GM ignition-switch trial hits snag over real-estate fraud accusation

GM ignition-switch trial hits snag over real-estate fraud accusation

NEW YORK (Bloomberg) -- An Oklahoma family’s eviction from their “dream house” following allegations of check fraud is threatening to derail the first trial over General Motors' deadly ignition-switch flaw.

Robert Scheuer, a mail carrier who claims the defect disabled his airbag in a 2014 car wreck, blames GM for the eviction, arguing that memory loss he suffered in the accident caused him to misplace a $49,500 check for a down payment on the home in suburban Tulsa, Okla.

GM’s lawyers said they uncovered evidence that Scheuer, his wife and two children were actually kicked out of the house because a real estate agent found Scheuer had faked a $441,430.72 check stub from his federal government retirement account as “proof of funds” to close the sale.

The evidence, revealed after the trial had already started, suggests Scheuer “misled his own counsel, as well as the court and the jury,” GM attorney Richard Godfrey said in a filing Tuesday in U.S. District Court in Manhattan, where the trial is in its second week.

The carmaker asked the court for permission to allow two new witnesses to testify about the evidence, the real estate agent and a forensic technology expert sent to Tulsa by GM. The original check was for only $430.72 before it was altered and had a different date, GM said in the filing.

Multiple cases

The check-fraud claims, if successful, won’t affect GM’s liability over the defect, which has already triggered more than $2 billion in legal fees and settlements. Still, it would be a poor start for plaintiffs counting on bellwether cases like Scheuer’s to gauge how much they stand to recover for thousands of clients.

U.S. District Judge Jesse Furman heard discussions about the development on Tuesday without the jury present, including GM’s claim that the new evidence contradicts testimony given by the Scheuers in pretrial depositions and on the witness stand. The judge said he wanted Scheuer’s wife, Lisa, to appear in his courtroom today so he could advise her of her Fifth Amendment right against self-incrimination.

He also said she may want to hire her own attorney.

Oklahoma crash

Scheuer, 49, sued after his 2003 Saturn Ion flew off an Oklahoma highway and crashed into a tree in May 2014, leading to neck and back pain. GM argues the accident wasn’t serious enough to deploy the airbag, and that Scheuer’s injuries predated the crash.

Three weeks after the accident, Scheuer and his wife purchased the home in Sand Springs, Okla., under a contract calling for $275,950 in cash, though no cash was ever provided and they were evicted in September 2014, GM said.

The documents about the cash offer and the discovery of the allegedly altered check weren’t made available to GM until the real estate agent heard about the trial on the news and came forward, the company said.

The real estate agent’s communications also show that Scheuer was on vacation shortly after the accident, when he was purportedly bedridden, GM says.

Carl Tobias, a University of Richmond law professor who isn’t involved in the case, said the development looks bad for the Scheuers.

“We’ll have to see how the judge and Hilliard respond,” he said.

Scheuer’s lawyer

“We are assessing GM’s allegations about a situation we were unaware of,” Robert Hilliard, Robert Scheuer’s attorney and one of the leading plaintiffs’ lawyers in the U.S., said in an e-mail about the claim of check fraud.

GM’s court filing on Tuesday included dozens of attachments purporting to back up its claim, including printouts of loan documents, e-mails and a photo of the disputed check stub that Scheuer allegedly sent to the real estate agent in a text message. The documents show a typical transaction for a newly built house, including requests for extra gutters, sprinklers and wood flooring, deteriorating into allegations of a widespread fraud over a period of a few months.

“Heard you and Robert were at Pottery Barn Saturday afternoon (after being at the bank) ... and were still telling them you had money coming in,” an e-mail to Lisa Scheuer from Concept Builders Inc. said on Sept. 9, 2014. ‘How many other people are the two of you trying to scam?’”

‘We trusted’

After Lisa Scheuer denied the claim, the employee from Concept Builders said the fake check was “obvious in hindsight, but we didn’t think to look closely because we trusted him.”

The jury continued to hear other evidence in the case Tuesday without any knowledge of the dispute over the check stub. So far the testimony has focused on details about the design of the ignition switch, video depositions of GM engineers, and live testimony from the designer of the air bag, who claims it should have deployed.

“Regardless of how GM paints it, the heart of this case is that Mr. Scheuer’s airbag did not deploy” as a result of GM’s misconduct, “and whatever dirt they throw at plaintiff and his wife doesn’t change that,” Hilliard said.

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