Lost Nissan Skylines, A $335,000 Lawsuit, An Empty Warehouse: Has A Well-Known JDM Importer Skipped Town?

This story was originally published on June 19, 2018
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In a scene full of shady Japanese car importers, Florida-based Rivsu Imports was supposed to be one of the good ones. No illegal cars. All legit. And with JDM imports on the rise, they seemed like the perfect shop to invest in. But that was before its owners up and disappeared.

This story was originally published on June 19, 2018

In November 2017, Rivsu, a shop that specializes in importing desirable Japanese cars to the U.S., accepted a $335,000 loan from a close acquaintance, South Dakota resident Craig Seidel, to refund customer deposits for three Nissan Skyline R34 GT-Rs.

It was supposed to be a straightforward deal and, on paper, it wasn’t an unreasonable arrangement for Seidel, a Japanese import fanatic who was in talks with Rivsu to come on as a business partner with a stake in the company. But the transaction went anything but smoothly, according to a lawsuit filed by Seidel. He now finds himself at the center of a story about a well-known Japanese domestic importer that’s accused of the same unseemly tactics that have put a black eye on this scene time and again.

By the time of the loan, Seidel had been in discussion for about a year with Rivsu’s owners, married couple Steve and Emily McCarty, to buy a one-third share in the company, according to the complaint. But after reading negative reviews about the importer, he thought twice about his investment. So, the suit says, he asked the McCartys to return his money.

He never heard back.

“They went dark on him,” said Michael Herring, who’s representing Seidel in the case filed May 8.

Seidel isn’t alone in trying to figure out what’s happening to Rivsu. Prospective JDM car buyers have been swapping stories in private Facebook groups and internet forums about Rivsu abruptly going silent in recent months, after a story appeared last week in the online car news site ShortShift about the writer’s troubled effort to secure a 1996 Mitsubishi Lancer Evolution IV he’d purchased through the company.

The current situation, based on interviews with several sources knowledgable of the company’s situation and a review of court and public records, is that, within the past year, Rivsu has fallen into serious financial straits. The McCartys’ Florida house is empty and for sale, their long-running warehouse in the City of Sanford appears abandoned, and they’ve been nothing short of elusive for weeks now.

“It is an absolute shitstorm right now,” said Adam Zillin, an exporter in Japan who runs the company 7Tune Exports and has spoken to a number of individuals in the scene about Rivsu in recent days.

The allegations against Rivsu come at a precarious time for America’s import scene. For years many of the most desirable Japanese imports were totally illegal to import, barred (with a few exceptions) by our archaic 25-Year Import Rule. It helps explain why this scene is so private, so reliant on word-of-mouth communications, so willing to give a long leash to businesses running with very little communication. The complex legalities and expensive nature of importing lended to the scene a lot of sketchy businesses, fraudsters, outright liars and fly-by-night shops.

All this started to change around 2014, when the first of the Playstation Generation Skylines, the 1989 R32 Skyline GT-R, aged into eligibility. Since then, the floodgates for legal JDM imports have opened, with countless forbidden-fruit cars of Japan’s nostalgic Bubble Era coming to our shores for the first time completely out in the open. No swapped VINs, no seized cars, no more secrecy. Arguably, the peak era of Japanese performance cars was the 1990s, and as time goes on those cars are finally old enough to make their way here.

But even as these cars themselves have gone legit, the same couldn’t always be said of the industry that had spent so many years bringing them over illegally. In the past year, the feds have gone after dealers for trying to bring in cars to sell with questionable sales tactics, throwing a wrench in efforts by on-the-level importers to legitimize the process.

By the nature of the 25-Year-Rule, shady shops have existed in the space for a long time, but it seems more and more dealers have started to work within the confines of the law.

Rivsu was hailed as being among that crowd. Its reputation, big in this world of JDM imports that has been so behind-closed-doors for so long, was that it was one of the good ones, on the legit side to that complicated equation. That’s what makes the dealer’s recent, very public problems so surprising.

But business is business, and sometimes it goes sour.

