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- November 08, 1982
- Vol. 18
- No. 19
Downfall of An Auto Prince
John De Lorean, the Detroit Dream Merchant, Is Trapped in a Desperate Gamble on Cocaine
John Zachary De Lorean, the automotive adventurer who created a dashing new car and rode it to financial ruin, stands charged with bankrolling a deal for 220 pounds of Colombian cocaine. He could have made up to $10 million on the deal, yet the risks were dauntingly high, even for De Lorean, a lifelong high roller.
Was it the drugs?
The FBI says he was not a dealer. His friends say they never saw him snort the stuff. "John doesn't drink or smoke," says his former PR man, Mike Knepper. De Lorean is a vitamin-popping health nut with willpower enough to shuck a four-pack-a-day cigarette habit: At 57, he kept as trim and sleek as the stainless-steel body of the car he built. "I could see John De Lorean being busted on swindling the stock market before I could believe he would sell drugs," Knepper contends. But De Lorean was vulnerable to the magic aura of the cocaine trade and its promise of euphoric profits. After eight years of superhuman struggle, the car company that was his life's vision faced failure.
Under tremendous pressure, De Lorean appeared to crack. He became, says De Lorean Motor Co. receiver Sir Kenneth Cork, "an entirely unpredictable man, at times an extravert and very excitable, and at others calm and collected." According to an FBI source, De Lorean had made earlier, much smaller, purchases of cocaine, possibly to give to friends. The source says that just before his arrest the automaker was "excited, almost exhilarated" about the deal. A small amount of cocaine was found on his person, a source said.
Was it the money?
De Lorean does have a penchant for flaunting his wealth: his 20-room, $7.2-million Fifth Avenue duplex in Manhattan; his 440-acre, $3.5-million New Jersey estate; his $4-million California ranch with hot tub accommodations for eight; his servants; his fleet of cars; his $700 suits and blue "JZD" shirts. He traded real estate with a sure touch to build a personal fortune worth an estimated $28 million. But money alone wouldn't make him do it. "I can live on $60,000 or $70,000," De Lorean said in 1974, after he told GM to take its $650,000 vice-presidency and shove it. "I could lay around for the rest of my life, but that's not my style. I'm running because it turns me on."
Aside from drugs or money, what else? Foremost was De Lorean's addiction to success, his fear of failure and a giant, turbocharged ego that drove him relentlessly. He was desperate not to let his namesake car company die—though that's just what happened on the day he was arrested. "He is ruthless in the pursuit of success," says former associate Annette De Lorenzo. "He will do anything because he is quite sure of himself. He thinks he is above the law."
His former engineer, William Collins, says: "John set it up so that he and the company were almost one and the same. If it went down, he went with it." De Lorean himself said: "I've never failed at anything, and I'm not about to try now." Ads for his $25,000 DMC-12 sports car read: "De Lorean—Live The Dream." Perhaps that was the problem: He did.
It was a seductive dream the De Loreans lived—John, the handsome millionaire, and third wife Cristina, 32, a butcher's daughter whose captivating beauty earned her half-a-million a year in modeling fees. They flitted from one coastal estate to the other. In Los Angeles Johnny Carson entertained them. They were not only buddies but business associates. The De Loreans bought Carson's New York apartment. Carson invested $500,000 in De Lorean's venture and drove his car. (Carson was driving a DMC-12 the night he was arrested for drunk driving.)
In New York the De Loreans dined at swank Le Cirque and "21" but shunned the druggy discos, preferring to entertain in their art-filled ("but unimportant art," huffs a friend) apartment on Central Park. Cristina, or "little pizza" as John fondly calls her, would whip up buffets of lasagna and shrimp marinara—without the help of her house-boy or maid—for moneyed Manhattan friends: NFL Commissioner Pete Rozelle, Frank Gifford, Eileen and Jerry Ford (they own the Ford model agency), Herb and Ann Siegel (he heads Chris-Craft), David and Hilly Mahoney (he runs the Norton Simon conglomerate) and Don Hewitt and Marilyn Berger (he produces 60 Minutes, she's a TV reporter).
"She's a wonderful Italian cook, a great girl, a real wife," says a family friend. Cristina had taken a playboy and tamed him. John always had a compulsion for dazzling women, but after he married Cristina, he doted just on her. "I'm so in love that I can't stand it," he once sighed. Together, they rode horses on their beloved New Jersey estate—Jackie Onassis, Cyrus Vance and Malcolm Forbes live nearby—and cared for their children, Zachary, 11, and Kathryn, 4. "Cristina is totally devoted to both kids," says the family friend. Kathryn was born five years after John and Cristina married.
John adopted Zachary shortly before his second marriage ended. "I never thought I would marry again," he explained. "It sounds weird, but it was a good thing." Says an acquaintance: "John is full of himself, but he is a loving parent."
Whether it was devotion to family or fear of assassination, as some said, De Lorean spent as little time as possible at his car factory in Northern Ireland. He kept a company house in Belfast, but generally stayed in a suite at the London Ritz hotel during his twice-monthly trips to Britain by Concorde.
