A longtime adaptive mobility dealer faces allegations by several of his customers. Were his actions intentional, or is he himself a victim of the larger economic crisis?

On May 21, 2009, in a federal courtroom, about a dozen people, most of them wheelchair users, raised their voices in objection to the filing of a personal bankruptcy by Charles “Chuck” Kutz, owner of the now defunct Adaptive Driving Systems of Canoga Park, Calif. [no relation to Adaptive Driving Systems of San Luis Obispo, Calif.]. The group of ADS customers were reportedly united in their contentions that each had been knowingly ripped off by Chuck Kutz. But you wouldn’t know there had been any such claims by going to the ADS website.

“Due to extreme pressures brought about by the current economic crisis, after 28 years of business, Adaptive Driving Systems has been forced to close its doors,” read the website announcement. Customers were referred to a nearby competitor, Mobility Works, for service, but contact information for Kutz was absent.

Former ADS customer Larry Singer, 41, of Irvine, Calif., has a problem with that state of affairs. “Yeah, that’s really nice that Chuck got Mobility Works to take over some of his customers’ needs after he abruptly closed his doors,” says Singer, a C5-6 quad. “But that does nothing at all for the people he robbed.”

Singer claims that in May 2008 he gave Kutz $33,861 to purchase the chassis of a lowered-floor minivan and an extended service warranty. California’s Department of Vocational Rehabilitation agreed to pay for the lowered floor and electronic hand controls. An e-mail from Kutz to Singer dated July 18, 2008, indicated that ADS had received the van, complete with lowered floor, from Vantage Mobility International of Phoenix and that Kutz was awaiting a steering system and other controls for installation. A “first fitting” was expected in about a month.

From that point forward, repeated delays pushed back the date of delivery. Singer began to get frustrated at the complications, but Kutz kept assuring him that everything was going as expected. When Singer was no longer able to contact Kutz in late February, he became alarmed, then irate when he learned that ADS had closed its doors and Kutz had disappeared. In a subsequent phone conversation with Tim Barone, CFO of VMI, Singer says he learned that his van had never been paid for by ADS even though California’s DVR had sent funding to Kutz’ company.

By the time Singer attended the bankruptcy hearing, it became clear that he had little standing other than to sue Kutz in civil court. But doing so would be challenging, as Kutz’ bankruptcy case shielded him from any immediate pressure to repay customers’ payments on undelivered vehicles.

No More “Friendly Basis”
Singer was not the only customer who paid for a van that was never delivered. Bill Fell of Vacaville, Calif., had purchased a lowered-floor Honda Odyssey for his son Bryan, 30, who has cerebral palsy and has been a wheelchair user since he was 5 years old. Bryan, who holds an associate’s degree in computer business software, is unemployed. The elder Fell had arranged for partial financing through Digital Federal Credit Union, and by Sept. 30, 2008, he had paid ADS a total of $114,915, including $60,000 that he and his wife had saved over the better part of a decade. Such a purchase price is not unusual when expensive “fly by wire” electronic hand controls are involved.

Bryan had kept in touch with Kutz arranging details of the purchase from June through September and beyond. He was told the completed conversion was to be delivered to ADS in January 2009. “I expected him to tell me that it might be as long as a year, since that was about the time it took for my previous van,” Bryan says, “but he told me, ‘Times are different now. The process doesn’t take nearly as long.'”

Bryan called Kutz in late January 2009 and was told that everything was proceeding as expected, but that there would be a change involving installation of driving controls. The van would be moved from VMI in Phoenix to Electronic Mobility Controls in Baton Rouge, La., for installation of his hand control system. According to Bryan, during this conversation Kutz said, “EMC has offered this service and we [ADS] are going to take advantage of it.” Kutz also said there would be a delay, pushing the delivery date back to mid-March.

“I was in constant contact with Chuck until mid- to late February,” Bryan says. Then he began getting only an answering machine. “This was very different than usual,” says Bryan. “He usually called me back right away.” On March 3 Bryan called again and got a message that the phones had been disconnected.

Growing suspicious, Bryan called EMC on March 4 to learn the status of the driving system on his Honda Odyssey. According to Bryan, he was told that EMC had no such vehicle awaiting installation and that they had had no contact with Chuck Kutz, or ADS, for over a year.

