Willamette Week | Lead Story

Scott Thomason's 11th-floor corner office at 1 SW Columbia St. is a long way from the used-car dealerships along Southeast McLoughlin Boulevard where he made his fortune. From the commanding Mount Hood view to the lily-filled crystal vase and cappuccino-colored leather furniture, nearly every detail projects an elegant opulence.

Thomason himself, with his monogrammed gold cufflinks, self-effacing manner and trademark round glasses, looks more like an investment banker than the stereotype of a fast-talking, uncouth car salesman, which his competitor Bob Lanphere Jr. sums up as "Brylcreem and plaid suits."

It's not by accident that Thomason, 45, is the only car dealer in Portland whose office isn't within shouting distance of a showroom floor.

"About 10 years ago, I decided I needed to change my image," he says. "I wanted it to be different from other dealers, more professional."

For most Portlanders, the most noticeable result of that decision is his award-winning advertising, which has made his name and face perhaps the best-known in the metro area.

And while other local car dealers expanded modestly in the '90s, Thomason's sales exploded. At the beginning of the decade, he was the biggest in town, but just barely, and sold 15,000 cars. In 1999, he sold 50,000 cars, more than twice the total of his nearest local competitor.

Success has brought great rewards. In 1998, Thomason sold 51 percent of his company to Asbury Automotive Group of Pennsylvania, pocketing an estimated $50 million. But the man friends describe as a "Type AAA personality" is still a workaholic who knows exactly how many cars each of his 21 lots sold yesterday.

As well as redefining his corporate image over the past decade, Thomason also altered nearly every facet of his life, from his appearance (he dropped 20 pounds and became a fanatical runner) to his wife (he divorced his wife of 12 years and married Deborah Autzen, daughter of one of Oregon's most venerable families).

Some entrepreneurs who have made it big hole up and count their cash--but Thomason is a trustee of the University of Oregon, a board member of Oregon Ballet Theatre and Doernbecher Children's Hospital. He also co-sponsors Portland's second-biggest charity golf event and is an investor in Marshall Glickman's Portland Family Entertainment.

Judging by appearances, life couldn't be sweeter for the youthful tycoon. But Willamette Week has learned that on several fronts Thomason faces problems that pose both a serious legal threat and a public-relations nightmare.

* In the past three years alone, customers have lodged 211 complaints with the Oregon attorney general's office against the Thomason Auto Group, alleging everything from shady sales practices to false advertising. That's more than twice the number of the next two biggest dealers combined.

* In an unprecedented action just completed last week, Thomason Auto Group repaid hundreds of used-car customers whom Thomason admits were overcharged on his lots. Without filing complaints, or in most cases knowing they were entitled to refunds, customers got big checks--if they agreed not to sue.

* Last month, a team of federal civil-rights officials began an investigation into a sheaf of racial and sexual discrimination complaints lodged against the Thomason Auto Group by one current and 10 former employees. Originally filed with the Oregon Bureau of Labor and Industries, the complaints provide a grim, behind-the-scenes contrast to Thomason's lighthearted ads.

No business would want to deal with the issues that confront Thomason today. And while the complaints and inquiries are leveled against the company, Thomason has worked tirelessly to make his name and face almost inseparable from his dealership, which must make his current difficulties particularly vexing. In an unguarded moment, Thomason conceded as much. "It tears your guts out," he says.

Brian Pool and Clyde Hunter, both African Americans, say they were told to clean racist graffiti (above) off company walls.

By the very nature of their work--selling big-ticket items in big volume to suspicious customers--car dealers generate more complaints than most businesses.

In response to the large number of attorney general complaints his company has racked up, Thomason says they are a simply a function of selling a lot of cars. "Less than a fifth of a percent of our interactions with customers result in complaints," he says. "We're very sensitive to complaints and we respond to every one of them."

But even among its Oregon peers, the Thomason Auto Group's track record stands out.

On the surface, the company looks like a larger version of Portland's second- and third-largest dealers--the Ron Tonkin Dealerships and Lanphere Enterprises, respectively--both of which sell a variety of new and used vehicles on multiple lots. But the complaints tell a different story. It's true that Thomason sells more cars than anyone else in town, but even adjusting for volume, the company still racks up far more complaints than its competitors. Tonkin, which in the past three years sold about half as many cars as Thomason Auto Group, generated only 37 percent as many complaints.