An attorney, George Trovato, notified the Seminole County Circuit Court last Wednesday that he’s representing the McCartys in the Seidel case, but the attorney didn’t return messages left seeking comment by phone and email. A message was left at a phone number connected to a separate company associated with the McCartys, but Rivsu Imports didn’t respond to several messages sent through email and Facebook. Every publicly-listed phone number for the company and the McCartys that Jalopnik could find were disconnected.

Earlier, in April, a rep for Rivsu spoke to Jalopnik through Facebook messenger, in response to questions about an eviction lawsuit filed last fall against the company.

“We have not been at that address for over six months,” the rep told Jalopnik. “Hurricane Irma [damaged] the roof of the unit we were occupying at the time and the landlord was unwilling to repair the damage. Our offices were soaked with water every time it would rain.”

The landlord accused Rivsu of owing roughly $12,000 in past-due rent, yet the rep told Jalopnik it left the location during the disputed time after “the landlord refused to repair the damages sustained to the property, which we documented with video and photos, for a subsequent claim.”

But in the intervening weeks, Rivsu’s problems continued to ratchet up. For one thing, the company’s license to legally operate as a dealer in the state of Florida is no longer valid.

“The Rivsu Imports dealer license expired on 04/30/2018 and is an abandoned location,” Alexis Bakofsky, deputy communications director for the Florida Department of Highway Safety and Motor Vehicles, told Jalopnik. And on June 11, the Florida Department of Revenue filed a warrant against Rivsu to recover $7,313 in delinquent sales and use taxes. The Rivsu Imports social media pages haven’t been updated in months, fueling the rumor mill that continues to churn on Facebook. Some of the postings obtained by Jalopnik show purported Rivsu employees saying they’re clueless about what’s going on.

Herring said he had to “go through a ruse” to even serve the McCartys with the Seidel complaint. The attorney told Jalopnik his client “found somebody on Facebook” that was supposed to take delivery of a car in mid-May from Emily McCarty. He hired a process server to show up and act like a friend of the buyer, and managed to get the complaint in her hands.

Herring said the realtor trying to sell the McCartys’ house believes the couple may be filing for bankruptcy soon, which could stop Seidel’s lawsuit before it ever gets off the ground.

Whatever the case, the McCartys are no longer living at their home outside Orlando.

“It’s as empty as can be,” Herring said.

Even if Seidel’s suit proceeds and he prevailed at trial, Herring isn’t exactly confident the McCartys will have any assets left to provide some sort of financial remediation.

“My client’s probably going to get screwed out of a quarter of a million dollars,” he said.

A $300,000 Loan With Three Skylines As Collateral

Herring’s history with Rivsu dates to 2016, when he represented a former Marine named Bryan Nichols, who’d been sued by the dealer for allegedly failing to pay $4,150 for work on a 1989 Nissan Skyline GT-R.

Since he had family members who had served in the military, Herring said he was eager to take on Nichols’ case and worked it pro bono. Nichols denied every claim, and, in court, said that Rivsu “failed to give a written estimate for repairs” and didn’t promptly notify him or obtain authorization for additional work that was done to the car.

“I felt sorry for the guy,” Herring said. “What Rivsu did, they kept increasing the cost... it was just a moving target.” The case was settled before it went to trial.

Around that time, Herring said, Nichols posted about Rivsu on car forums, which caught the attention of Seidel.

“Seidel picked it up and called him,” Herring said. After explaining the extent of his alleged problems, Nichols recommended Seidel his attorney.

Seidel first crossed paths with the McCartys in 2016. “He got pretty close with them,” Herring said, “so close that he was thinking about investing in their business.”

The McCartys negotiated with Seidel to split their interest of Rivsu, according to the complaint, and then allow him to buy a 33 percent stake in the company.

Stephen McCarty allegedly advised Seidel that, based on “the numbers” for the business, the cost to buy-in would be roughly $300,000—contingent on a confirmation by a business valuation expert.