Bryan then called VMI in Phoenix. “I was told by CFO Tim Barone, after giving him the vehicle identification number, that the vehicle I had ordered had been sold to someone else, and that a lesser 2009 model had been ordered to replace it. The lowered-floor conversion had been completed on this vehicle, but it had not been paid for by ADS.” This conversation solidified Bryan’s suspicion that something had gone very wrong.  “I couldn’t understand how someone who had been in business since 1982, someone who had gained my trust and the trust of others, could be doing this. I had chosen to go to ADS even though it was 400 miles distant. But from that moment on, I knew we could no longer deal with Chuck Kutz on a friendly basis.”

On March 11, 2009, Bryan’s father made the seven-hour drive to Canoga Park and found ADS vacated. The Fells had also placed an older backup van on the ADS lot to be sold on consignment, but the van was nowhere to be found.

The next day Bill filed a police report with the Topanga Police Station, a division of the Los Angeles Police Department, located in Canoga Park.

More Alleged Victims
Charlene Ferguson, 61, and her husband, Thomas, also 61, who was paralyzed by a massive stroke in 2007, also had an unhappy experience with ADS. Charlene’s husband uses a manual chair, has a tracheotomy and feeding tube, and has lost the ability to speak. He was hospitalized in a sub-acute ward until July 2008. Charlene says that in late December of that year she called ADS and talked with Mike Stephens about buying a van. She says she was given a quote of $41,667 for a Chrysler Town and Country. “I put down a $1,000 deposit. Then Mike Stephens called and said the vehicle he had quoted had been sold, but another was available. It would cost $51,000 and could be delivered the third week of January. I said OK. I needed a van.”

On Dec. 31, 2008, according to Ferguson, Mayra Trevizo from ADS called her and offered to drive from Canoga Park to Ferguson’s home in Ventura, a distance of 46 miles, to collect the remaining $50,000. Trevizo showed up at her door that same day. Ferguson drove to her bank, got a cashier’s check for $50,000, and gave it to the woman.

At or near the time the van was supposed to be delivered, Charlene Ferguson had to be hospitalized. When she was released from the hospital, she called ADS in mid-February. She says she was told the van had not arrived and that Mike Stephens was out for a week. On February 19, Ferguson says she called again and talked with Kutz, who told her the van would arrive Feb. 26 or 27, but when she called at that time, she was told that Mike Stephens no longer worked there and that her car was due to arrive in a couple of days. She drove to ADS on Feb. 27 and found no cars on the floor. “Chuck Kutz was there, and he said, ‘I’m sorry, but our business has closed. You’ll have to sue me to get your money back.'”

Ferguson’s brother then called VMI and was told the same thing others had been told — the minivan she had ordered was in Phoenix and had not been paid for. Later, when Ferguson attended Kutz’ personal bankruptcy hearing, she learned that two investigations were underway, one by a LAPD detective and another by a DMV investigator. Ferguson filed a complaint with the Los Angeles County District Attorney’s Consumer Protection Division.

“But I don’t know what to expect now. I’m still out my $50,000 and have no way to transport my husband. And I can’t afford to buy another adaptive van.”

Glo Donnelly, 65, of Valencia, Calif., decided to sell her deceased husband’s van on consignment through ADS in September 2008. She had to be hospitalized for a series of operations soon after ADS took possession of the van, but when she returned home in November, she re-established contact with Kutz. Donnelly says she was told by Kutz in December that he had found a buyer and would have the money that he and Donnelly had agreed upon — $17,000 — by February. When she heard nothing from Kutz for a couple of months, she decided to go to ADS. The van was no longer there.

“I went to ADS with my 7-foot-tall son, and Chuck said he sold the van but didn’t have the money any more.” Kutz then gave them a wrong number for the buyer, according to Donnelly. But she hadn’t been as trusting as some of Kutz’ alleged victims – she still had the pink slip. “Chuck said they lived in Apple Valley, so my son got online and we actually found a picture of my van using GoogleEarth.”