For his part, Ed Tonkin, who with his brother Brad runs the Tonkin dealerships, says his company has little in common with Thomason's. "Our businesses are completely different," he says. "I feel we have a longer-term focus. Our emphasis is on customer satisfaction." Thomason shrugs off the slight, saying he's only concerned with his own business.

The more striking comparison is between Thomason Auto Group and Lanphere Enterprises, which sold about a third as many cars as Thomason in the past three years but generated only three complaints.

Of the complaints against Thomason Auto Group, more than half were settled, approximately 20 percent went nowhere and the rest resulted in lawsuits or remain under investigation.

"Sometimes you think, 'If one large dealer can avoid complaints, why can't others?'" says Jan Margosian, a spokeswoman for the attorney general's office, who has handled consumer issues for nearly two decades. Of Thomason's large number of complaints, she says, "Is it bad managers, or a systematic problem? The answer is both."

Complaints against the Thomason Auto Group filed with the attorney general's office allege that employees fiddled with odometers and sold previously wrecked cars without proper disclosure. In a few cases, the complaints are more unusual, such as a complaint that is to be filed this month alleging that a Thomason employee masturbated in a customer's living room, or another in which two Thomason salespeople allegedly took advantage of a customer suffering from a degenerative nervous disorder, selling him landscaping services at an inflated price and selling him a car he physically could not drive.

By far the most common type of complaint over the past three years, however, is categorized in the attorney general's filing system under "false and misleading" terms of sale. The words "false and misleading" crop up in more than a third of the cases.

A number of complaints concern customers' treatment in what car people call the "back end," which includes the non-automotive parts of a sale, such as financing, warranties, insurance and various auto protection packages.

Michael Moore of Portland says he narrowly avoided getting ripped off when he purchased a new Corolla from Thomason Toyota in December. Moore, who reviews health-insurance contracts for a living, says that as he was signing his purchase documents, he noticed a charge for an $800 item called Safe Inc., the function of which remains a mystery to him. "I said, 'Why is that on there? I didn't agree to that,'" Moore recalls.

Moore's allegation describes a practice called "packing," in which costs of products the customer didn't ask for are hidden in the final price of a car. Since most people buy their cars based on a monthly payment rather than paying cash, says Monty King, director of the Oregon Independent Auto Dealers Association, packing is easy to do. The practice is rampant throughout the industry--and illegal.

Thomason declines to discuss specific complaints against his company, but he denies that his employees engage in packing. "Our policy is to disclose all costs," he says. "Customers are told exactly what they're paying for."

The Thomason Auto Group's biggest customer problem, however, dwarfs its existing file at the attorney general's office. In an unparalleled action, the company over the past year refunded more than a million dollars to hundreds of customers, most of whom never even knew they had been wronged. Through last week, Margosian says, Thomason had returned a total of $1.5 million to customers, a figure that in terms of restitution, Margosian says, "is bigger than anything we've done before."

The company's refunds dumbfounded competitors. "We've never once sent an unsolicited rebate," says Ed Tonkin. "I've never heard of it happening before."

Thomason's offense was simple. The company sold cars to customers at prices higher than those at which the cars were advertised. Such a practice, Margosian says, is a clear violation of truth-in-advertising laws.

Each weekend, Thomason and other dealers list hundreds of so-called "ad cars" in The Oregonian. The model, stock number and other identifying information are listed in the ads. If a customer wants to buy an ad car, the dealer must sell that specific car to him at the ad price.

Thomason admits that his company overcharged customers on a large scale, but insists it was unintentional, the result of a computer glitch. He says that because the system did not show that cars were advertised at discounted prices, salesmen mistakenly sold them at full price. He also says that as soon as he discovered the problem he notified the attorney general's office. "There was never a complaint registered," he notes. "We called in auditors and fixed the problem ourselves."

Margosian says, however, that the notion that computers are to blame for the overcharging is news to the Department of Justice. "We don't know anything about a computer glitch," she says. She also points out that the prices of advertised cars are required to be posted in the showroom and on cars themselves. Thus, even if the computers didn't function properly, there is little excuse for a salesman not knowing the correct price.

Until Thomason Auto Group finalizes all the paperwork on its restitution program, the attorney general's office will not decide what action to take against the company. "There's no settlement agreement," Margosian says. "The file is open, and we're still investigating the situation."

