Legal Files (78)

  Last month’s “Legal Files” illustrated how loaning your car to another can wreak havoc at the highest levels. This month, we’ll explore some more mundane situations that can be equally unsatisfying. Let’s start with a pretty common situation — you and your friend enter a rally in your 1957 Porsche Speedster. On the second day, you trade places and your friend drives. While you’re trying to figure out where you took the wrong turn and how to get back on course, your friend gets distracted, misses a turn and crashes into a tree. Fortunately, you both escape injury, but…
Sports car racing driver David Piper (a former F1 driver who lost a leg below the knee in an accident driving a Porsche 917 during the filming of Steve McQueen’s 1971 film “Le Mans”) recently won an important case in The Royal Courts of Justice in London. The high court awarded damages and legal costs likely to be around $175,000 against automotive journalist and racer Mark Hales, who was stunned and angered with the judgment. In his written response posted on the Internet, Hales was quite vocal in his criticisms of the judge. Hales wrote that he will lose his…
Okay, it’s March, but we all know that spring is the real start of the car collecting year. And every new year marks the time for self-improvement resolutions. Here are the top seven for the car collector. I won’t buy a car online without seeing it myself Hands down, the most common complaint I get from clients and readers is that they bought a car long distance and, when it arrived, it didn’t turn out to be anything like what they were expecting. The common scenario is that the car looked great in all the low-resolution photos on the web…
"Jim” thought he had a smoking deal — $3,650,000 for a 1956 Ferrari 500 Testa Rossa. He thought he could easily flip the TR for a quick profit. All he needed was $3,650,000. So, Jim called his stepbrother-in-law, “Bob,” for financial help. Bob thought the TR deal sounded like a good idea, so he contacted his bank, which agreed to loan the $3,650,000 against the Ferrari. According to Bob, Jim advised him to run the transaction through a shell company. The shell company borrowed the $3,650,000 from the bank, and the bank secured the loan with a security interest in…
In the realm of estate planning, 2012 is either a once-in-a-lifetime tax-saving opportunity or the new normal. We won’t know which until after the November 2012 election — and maybe not until next year, after the new Congress has had time to act. Savvy investors aren’t waiting to find out, and they are acting now to take full advantage of today’s opportunities. The main point of interest is the estate and gift tax exemption. It has been rising steadily since 1981, and it now stands at $5 million (inflation-adjusted to $5.12 million) per taxpayer. But the extraordinary factor that is…
Tim Durham (right) arrives at court in Indianapolis in June to hear the verdict in his trial Tim Durham started out as an attorney, then left practice for far greener pastures. Highly ambitious, he reportedly made millions through leveraged buyouts. He was a well-known fixture at collector car auctions. Arriving on his private jet — and spending freely — he rapidly amassed a significant collection that included Duesenbergs, Ferraris and a Bugatti Veyron. Durham also owned 75% of Car Collector magazine, and his financial problems were certainly one of the reasons that Car Collector recently folded. This June, it took…
Finding an auction company that meets your needs is one of the first crucial steps "Legal Files” recently wrote about the 1935 Mercedes-Benz 500K Roadster that German authorities seized on a claim that it had been stolen from Hans Friedrich Prym in 1945 (June 2012, p. 30). The current owners, who bought the car at the 2011 RM Monterey auction, were very confident that the claims would be summarily dismissed. Surprisingly, the German court recently ruled that the Prym family had presented a claim that was complete enough to earn them a full trial and the opportunity to establish that the…
"Legal Files” has written several times about various techniques that collectors employ to avoid paying sales/use taxes on their collector cars. It’s a big deal, as the sales/use tax rates are typically 6% to 10% of the purchase price of the car. One of the common techniques, which our office uses with many of our clients, is to form a Montana LLC (limited liability company) to serve as the owner of the collector cars. Under Montana law, a business entity formed in Montana can title and register its vehicles in Montana no matter where they might be located. The titling…
In late March, Frans van Haren and Tony Paalman, Dutch car collectors and business partners, put their 1935 Mercedes-Benz 500K Roadster on display at the Techno Classica car show in Essen, Germany. The two men had bought the car, Lot 147, for $3,767,500, including buyer’s premium, at RM Auctions’ 2011 sale in Monterey, CA. Life was good — until the German police, executing a warrant issued by a local court, seized the 500K on the basis that it had been stolen from its rightful owner in 1945. The two men, who have millions invested in this car, were stunned. The…
Legal Files previously reported about an incident where FBI agents crashed a Ferrari F50 that they had seized (SCM February 2010, p. 26). As amazing as that scene was, the same F50 has been in the news again, and now we know the rest of story.The F50 was introduced in 1995. At 513 horsepower and 2,976 pounds, it represented the latest and greatest of the Ferrari supercars. Priced at around $500,000, Ferrari manufactured only 349 cars—one fewer than Ferrari believed it could sell, which assured exclusivity.Gone in 60 secondsIn 2003, Algar Ferrari in Rosemount, PA, was happy to have an…