A year later, with the deal still unfinished, the McCartys had a request for Seidel. The couple had apparently hit a serious snag with clients trying to purchase three separate Nissan Skylines.

In mid-November, according to the complaint, they asked Seidel to advance them $335,000 so they could refund three customers their $100,000 deposits for three Nissan Skyline R-34 GT-Rs that were sitting at a shop in Baltimore called JK Technologies, which specializes in bringing the cars into compliance with Environmental Protection Agency regulations.

In return for his generous loan, according to the suit, the McCartys promised Seidel his money would be secured by purchase agreements for the very Skylines they were refunding deposits on.

But soon after, Seidel caught wind of “negative posts” online about Rivsu, Herring said, “and he got cold feet.” It’s around this time that Rivsu faced the eviction proceeding for its warehouse, and Facebook messages obtained by Jalopnik show prospective clients had started asking around for the McCartys’ whereabouts.

Seidel asked for his money back. According to Herring, the couple didn’t respond.

A call to JK Technologies didn’t help. Seidel reached out to the Baltimore shop and “advised him of his collateralized interest in the cars,” the complaint says.

JK Technologies allegedly responded by saying the cars had a bill of sale in the name of Rivsu, and it, too, couldn’t make contact with the McCartys.

“Without some form of assignment from Rivsu,” the lawsuit claims, “JK Technologies has refused to release the cars to plaintiff, even if its possessory lien is paid by plaintiff.” (A rep for JK Technologies only told Jalopnik of Rivsu: “We used to have a working relationship with them but we don’t any longer”)

As far as Herring knows, the cars remain sitting in Baltimore.

“They duped Seidel into investing with them by giving him three separate purchase agreements on these cars,” he said, “and the things already had full deposits on”

However the Seidel case unfolds, the McCartys have a whole host of other problems to handle, including a number of customers who’re trying to figure out if they’re going to ever take delivery of cars they ordered.

‘It’s An Absolute Shitstorm Right Now’

Concerns and complaints about Rivsu reached a boiling point last week, when Steve Miller, a writer for the auto site ShortShift, published a story about his purchase of a 1996 Mitsubishi Evo. Miller wrote that he was drawn to Rivsu after the McCartys managed to import an R33 GT-R LM and a Midnight Purple III 1999 R34 under the show and display rule.

“So you can absolutely understand why, when I decided that I wanted to go through the importation process, I reached out to Rivsu Imports,” he wrote.

He called Rivsu in October 2016 asking about the possible importation of an Evo and said the company quickly replied.

“I told them my budget (all in by the time the car landed), and I wired them a $10,000 deposit,” Miller said. The car didn’t sell at auction due to the reserve, he went on, but Rivsu told him “another great example” had come up. The next morning, he had an email from an Rivsu sharing good news: he’d won the car.

“Rivsu had gone over budget, but the representatives were adamant that the car was a great example (that could be ‘sold for a profit once landed,’ no doubt),” Miller wrote. “In fact, the car came with tons of spare parts that Steve told me he would send over earlier to ensure they were not lost or damaged.”

Steve McCarty, Miller claims, then said he’d contact him within a couple days to provide a final invoice, which struck Miller as peculiar

“It’s worth nothing here that the winning bid was allegedly $6,700,” he wrote. Rivsu couldn’t provide receipts for the shipping costs, nor any verification that the auction house “actually sold them the car,” Miller goes on.

“They were adamant that Japanese privacy laws prevent them from sharing receipts,” he wrote. “This confounded me.”

Well aware he couldn’t get the car until March 2017, when it could legally be imported under the 25-year law, Miller didn’t reach out to Steve McCarty again until this past March, when he said he asked “about insurance, and a rather speculative question about what would happen if Rivsu USA disappeared.”

“At that time (and several times before) Steve assured me that the car is ultimately mine,” Miller wrote. “If I want to remove it from their facility I was welcome to do that. If I moved to Japan, they could help facilitate registering the car in my name.”