He did most of his quicksilver wheeling and dealing in New York—with other people's money. "He said he put anywhere from $3.5 to $10 million into the company," reports his former financial officer, Bob Dewey. "But he never put his own money in the company." De Lorean's personal stake was, by some accounts, only $700,000 in actual cash, and the deal was structured to yield a windfall profit for him. Had Wall Street not foiled his plan to go public this year, selling De Lorean stock for $12.50 a share, his holdings would have boomed to a paper value of $120 million.
Most of De Lorean Motor Co.'s capital—$130 million—came from the British government, with $8.6 million more from 345 auto dealers and $18 million from private investors (including $150,000 from Sammy Davis Jr.).
With that money, De Lorean vowed to start "the ethical car company." His gull-wing model would last (its stainless steel body is virtually rustproof, but also hard to repair), be fuel-efficient (the DMC-12 gets 21 city mpg), and cheap (he planned to sell it for $8,000, but the price jumped to $25,000). He also wanted to give jobs to Northern Ireland's 22 percent unemployed. "God stuck me here," he said, "to be part of the solution."
De Lorean called himself a "firm believer in the 10 Commandments," a Catholic who (though twice divorced) went to St. Patrick's Cathedral every day he was in New York. "In many ways, Jesus was an outsider," De Lorean said. "He was a radical. Some of the big things in life are achieved by those who refuse to conform.... I'm an outsider."
But some say the messiah of motor-making betrayed his own gospel. "All the things he said he despised at GM he became himself," says Dewey. "John suffered moral anemia." Former aides accused him of bookkeeping sins, surrounding himself with yes-men and lording over subordinates. And a British M.P. lamented: "We should have known better than to entrust such sums to such a dicey character."
De Lorean paid himself extravagantly well. He was drawing $475,000 a year and $1,000 a week in expenses even when the company was dying. "John," said one critic, "would sooner be sterilized than go second-class."
He went first-class at home too. While De Lorean Motors declined, De Lorean himself bought his New Jersey estate. The lavish expenditure on Cristina's jewelry and the art and furnishings for three sumptuous homes and a fleet of automobiles made for a lifestyle very few could afford. Only the best would do. For his New York headquarters he chose a $25,000-a-month skyscraper suite on eyeball level with former colleagues in the nearby GM building. "When you start at the top," Dewey remembers telling his boss, "the only place to go is down."
Dewey says De Lorean had a tendency to make up facts and create phantom investors. He once told 20/20 that Frank Sinatra had ordered a few DMCs. "Ridiculous," Dewey huffs. "Sinatra was representing Chrysler."
De Lorean wanted $17 million in British loans forgiven to pay for 140 fire-bombings at his Ulster factory. Police records, however, show only two significant bombings with minor damage.
He also frittered time and cash away on outside interests. He allegedly spent $500,000 in company legal fees in an unrealistic try to buy Chrysler.
Scotland Yard looked into De Lorean's finances but found no criminal conduct. With his usual authoritative air, De Lorean said the allegations were "part of a wider conspiracy" by a competitor or a foreign country "I dare not name."
He fought for his company and knew how to fight. "I know about being a street kid," he said. "I learned about getting in trouble. I thought the whole world grew up like I did."
He was raised the eldest of four sons in working-class Detroit. His immigrant father, Zachary, wore blue collars in Ford's foundry and "finished down there right where he started, in the factory." His mother moved to California when John was a boy. He shuttled between his parents.
De Lorean's dream of following Henry Ford's example of starting a successful American car company was born when he was a youngster. "I have spent my whole life on cars," he says. At Michigan's Lawrence Institute of Technology he earned a degree in engineering, and while working, earned a master's in engineering and an MBA and started on a law degree.
He went to work as an engineer at Chrysler, then Packard, then GM, fathering a generation of "muscle" cars: from the Pontiac GTO to the Firebird.
In 1972 De Lorean was GM's chief of North American operations with, he boasts, "a better than even-odds chance of one day being president." Six months later, he chucked it. "I didn't feel like I was in the game anymore," he complained. "He's the only man to fire GM," says an admirer. After he quit, De Lorean assembled a manifesto of GM's ills: sinister business practices, unsafe cars, bungled management. He chickened out of publishing it, but journalist J. Patrick Wright later wrote De Lorean's material into the best-selling On a Clear Day You Can See General Motors.
Detroit tolerated his liberal beliefs but not his liberal life-style. De Lorean lived like the fast cars he designed. Instead of worsteds and wing tips, he wore turtlenecks and beads. "Goddamn it, John," his boss once berated him. "Can't you dress like a businessman?" He dyed his hair and had a surgeon streamline his face. Instead of Chevrolets he sometimes drove Italian thoroughbreds like Maseratis. Worst of all, he married three times. Detroit execs did not approve. It was okay for car styles to change annually, but marriages were not designed for obsolescence. "There was a lot of envy and resentment," De Lorean said. "I didn't kiss anybody's ass and I didn't expect anybody to kiss mine."
De Lorean had wed Elizabeth Higgins, but after 15 years he traded her in on a younger model, sports figure Tom Harmon's 20-year-old daughter Kelly. After three years, they divorced. In his single days De Lorean dated enough stars to fill a clear night's sky: Ursula Andress, Candice Bergen, Nancy Sinatra and Pam Austin, the "Dodge Rebellion girl."
