The lingering taint of fraud scandal at the former Huling Brothers auto dealerships in West Seattle has forced the new owner to close their...

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The lingering taint of fraud scandal at the former Huling Brothers auto dealerships in West Seattle has forced the new owner to close their doors, according to the dealerships’ CEO.

Gee Automotive Companies of Spokane gave notice to its employees in a letter Wednesday that it had made “an extremely difficult decision” to shut down and lay off about 160 employees unless a new owner could be found by Oct. 7.

Ryan Gee, president of Gee Auto, said the dealerships never recovered from a scandal involving fraud and theft that surfaced two weeks after he bought the dealerships from Steven Huling last January.

On Jan. 19, police arrested three former Huling employees for allegedly scheming to steal $100,000 from an obviously mentally ill man, a plan hatched by a then-sales manager.

Gee said Huling was required to disclose anything that could affect the value of the $5.3 million sale. But Gee said he first learned of the pending arrests on Jan. 18 in a “vague” voicemail left by Huling, and only learned of the full details from news accounts. Gee said he hasn’t talked to Huling since, although he has tried to get answers.

“As you can imagine, I’m extraordinary frustrated by the lack of disclosure,” said Gee in an interview from Spokane. “We know for certain he knew.”

Huling said today that the lack of disclosure was due to a lack of information. “This was never brought to my attention until after the sale,” he said.

Huling said that the Gee family is “putting their spin on this because they have some problems that have nothing to do with this.”

Gee said business at the West Seattle dealerships is down 50 percent from a year ago, at a loss of about $300,000 a month. Gee said he planned to file a lawsuit against Huling next week for breaching their contract, which includes a provision in which Huling vouched that his company had operated in a law-abiding manner. The contract also required Huling to disclose any pending liabilities that could devalue the company.

Gee had planned to keep the Huling name on the dealerships for nine months, but immediately changed the name after the arrests.

To understand why business had dropped, Gee said his company commissioned a survey of West Seattle residents. About 90 percent of the respondents said they knew of the criminal allegations at Huling, Gee said.

“Even though we made significant efforts to differentiate ourselves from the former Huling name, the impact of this event and stigma associated with it, we weren’t able to recover from,” said Gee. “It was incredibly significant in the consumer’s mind, that such a horrific act would happen. The stigma attached to the business is something that has continued to linger, and has had enormous detrimental impact to us.”

Huling said that Gee came in with a different business model than the one that worked for his dealership for 60 years, adding that floundering business “has been something that is their problem.”

“I think that it’s really important to note that when we sold the dealership, we never sold the Huling name,” he said. “It looks like the commitment was never there on their part.”

Huling’s former sales manager Adrian G. Dillard and two other former salesmen are scheduled for trial in October for charges of theft, fraud and money laundering.

The scandal originated in July 2006, when a 59-year-old customer who had a history of mental illness came into Huling Brothers wearing feces-stained pants and seeking to buy a truck. The man paid $30,000 for a vehicle, and told a salesman he had far more money back at his apartment, according to police reports. The next day, Dillard and five underlyings practically tripped over each other to be the first to steal the remaining cash; Dillard and another salesman, Ted Coxwell, succeeded, according to a Washington State Patrol report.

After being beaten to the cash by co-workers, another salesman, Paul Rimbey, managed to steal the man’s new $30,000 truck by getting him to sign over ownership while the man was in Harborview Medical Center’s psychiatric ward, according to charging papers

All three men have pleaded not guilty.

Gee said his company, the largest family-owned auto dealership in the Northwest, is now “actively” seeking to sell the dealerships. The land the dealerships sit upon, on Fauntleroy Way Southwest in West Seattle, is still owned by Huling and is leased by Gee.

Jonathan Martin: 206-464-2605 or