The large-scale rebates aren't the first time Thomason's ads have cost his company dearly. In 1994, the Washington Attorney General's Office sued Thomason over complaints at its Seattle-area dealerships. Thomason agreed to a settlement in which the company was assessed nearly $400,000 in civil penalties for what the AG's office called "16 patterns of unlawful or deceptive sales practices," including packing, bait-and-switch tactics and false advertising. "What caught our eye was the advertising," recalls Assistant Washington Attorney General Doug Walsh. In the months following public announcement of the fines, more than 400 additional complaints poured into the Washington AG's office. Irate consumers even picketed the dealerships, and in 1995 Thomason Auto Group pulled up stakes and left the state.

As with complaints to the AG's office, Thomason Auto Group leads local auto dealers in BOLI complaints. In the past four years, Thomason racked up 33, Tonkin seven, and Lanphere none.

Ultimately, 11 employees--six African Americans, two Latinos, one Filipino and two women, all represented by Salem lawyer William Stark--filed complaints against Thomason Auto Group. Three of the 11 were still employed when they filed; the rest had already quit or, in only one case, been fired.

When a December mediation between Stark's clients and the company ended without resolution, the BOLI complaints were turned over at Stark's request to the federal Equal Employment Opportunity Commission in Seattle. A team of EEOC officials began investigating the complaints last month, Stark says. EEOC officials will not comment until the probe is complete.

Whatever the outcome of the EEOC investigation, the discrimination complaints, if true, present a disturbing version of what it's like to sell cars for Thomason. One of the complaints was filed by Pam Atkinson, a 36-year-old mother of three who worked at a Thomason used-car lot at 8990 SE McLoughlin Blvd. from 1997 to 1999, having previously sold cars in Salem.

Among other things, Atkinson alleges that in May 1998, while she stood in the "up room" (the bullpen where the sales staff await customers), a salesman named Bradley Forrest Fenley "took out his 'member' and began it putting it in" a sleeping co-worker's mouth. Atkinson recalls that she was revolted, if not exactly surprised. "It's the most primitive place I've ever seen," she says. "And I've worked in logger bars."

Atkinson says she notified her supervisor, Larry Green, about the Fenley incident and told other managers about other incidents but that nothing was done. (Green could not be reached for comment; Fenley denies the incident occurred.)

Larry Carillo, a Mexican-American who also sold cars at the same location, details several incidents in his complaint. In March 1998, a manager allegedly said to him, "how about if I just pay you in tacos?" Then in June of that year he says another manager called him a "minimum-wage beanpicker." In March 1999, he says, a third manager told him he looked as if he "just rolled out of the ghetto." Like other complainants, Carillo says he repeatedly brought racial slurs to the attention of senior company officials to no avail.

The complaint Brian Pool filed about his experiences, also at 8990 SE McLoughlin Blvd., is even more alarming. Pool, an African American, led a multiethnic sales crew that Thomason officials concede was the leading sales crew on the lot for several months. According to Pool's BOLI filing, he informed his boss in March 1999 of graffiti in the company bathroom that read, "What's black and blue all over--a black man drug behind a truck" and "Pool's nigger crew sucks dicks." (Another African-American complainant saw the graffiti, videotaped it and provided a copy of the tape to WW.)

At 6-foot-3-inches and 245 pounds, the 30-year-old former junior college football player can take care of himself, but he says he felt "humiliated" when his boss's only response was to tell him and his crew to clean the graffiti off themselves. "I felt a lot of anger," Pool recalls. "I had been telling management the racial undertones on the lot were out of control."

Although Atkinson, Carillo and Pool worked at the same location during part of their tenures at Thomason, the 11 employees whose complaints are now before the EEOC worked at five different lots. According to the complaints, the company's senior management was repeatedly notified of alleged acts of discrimination.

When asked if any employees had been disciplined or fired as a result of the complaints, Thomason said no. He called the complaints "upsetting," but declined to comment on specifics, citing the pending investigation. "We don't take those allegations lightly," he said. "But we feel there's our side of the story too."

No other car dealer in Portland has faced anything quite like the discrimination complaints Thomason Auto Group faces, but then again, no other local car dealer is quite like Thomason.

Pat Johnson, of the advertising agency Johnson Sheen, offers an outsider's view. Having shaped Thomason's image in the mid-'90s, Johnson now creates advertising for the Tonkin Dealerships. From her perspective, Johnson says, the two companies operate completely differently. Thomason, whom she labels a visionary, is more of a risk-taker than his competitors, she says, and also a one-man show.

