THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Wednesday, October 19, 1994 TAG: 9410190441
SECTION: LOCAL PAGE: B5 EDITION: FINAL
SOURCE: BY JOE JACKSON, STAFF WRITER
DATELINE: NORFOLK LENGTH: Medium: 80 lines
About 400 former customers of auto dealer Charlie Falk have called the Tidewater Legal Aid Society claiming damages since Thursday, when Falk settled a class-action lawsuit against his dealership by agreeing to forgive about $10.5 million in defaulted loans and to pay $400,000 in damages.
Two temporary workers have been hired by Legal Aid and two offices set aside exclusively for calls from Falk's former clients, said executive director Charles A. Johnson.
The Legal Aid Society, which is coordinating the claims, had about 260 calls on Friday, 100 on Monday and about 40 calls by 3 p.m. Tuesday.
``It was hectic Friday,'' the day a story about the settlement ran in The Virginian-Pilot and Ledger-Star, Johnson said. ``Since then, things have leveled off.''
The proposed settlement was filed Thursday in Norfolk's federal court. A judge must approve it before it takes effect. About 2,500 to 3,100 former Falk customers are expected to split the $400,000 settlement and have their debts forgiven.
Falk also agreed to change his repossession policies to give customers more notice after they default on loans and pay more money to them for cars he does repossess.
The class-action lawsuit was filed last year in U.S. District Court by four women from Norfolk and Portsmouth. Each had bought a car from Falk, defaulted on her loan, then lost the car to repossession. The lawsuit accused Charlie Falk Auto Wholesale, JB Collection Corp., which is owned by Falk, and a finance company of fraud, racketeering and other illegal acts against customers.
In Thursday's settlement, Falk did not admit liability, but did agree to notify all former customers who may be affected.
The $400,000 settlement fund will be split equally among former customers who make a successful claim. Payments could be as small as $129 per customer if 3,100 make successful claims.
Only customers who bought cars from Falk, took loans from him or his companies, defaulted on the loans, lost their cars to repossession after June 17, 1989, and suffered ``deficiency judgments'' in court after that date can file claims.
A deficiency judgment is what a borrower owes after deducting the value of the repossessed car from the defaulted loan. Lawyers charged that Falk placed artificially low values on repossessed cars, and got inflated deficiency judgments against former customers. The average judgment was about $4,000.
When a former customer calls Legal Aid, one of the temporary workers records his or her name, address, telephone number and the date the car was repossessed. The customer is then sent a claim form, which will eventually be submitted to the court for evaluation, Johnson said.
``It's interesting,'' said Melanie Sanders, one of the temporary workers. ``Most of the people who call feel they've been cheated . . . but not all had cars repossessed. I tell those people that if you think you've got a grievance, maybe you need legal help.''
Falk is the biggest used-car dealer in Hampton Roads, selling more than 3,000 cars a year at 11 area locations. He caters mainly to people with little money and poor credit.
He is best known locally for his TV ads in which a goat eats customers' credit reports. ILLUSTRATION: Staff photo by PAUL AIKEN
Diane Michael, a temporary worker at Tidewater Legal Aid, talks to a
caller about Charlie Falk. Michael had taken 202 calls in two days
by Tuesday afternoon.
TO FILE A CLAIM
Write to Tidewater Legal Aid Society, 125 St. Paul's Blvd., Suite
400, Norfolk, Va. 23510-2708.
Or call 627-5423.
KEYWORDS: CLASS ACTION LAWSUIT
by CNB