Then, at a Beverly Hills Gucci party in 1972, De Lorean met bellissima Cristina Ferrare. He had sighed over her ads in Vogue and torn them out. "First I fell in love with her picture," he said, "then I fell in love with her." She was half his 48 years, but De Lorean protested, "I consider myself young for my age." "Age difference?" scoffs Cristina. "He's the sexiest man in town."
When Cristina and De Lorean met, she was planning to marry another business daredevil, Fletcher Jones, a computer millionaire. Soon after, Jones died flying his own plane. (Ironically, one of the men arrested with De Lorean last month, William Hetrick, once worked as Jones' pilot.)
Within weeks Cristina moved into De Lorean's Michigan home. "Then," John reminisced, "in about two months she moved out and said, 'Either we get married, or drop dead.' " They got married and later moved, at Cristina's insistence, to a new house away from the ghost of John's ex-wife. "Twice the house at twice the price," she crowed.
John says he quit GM partly for Cristina. "She wasn't accepted into Detroit society," he said. "I didn't want to subject her to that vindictiveness."
But he had another reason. De Lorean was dying to make his car. "What made this country," he said, "was people who believed in something and went out and did it." Eight years later, in January 1981, the first DMC-12 roared off the assembly line.
De Lorean's dream had come true: He had a beautiful, loving wife, an eye-catching car and a company to call his own.
But De Lorean was astride a money-eating tiger. He aimed to make 40,000 cars a year, but produced only 9,000 and sold just 5,550 as the deepening recession devastated the American auto industry. De Lorean Motors was $200 million in debt. In February, the company went into receivership. Most of its 2,600 workers were laid off, the assembly line stilled. The De Lorean family, it seems, was short on cash. Cristina sold four $15,000 sable coats and the couple put $150,000 in Louis XV clocks and other antiques on Sotheby's auction block this week. But that wasn't enough. The British government demanded $10 million by late October if De Lorean wanted to reopen his plant.
He was desperate. The unflappable De Lorean seemed to panic. He was writing memos about aides engaging in "disloyalty and insidious treachery." Former golf pro Walter Burkemo, a friend, called to ask John's plans: "He said, 'We're not going to lose the company.' He kept saying that."
"He was a great gambler and a great entrepreneur," says racing celebrity Linda Vaughn. But the gamble he took was too great. In July, De Lorean allegedly made the mistake of telling a federal informant—who, according to an FBI source, had supplied De Lorean with drugs—that he would like to make a cocaine deal. For $60 million in drug sale profits, the FBI says, De Lorean allegedly agreed to trade half his DMC stock. The informant also told the FBI that Californians William Hetrick and Stephen Arrington were looking for a buyer. It was as simple as putting together supplier and buyer.
After months of bicoastal meetings among De Lorean, Hetrick, the informant and undercover agents—some preserved on videotape for posterity and prosecution—the FBI confiscated 60 pounds of cocaine in a car and arrested Arrington and later Hetrick. The next day De Lorean was busted in an L.A. hotel. "This is better than gold," he beamed, according to the FBI. "This came just in the nick of time." But it didn't. Britain had just put De Lorean out of business for good. And because of his chase after fool's gold in L.A., De Lorean reportedly missed a call from a banker arranging a $200 million loan that could have saved his company—and him.
De Lorean, a man accustomed to gold bracelets, was led away in steel handcuffs. Cristina heard the news on TV. "The horrible thing," she told a friend, "is that I'm finding out the news like everybody else." She called their friend Siegel. "I'm desperate," she told him. He flew with her to California.
Cristina has stood by her man from the beginning. In February, she told BBC-TV: "I live with the sleepless nights. I live with the anguish he has to go through every day. I'm 1,000 percent behind him." Even now she says: "I'll stand by John. We're a team."
For days De Lorean remained in jail, apparently unable to raise the $250,000 cash bail. Friends were aghast that his rich pals would leave John in the Terminal Island jail so long. An FBI source was not surprised: "De Lorean is a sinking ship that no one is going to rescue," he said. Investigation sources expect De Lorean to raise an entrapment defense with some chance of success. Federal agents blame an undercover man for over-zealousness in offering to supply De Lorean with Thai heroin.
For a long time, Cristina tried to shield her children from Daddy's difficulties. But one day, she told an interviewer, "Zachary suddenly said to John, 'Dad, I want you to know that when summer comes I'm going to cut all the lawns near our country house and I'm going to take that money and give it to you so you can keep your plant in Ireland open.' " Then, she said, "John started to cry."
This story was reported in Los Angeles by David Gritten and Karen G. Jackovich; in Detroit by Julie Greenwalt; in New York by Chet Flippo and Linda Marx; in Washington by Karen Feld; in New Jersey by Richard K. Rein; and in Seattle by Bill Shaw.
- David Gritten,
- Karen G. Jackovich,
- Julie Greenwalt,
- Chet Flippo,
- Linda Marx,
- Karen Feld,
- Richard K. Rein,
- Bill Shaw.
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