By at least one measure, Thomason runs a far leaner operation than his competitors. In 1998, Thomason Auto Group sold 45 cars for each employee, Tonkin sold 28 and Lanphere 21.

Judging from time sheets, Thomason also works his people harder. His salesmen often put in more than 300 hours a month, a figure that raises competitors' eyebrows. "Nobody here works that much," says Bob Lanphere Jr.

Thomason's liberal hiring policies also appear to set him apart from the competition. At least four of the employees named in Atkinson's BOLI complaint, for instance, have criminal records. Fenley and Robert Torresdal, two of the men Atkinson names, sold cars for Thomason while living in a nearby Clackamas County Corrections work-release house.

For his part, Thomason says as long as an applicant discloses his background, the company has no policies against hiring ex-cons. "We don't discriminate against anyone," he says. "We believe in giving everybody a chance."

Thomason's competitors aren't as magnanimous. Lanphere says his company would not normally hire a felon. Ed Tonkin takes a similar position. "We rarely hire people with criminal records," he says.

It's difficult to understand how someone as image-conscious as Scott Thomason could find himself in so much hot water, but part of the problem may be the phenomenal success his advertising helped fuel. Measured by vehicles sold and employees, Thomason's company has more than tripled in size over the past 10 years. It's not clear that the company's managerial skills have kept pace.

In December, for instance, the insurance division of the Oregon Department of Consumer and Business Services fined Thomason Toyota $30,000 for allowing employees to sell insurance to customers without a license. The fine was the first ever levied against an auto dealer by the department. Thomason explains that he relied on the insurance companies to make sure his employees were licensed.

Thomason admits that the company may have grown too fast. "For me to sit here and say I control this place is not a smart thing to say. Because when you have 1,200 employees, you're at the mercy of your people," he says. "You can't control that many people."

There are some indications that his new partner, Asbury, wants him to slow down. One of the engines of Thomason's explosive growth has been the company's willingness, as its ads say, "to offer financing to anyone the law allows." Rod Livesay, Thomason's longtime chief lieutenant, who retired last year, says the company co-signed loans on about 15 percent of car sales in recent years. In other words, if a customer defaulted on a loan to Ford Motor Credit, which provided much of Thomason's financing, Thomason Auto Group was on the hook for the customer's payments.

No other Portland dealer, or any of the other seven dealerships Asbury owns, makes such guarantees, Livesay says, and Asbury recently told Thomason to stop. That edict, which Thomason confirms, may dampen sales.

Asbury also instructed Thomason to cut back on advertising, Livesay says, because Asbury's other dealerships spend dramatically less. Figures compiled by local media trackers confirm that in fact Thomason trimmed total ad spending by 9 percent last year, to just under $11 million--oddly enough, at the same time Tonkin was increasing spending by 25 percent.

What will Scott Thomason do now? During a recent interview, he sounded at times like a man in denial, arguing that people pick on his company because he is so visible. "We're a target," he says. In other moments, however, he sounds like a man who is willing to change. "The car business in the past has been a tough and dirty business," he says. "I want to be the guy to help make it more professional." He hired a new director of human resources at the first of the year, notes proudly that three of his four top executives never sold a car in their lives and even vows that he'll tighten his hiring practices. "We're definitely headed in the right direction," Thomason says. "I really believe that."

pounder--a profit of a thousand dollars on a car sale; as in, "I just nailed an 8-pounder."

kink--to steal another salesman's customer or deal; or someone who does same

blast--to take advantage of; as in, "You'd rather sell to a woman than a guy who shows up with a BlueBook and cash because you can't blast him as much."

stewing--letting a customer sit for long periods of time after he's decided he wants to buy

decrowning--even if a customer is richer than Bill Gates, he is given a negative interpretation of his credit report, or "decrowned"

chasing for stips--following a customer home to verify residence and financial information

leg--the difference between the cost of a car and what a customer can be convinced to pay; leg is a measure of how many extras can be packed into a payment

loading your lips--what the desk manager does when he scripts a salesman's pitch

super string - the achievement of selling a car Friday, Saturday and Sunday; generates lots of spiffs

up room--a second-floor bullpen with one-way glass where salesmen claim customers by yelling out the color of approaching cars, as in "up blue!"

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Willamette Week | originally published February 9, 2000