For the second time this month, the Respect Auto Group has been sued for allegedly failing to pay back a loan.
Asset Protection Financial Inc. and two affiliates claim that Respect Auto Yonkers, doing business as Yonkers Kia, defaulted on a $3 million loan.
“Asset Protection was fraudulently induced,” according to a complaint filed on July 23 in White Plains federal court, “by misrepresentations and omissions of material facts concerning Respect Auto’s anticipated dealership acquisitions.”
“Just learned about this,” Respect Auto president Harrison Gray stated in response to an email asking for his side of the story, “so I have no comment at this point.”
On July 2, Zee Bridge Capital, of Purchase, accused Respect Auto Group of refusing to pay back a $4.3 loan. Days later, Zee Bridge discontinued the lawsuit and Gray announced that both sides were working on a mutually satisfactory settlement.
According to the new complaint, Gray asked Asset Protection in May 2023 if he could borrow $5 million for acquiring car dealerships.
Respect Auto purportedly planned to open four dealerships from November 2023 through September 2025 in Manhattan, the Bronx, Boston, and Santa Monica, California, representing the Honda, Kia and Land Rover brands.
Initially, Asset Protection, of Chesterfield, Missouri, declined, according to the complaint, but in August 2023 it agreed to loan $3 million. The deal was signed on Sept. 1.
The loan had to be repaid in 18 monthly payments, the complaint states, and Gray and one of his affiliates guaranteed the deal.
Almost immediately, the complaint states, Gray asked to defer the first payment for 90 days because he was still trying to secure real estate for the California dealership and the Massachusetts dealership was under construction.
Asset Protection deferred the first payment to December.
But no payment was made in December or since then, according to the complaint, and neither the California nor Boston dealership opened.
Asset Protection issued a default notice on April 5 and demanded full payment on the loan, plus interest and fees.
Asset Protection says Respect Auto sold its only operational dealership this past May, and did not make any loan payments. According to the Zee Bridge Capital lawsuit, Respect Auto sold Yonkers Kia in April for $12.35 million.
Asset Protection accused Respect Auto of breaches of contracts and fraudulent inducement. It is demanding $3.4 million.
