Car Manufacturer John De Lorean Is Arrested in a Drug Sting
John De Lorean, renowned for his role as an automotive innovator and manufacturer, was arrested on October 19, 1982, by the FBI for his alleged involvement in a drug conspiracy aimed at distributing cocaine. His arrest garnered widespread media attention, particularly due to its timing with the closure of his Northern Ireland manufacturing plant for De Lorean Motor Cars Ltd. De Lorean, who had previously gained fame for creating the iconic Pontiac GTO and the DMC-12 sports car, faced financial struggles leading to his pursuit of unconventional funding methods to save his company. The FBI alleged that he participated in discussions for a scheme to bring in large quantities of cocaine, while De Lorean maintained that he was seeking investors and was coerced by threats to his family.
Following a complex sting operation, De Lorean was arrested after meeting with undercover agents and viewing the drugs. Despite his acquittal in 1984 on the grounds of entrapment, the incident had lasting repercussions on his reputation and business. While the DMC-12 became a cultural symbol, the fallout from his legal troubles contributed to significant financial losses for investors and the British government, who had supported the venture as a means to combat unemployment in Northern Ireland. De Lorean's story remains a poignant example of the intersection between ambition and the law, illustrating the fragility of success in the high-stakes automotive industry.
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Car Manufacturer John De Lorean Is Arrested in a Drug Sting
Date October 19, 1982
Automobile manufacturer and engineer John De Lorean attempted to save his failing company by conspiring to sell drugs. He was arrested by the FBI in a case that generated widespread publicity and scandal. He was later acquitted on grounds of entrapment but his name is now synonymous with white-collar crime.
Locale Los Angeles, California
Key Figures
John De Lorean (1925-2005), American automotive engineer and founder of De Lorean Motor CompanyJames Hoffman (fl. 1980’s), former neighbor of De Lorean and FBI informantBenedict Tisa (fl. 1980’s), FBI agent
Summary of Event
Charismatic and well-known automotive manufacturer and engineer John De Lorean was arrested by the Federal Bureau of Investigation (FBI) for conspiracy to distribute cocaine on October 19, 1982. His arrest made international headlines, as the timing coincided with the closing of the Northern Ireland plant for De Lorean Motor Cars Ltd., whose parent company was De Lorean Motor Company (DMC), based in Detroit, Michigan.
Founded in Detroit in 1975, DMC had gained international publicity with the introduction of the DMC-12 sports car, which was manufactured in Northern Ireland, in 1981. However, delays in building the cars, as well as flaws in design and manufacturing, led to sales well below the projections needed to make a profit. The DMC-12 ended its production run in late 1982, with about nine thousand sold. By the time DMC had entered into receivership and bankruptcy, De Lorean was seeking ways to recapitalize his business so that he could continue production and develop more cars.
The story of how and why De Lorean, who also gained fame as the creator of the Pontiac GTO “muscle car” during the early 1960’s, became involved in the drug-dealing conspiracy remains a two-version tale. The FBI claimed that De Lorean played an active role in the conspiracy to bring 220 pounds of cocaine (worth tens of millions of U.S. dollars) into the United States. FBI tape transcripts indicate that De Lorean did indeed participate in several meetings, in which he demonstrated a willingness to pay a $1.8 million commission for a transaction.
De Lorean, however, claimed that he never intended to participate in an illicit drug deal. Instead, he was looking for investors in his struggling car company. His willingness to seek creative and unconventional financing methods was a product of his inability to gain more bank financing. After being contacted by James Hoffman, the father of one of his son’s friends in Pauma Valley, California, De Lorean listened to a deal that would possibly recapitalize his company.
In reality, Hoffman was a federal law-enforcement informant with a history of drug-trafficking convictions. On July 11, 1982, De Lorean met Hoffman at the Marriot Hotel in Newport Beach, California. Hoffman described a plan in which De Lorean would pay Hoffman a $1.5 million brokerage fee plus $300,000 in expenses to provide financing for De Lorean’s company. Soon after the meeting, however, De Lorean realized that his money would be used for the purchase of cocaine and that the proceeds from the sale would be laundered through a bank account that De Lorean was to set up through Eureka Federal Savings and Loan in San Carlos, California. Little evidence indicates that De Lorean came up with the complex plan to buy the drugs and launder the money, but numerous federal law-enforcement tapes indicate that he willingly took part in the discussions to participate in the plan.
Discussions about the deal continued, though De Lorean would later claim that he participated in these later discussions because Hoffman had threatened the lives of his children and not, as was alleged by federal authorities, to commit a crime. Regardless, he had flown to Washington, D.C., on September 4 to meet with Hoffman at the L’Enfant Plaza Hotel.
