Car buyer alleges fraud in Kruse-run phone sale

A Virginia man has sued the Auburn Cord Duesenberg Museum and an embattled board member over the September sale of a multimillion-dollar 1930 Duesenberg automobile.

James Scott alleges in the federal lawsuit that museum board member Timothy S. Durham and others who had a financial interest in the sale of the car drove up the price during bidding and then split the profits of the sale. Scott, who filed the suit last week in U.S. District Court in Fort Wayne, won the car with a bid of $2.9 million

Durham is an Indianapolis financial adviser whose offices were raided by FBI agents two days before Thanksgiving.

Also named as defendants in the lawsuit are Missouri collector car dealer Mark Hyman; Donald D. Lyons, of Dowagiac, Mich.; Kruse International and the Auburn museum.

Before the Sept. 3 auction, Scott visited the museum and previewed the 1930 Duesenberg put up for consignment by a group of sellers: Durham, Hyman, Lyons and the Lyons Family Trust. Scott participated in the auction by telephone.

The auctioneer for the museum’s auction used Kruse’s license to conduct the auction, Scott’s attorney said.

An employee of the museum stayed on the telephone with Scott and transmitted bids to and from him.

Hyman opened the bidding with an offer of about $500,000, according to court documents.

As the auction moved past $850,000, the remaining bids were between Scott and Hyman. Scott alleges that Hyman conferred about bids often with Lyons, who was seated next to him.

Scott said no one disclosed that the group of sellers reserved the right to bid or that they were in fact offering bids on the car. That meant that the price of the car was artificially inflated by those who had a financial interest in getting more money for the car, according to court documents.

After Scott transferred more than $3.1 million to the museum’s bank account a few days later, the money was divided up and distributed to Hyman, Lyons and the museum, with Durham’s knowledge.

Scott has yet to receive the title for the vehicle, according to court documents.

In his civil lawsuit alleging violation of Indiana law, fraud, criminal conversion and negligence, Scott is seeking $3.1 million, interest and the right to retain the automobile, according to court documents.


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