Ford Motor Credit’s collateral and property, and by Gould’s continued attempts to sell motor vehicles, which are part of Ford’s collateral and by Gould’s continued spending of the proceeds of Ford’s collateral.

Court documents state that because Gould has defaulted on his agreement, Ford is entitled to keys and titles for all vehicles on the lot — not just the new vehicles Ford has delivered to the dealership.

A court filing states that Ford Motor Credit Co. has had employees working in the dealership since June 8.

An affidavit filed by Paul Izzi, territory sales manager for Ford Motor Credit Co., gives events that led to the restraining order.

On June 7, a payment Gould made to Ford Motor Credit Co. of over $42,000 was returned due to insufficient funds, Izzi stated.

On June 8, Gould paid Ford with a certified check.

Also on that day, Ford performed an audit and discovered Gould had sold 11 vehicles and hadn’t paid Ford for the advances, which totaled $283,339.58, Izzi stated in an affidavit.

On Aug. 29, a Hancock County deputy sheriff served Gould with the summons and complaint.

“Mr. Gould’s angry displeasure with the same was loudly expressed and he physically seized the keys to vehicles that were in the possession of an FMCC (Ford Motor Credit Co.) employee and unsuccessfully attempted to seize the titles and manufacturer’s statements or certificates of origin held by that employee as well,” Izzi stated. “Mr. Gould has since returned some of those keys to an FMCC employee but continues to retain others that he seized. Thus, he now has the ability to sell the vehicles to which he retains the keys without accounting to FMCC for those sales, even though those vehicles and sale proceeds constitute collateral securing the dealer’s obligations to FMCC.”

Gould has sold at least one such vehicle after Aug. 29 without Ford’s consent and without giving the sale proceeds to Ford, Izzi stated.

The court filing refers to the phrase “sale out of trust” and Izzi defined this as an auto dealer selling a vehicle without paying advances issued to finance the purchase of that vehicle.

“SOT’s (sale out of trusts) are ordinarily one of the most important and egregious defaults that occur in the finances of automobile dealership inventories, since they can easily and quickly lead to a substantial loss of collateral for that financing and expose the financing lender to a substantial risk of loss,” stated Izzi.

“The dealer’s financial condition is precarious,” Izzi stated. “As noted above, the dealer does not meet FMCC’s financial requirements for obtaining advances under the wholesale agreement and FMCC has been informed that it owes substantial past due amounts to other creditors. Given Mr. Gould’s actions on Aug. 29, 2007, as well as the dealer’s financial condition, FMCC needs an order of this court prohibiting the dealer from selling any vehicles pending a hearing in this case unless the full proceeds of any such sale are immediately paid over to FMCC. If such an order is not entered, then FMCC will face irreparable harm if these vehicles are sold and the proceeds are otherwise spent by the dealer.”

Gould’s attorney Nathan Dane III stated in a Sept. 14 court filing that the motion for a temporary restraining order in effect results in Dave Gould Ford ceasing business.

“It cannot sell cars,” Dane stated. “While for the purposes of this proceeding the defendant is willing to accept the assertion that there was a deficiency arising from the sale of used vehicles ‘out of trust,’ that deficiency is being cured as of today. To shut the business down now is inconsistent with the stated requests of FMCC. Things have returned to the status quo ante of June. FMCC has full control of all its new vehicles. It is in everyone’s interest to sell cars and defendant will be seriously harmed from continuing business in the ordinary course unless FMCC is required to be bound by its own stated intentions.”

The filing contains an affidavit from Gould himself, who states as of Sept. 13, he has paid in full the amounts Ford claimed were owed for sales out of trust.

Gould stated in his affidavit that he has been repeatedly told that once the deficiency is satisfied, Ford Motor Credit Co. will return all titles and keys and allow his dealership to continue doing business in the manner it has the past nine years up until June.

Gould stated that many of the used vehicles, which he purchased with Dave Gould Ford funds, have been sold to buyers. Gould is making arrangements to sell the remaining vehicles to generate cash for the dealership’s business operations, he stated.

A hearing has been scheduled in district court on Tuesday, Sept. 25, at 9 a.m.

The Ellsworth Police Department, The American and agencies in the state of Maine have received complaints from Dave Gould Ford customers who allege that the loans on vehicles they traded in to the dealership were not paid in a timely manner or, in some cases, at all.

Will Lund, director of the Maine Office of Consumer Credit Regulation, stated “in this particular case, we received five consumer complaints alleging that David Gould Ford had not paid off the loan balances on cars that were traded in. Several of them began receiving collection calls from folks they thought were their previous creditors. That obviously pointed to a problem.”

“These are serious, serious issues,” Lund said. “We need to know the scope of the situation. There are title issues. There are debt issues. There are insurance issues. There are all kinds of issues.”

Lund said that three or four other state departments are investigating Gould and his ability to continue operations.

“This is a case of floating too much credit and he got caught,” Lund said.

Lund said his office is chiefly concerned with the consumer. He said there are two issues: a consumer still owes money to his creditor even though he leaves a trade-in vehicle with the expectation the dealer will pay off their prior lien. Another issue is for that consumer’s credit reports, he said.

Lund said he had Gould travel to Augusta with his records and sign documents for each case so that Lund’s office could clear the credit reports of the affected customers.

“To his credit, he did travel down and talked openly with us and cooperated with our investigation,” Lund said.

Lund said he knows Gould paid off at least two of the trade-in loans.

Gould customers who have been affected can contact the Office of Consumer Credit Regulation at 1-800-332-8529.

One customer who has been waiting over three months for resolution is Karen Robidoux of Ellsworth.

Robidoux sent The American an e-mail stating that she traded in a 2007 Subaru Legacy on May 30 and purchased a Ford 500.

The dealership sold the Subaru the following day.

On Monday, Robidoux stated that the loan on the Subaru had not been paid.

“This means that it [the Subaru Legacy] has been sold to an unsuspecting patron, without a clear title,” Robidoux stated in the email. “I am still the title holder and the responsible party for the unpaid balance of the loan. I have spoken with Dave Gould several times and I keep getting the same response, ‘I will take care of it.’ He is still conducting business and will not take my calls.”

A Farmington woman is in a similar situation.

Karen Sweetzer said her son did business at Dave Gould on June 9 trading in a Jeep Rubicon for a Mustang Saline.

She is getting calls every day from Wells Fargo, which holds the loan on the Rubicon. Sweetzer said Tuesday that her son owes $10,364 on the Rubicon he traded in. So far, lender Wells Fargo has received just $1,400 from Gould, she said.

“As far as they’re concerned, we owe that money,” Sweetzer said. “So, we’re out a lot of money and I don’t know what’s going to happen. He can’t afford to pay for a jeep he doesn’t have and the Mustang.”

Sweetzer questioned why Gould was still being allowed to do business.

“I don’t think it’s right and they ought to do something about it,” Sweetzer said.

Stacey Warren, who owns the High Street Barbershop with her husband, Peter, is another unhappy Gould customer.

Warren said in July she repossessed a truck she had traded in at Dave Gould Ford after it took the dealer over a month to pay off the loan.

Consumers who have complaints about vehicle purchases must fill out a complaint petition, which is available at the DMV office on Church Street or on the state’s Web site at www.maine.gov/sos/bmv/investigations.