Through various meetings and contacts, De Lorean was introduced to banker James Benedict, the person who would see that the financing on the deal was handled appropriately. (Benedict was undercover FBI agent Benedict Tisa.) Around this time as well, De Lorean was reacquainted with William Morgan Hetrick, a pilot and aviation company owner with a history of drug-running who also was being set up in the FBI sting. On September 20, De Lorean, Hetrick, and Benedict met at the Bel Air Sands Hotel in Los Angeles. FBI tapes yielded incriminating statements made by De Lorean and Hetrick, showing they clearly knew they were involved in a illegal drug transaction. However, De Lorean could not get the $1.8 million in cash needed to complete the deal.
As his company continued to face significant losses and could not pay creditors and suppliers, De Lorean decided that his only contribution to the deal would be DMC stock. This option was made clear by De Lorean at a September 28 meeting, also in Los Angeles, with drug dealer John Vicenza (undercover Drug Enforcement Agency agent John Valestra). De Lorean later noted in a postarrest interview that the stock he offered was worthless.
De Lorean claimed after his arrest that his participation in the deal continued only through the threats of harm to his family and the constant pushing of Benedict. The sting operation was so complex that a real banker volunteered to play a role in affirming the legitimacy of Benedict as a banker with whom De Lorean should deal.
On October 19, De Lorean entered room 501 of the Sheraton Plaza Hotel near Los Angeles International Airport. He saw the cocaine, said it looked “good as gold,” and was arrested by Benedict and Vicenza. The two, along with Hoffman, were with De Lorean in the hotel room.
After putting up as collateral his New York apartment, New Jersey estate, and Pauma Valley home, De Lorean was released on $250,000 bail. His trial, long and complex, began on April 18, 1984. The cross-examination of two witnesses for the prosecution, Benedict and Hoffman, greatly harmed the case against De Lorean, leading to his acquittal on all eight charges on August 16. Benedict testified that he continued with the deal even though he had known at the time that De Lorean did not have the $1.8 million to complete the transaction. This testimony led to charges by the defense that government agents had to put up the money to make De Lorean continue with the deal. Hoffman’s admission during trial that he had demanded a share of the money seized in the deal led to suspicion about the truthfulness of his testimony. In the end, the jury determined that De Lorean had been entrapped by federal law enforcement, and he was freed.
Impact
De Lorean’s arrest bridged high-profile crime such as drug dealing with the “lesser” acts of falsifying reports and bad-faith negotiations for the development of a car company. Although acquitted of criminal charges, he spent years defending himself from numerous lawsuits related to his failed company. He also faced numerous charges of tax evasion and fraud related to his operation of DMC.
De Lorean’s name has been immortalized by the DMC-12 sports car that captivated the attention of automobile enthusiasts during the early 1980’s. Still, even with the car’s continuing legacy, the fact remains that the British government and investors, including celebrities Johnny Carson and Sammy Davis, Jr., lost approximately $250 million when the company failed. The British government had invested in DMC to help with high unemployment in Northern Ireland. Although these monetary losses mostly came from failed attempts to further develop DMC, De Lorean’s arrest and trial affected the company as well. De Lorean would ask, even after his acquittal, “Would you buy a used car from me?”
The novelty of the DMC-12 and the public-relations campaign of his daring venture to build a car that challenged the powers of automobile manufacturers in Detroit made him a hero to many. Analysis of the drug deal indicates, however, that he simply wanted to single-handedly save his dream.
Bibliography
Fallon, Ivan, and James Srodes. Dream Maker: The Rise and Fall of John Z. De Lorean. New York: G. P. Putnam’s Sons, 1983. A detailed biography of De Lorean’s rise as an automotive executive after founding De Lorean Motor Company. This book, published before De Lorean’s criminal trial, contains few details about the cocaine-trafficking case.
Haddad, William. Hard Driving: My Years with John De Lorean. New York: Random House, 1985. Haddad spent fifteen years with De Lorean as a business associate and executive with the De Lorean Motor Company. Displays both admiration and contempt for the complex De Lorean.
Hakim, Danny. “John Z. De Lorean, Father of Glamour Car, Dies at 80.” The New York Times, March 21, 2005. De Lorean’s obituary. A brief account of his life and career, including some discussion of the scandal.
Latham, Aaron. “Anatomy of a Sting: John De Lorean Tells His Story.” Rolling Stone, March 17, 1983. After his arrest but before his trial, De Lorean tells his version of the story in this magazine piece.
Levin, Hillel. Grand Delusions: The Cosmic Career of John De Lorean. New York: Viking Press, 1983. This biography chronicles De Lorean’s early life, rapid rise in Detroit’s automotive industry, and the development of De Lorean Motor Company. De Lorean is characterized as both brilliant and vain, with a keen sense for public relations and a willingness to do anything to succeed.