The founder of a British car dealership formerly known as JD Classics has reportedly been sued for allegedly inflating the values of the vehicles he sold, along with this wife.
The suit seeks £64 million (a little less than $83.5 million) from Derek Hood and his wife, Sarah, who allegedly used dishonest transactions and false statements about some vehicles prices, The Times reported. The case was brought by administrators Alvarez & Marsal Europe, which oversaw the dealership’s sale last year following severe financial troubles after Derek Hood’s departure.
JD Classics — which was also known for its restoration work and racing presence, both on and off the track — is now doing business as Woodham Mortimer Ltd., a special-made company created to take over operations. The parent company is HPS Investment Partners, LLC.
Hood sold the dealership three years ago to Charme Capital, a private equity firm. He is accused of marking up the price of several vintage Jaguars to “create the false appearance of a vibrant market” and inflate their value. One of those, an XKD D-type, was allegedly bought and sold eight times, which the company recorded as £24 million ($31.3 million) in sales and £7.25 million ($9.4 million) in profit.
Sotheby’s estimates the car is only worth about £650,00 ($847,626).
A similar situation was alleged with another Jaguar, this one an XKSS D-type. JD Classics pegged the value at £11.5 million ($15 million), but Alvarez & Marsal Europe officials said that figure should be much lower.
But the tactic may not have been limited to just Jaguars. The suit alleged the same process was used on a replica Ford GT40 Mk1. Hood allegedly claimed the car was real, not a replica, and valued it at £5.5 million ($7.17 million). Alvarez & Marsal Europe officials said the value was about half that.
The Hoods have denied any wrongdoing. A legal adviser for the Hoods told The Times the claim was “bizarre” and the couple used a team of advisors who would have spotted questionable activity. He said the dealership’s collapse was caused by Charme Capital, which loaded the company with too much debt.
Hood founded JD Classics in 1987. When he sold, it posted an annual turnover about £125 million ($163 million) with £17 million ($22.1 million) in profits.
Last year, Hood was sued by a man who spent £40 million on classic cars. The judge in that case accused Hood of “deliberate and dishonest conduct” relating to the ownership of a Jaguar Lister Knobbly. Around the same time, Charme Capital said it uncovered several disputes over ownership and value of some of JD Classics’ vintage vehicles.
As mentioned, JD Classics was sold last year. It is now doing business as Woodham Mortimer Ltd., a special-made company created to take over operations. The parent company is HPS Investment Partners, LLC.