By early this year, Miller hadn’t heard about his storage bill for keeping the car in Japan. Rivsu said it would send an invoice, Miller wrote, but never did. In February, he asked for pictures of the car and a yearly invoice, but didn’t get a response for days.

“During this wait, rumors start flying around that Rivsu USA has closed up shop and disappeared,” he wrote. “A few weeks pass and Rivsu USA’s phone become disconnected. Suddenly it became very apparent that there was something terrible going on. Six more weeks go by with no contact at all.”

By the end of May, after reading a forum post about Rivsu, he messaged a former customer of the dealer, and that’s when the rumors about the McCartys skipping town came into his purview: the empty house, the vacated warehouse, the string of complaints from other customers. It looked like he could be out several thousand dollars, with the Evo caught up in a confusing custody battle with Rivsu’s Japanese affiliate.

Indeed, the McCartys operate thanks to an arrangement with another independent company on the ground in Japan itself, called Rivsu Japan. That arrangement, according to several sources and Facebook messages obtained by Jalopnik, works like this: Rivsu Japan purchases the cars at auction and then ships them to America, with the job of handling the individual sale and handover falling to Rivsu USA. Rivsu Japan operates with the expectation that the McCartys would pay it back over time.

The owner of the Japanese affiliate, someone known as “Amir,” is apparently as confused and in the dark as the McCartys’ clients.

In an April Facebook message to a person familiar with the McCartys’ business, obtained by Jalopnik, Amir said that Steve McCarty called him “several times” but ignored him “as he did for a few weeks.”

Amir said he believed the McCartys were in “deep trouble” and eventually told him by phone that he had made “so many people worried.”

“Right now, if you believe him, he sounded like he has some orders and he wants to buy from us,” Amir wrote, saying he planned to rebrand his business. “But personally, I am moving my ass to save this place and make some money. Whether he is with us or not not, not clear, but as a Japanese company, I am working myself.”

Miller told Jalopnik that the McCarthys abruptly reached out after his story ran about his car. “It’s a smoke screen,” he said.

Zillin, of 7Tune Exports, told Jalopnik that the import community is up in arms right now since Miller’s story ran.

“This is what irks me, because in the past Rivsu’s shipped a lot of cars internationally and they’ve brought a lot of cars into the state,” Zillin said. “From what I understood, they had a lot of happy customers.”

But something changed in recent months, Zillin added.

“Something has gone wrong in the last few months,” he said. “And I don’t know on the personal level of things what that was caused by. But the relationship between the Japanese arm and the American arm has somehow gone sour.”

As an exporter, Zillin said these types of scenarios are frustrating to watch unfold.

“It just pisses me off,” he said. “I’m looking at this thinking this is only going to do damage. And it hurts me professionally and personally. The less people like this that are involved in the industry, the better it’s going to be.”

‘I Think He Jumped Town A Long Time Ago’

The McCartys may have secured a lawyer for the Seidel case, but Steve McCarty’s whereabouts remain much of a mystery. Interviews and messages reviewed by Jalopnik suggested he may’ve taken a job in North Carolina at some point this year, and the couple’s home has been listed for months.

When their phone line were disconnected and the former warehouse appeared emptied out, red flags started going up.

“A company as big and popular as Rivsu doesn’t just disconnect itself for weeks giving no updates on their whereabouts like that,” said another source familiar with Rivsu. The McCartys told customers they were moving to a new location, hence why they were difficult to reach. Weeks on, buildings associated with purported addresses that have turned up as being connected to their relocation appeared empty as well.

Herring, Seidel’s attorney, said he’s hoping to secure a piece of the $25,000 bond that Rivsu put up to obtain a dealer’s license in Florida, but doesn’t expect much of anything else. The lawsuit asks for a reimbursement of $335,000, plus interets and costs, but Herring said his client just wants to make sure the couple’s alleged misdeeds doesn’t cost anyone else a fortune.

“It is what is is,” he said. “We’ll see whether we can recover anything.”

With reporting from David Tracy

Correction: A previous version of this story said that Seidel was a Florida resident. He lives in South Dakota, according to his lawsuit. We regret the error.