According to Donnelly, she and her son retrieved the van in March 2009 and were told the buyers had paid $31,000 for it, but much of the expensive adaptive gear had been stripped. Gone was a six-way transfer seat, skirting for the passenger seat, hand controls, a spinner knob, lockdowns, and an automatic phone answering system. She is now fighting a losing battle with her insurance company to be compensated for the damage and $6,700 worth of missing adaptive equipment.

David Ward, Andrew Skinner and Tommy Hollenstein also had troubled dealings with Kutz. Ward claims that he was taken for $25,000, but that through the intervention of Access & Mobility Finance’s Tom Matson, he was able to get his van after all. Matson has been credited by others for orchestrating similar resolutions. Skinner filed a complaint with the DMV after he received his van because the pink slip and registration never arrived in the mail. He has been able to keep his van for over a year with the help of DMV investigator Jeremy Suetos, who forwards a new temporary registration to Skinner every three months. “Obviously,” says Skinner, “this can’t go on indefinitely. If criminal charges aren’t filed, I’m afraid that Tempe Dodge, the dealer who was never paid by Kutz, will repossess my van.”

Tommy Hollenstein, a former employee of ADS, is also in possession of a van he purchased from ADS, but like Skinner has no pink slip to show for it. Unlike Skinner, Hollenstein still has a favorable opinion of Kutz. “My van is in limbo as well. I’ve had to hire an attorney to try and keep it, but I’ve got nothing negative to say. I don’t for a moment believe that Chuck planned this.”

Chuck Kutz Defends Himself
Others lost money when ADS went out of business, but the mystery surrounding the unfortunate events focuses on what many believe to be Chuck Kutz’ sudden change of character.

Ward is baffled by what he says was Kutz’ apparent about-face from the man he thought he knew. “He was highly respected in the industry for decades,” he says. “He was noted as an expert. He was, I think, the biggest DVR provider for adaptive mobility customers in Southern California. Everyone spoke highly of him.”

“He was always more than a fair boss to everyone,” says Hollenstein, who lost his job when Kutz hired Stephens several years ago. “I saw him give back to the disability community at charity events.” Julienne Dallara, a current employee of Mobility Works, confirms Kutz’ previous generosity, but adds, “Now that image of nice guy is gone. Look what he’s done to these people. Look what he’s done to this industry.” Kutz’ questionable business practices have prompted industrywide changes in financing, resulting in increased paperwork and verification processes and less reliance on trust.

For the better part of three months, NEW MOBILITY tried to contact Kutz and get his side of the story, but repeated attempts were blocked by his attorney, Lee Lubin, who cited legal proceedings as the reason his client could not talk to the media. After one final attempt was made to contact Kutz through a different intermediary, Kutz called NM.

“My attorney advised me not to say anything, but your intermediary convinced me it was best to talk to you about Larry Singer,” Kutz says. “The bottom line is, our terms were changed on financing by Tempe Dodge from 90 days to 30 days [Tempe Dodge/Tempe Mobility works closely with VMI, which does van conversions]. By changing our terms, we were unable to service our debts. At that time, the responsible thing to do was close down the business.”

What about all the other customers who claim they were ripped off?

“I feel very badly about it,” Kutz says. “But my hands were tied. I do take responsibility for bad management, but I didn’t do it intentionally. My track record bears that out.” In the 28 years that he was in business, Kutz says that right up until late 2008 he was one of the top 15 dealers in sales for VMI adapted minivans, but then sales dropped off, and without financing his business couldn’t continue.

According to Kutz, when the economic crisis spread throughout the nation, the state of California was hit hard, and DVR put a freeze on paying for adaptive vans in late 2008 — or at least slowed payments way down. Kutz says he did everything he could to try to save his business. “I had put all the money I had into the business during the end of 2008 and into 2009 trying to keep it afloat — my home and everything.” A title report on Kutz’ Woodland Hills residence confirms that a notice of default on mortgage payments was placed on record Jan. 7, 2010.

To those customers who were upset that his only response was “sue me,” Kutz says, “I don’t recall saying that, but at a certain point I no longer had control of the business. It was in the hands of a [bankruptcy] trustee. I was advising them, trying to help them get their money.”

Some in the industry have pointed out that National Mobility Equipment Dealers Association regulations involving crash testing and certification also dealt a blow to independent dealers several years ago. Hollenstein says Kutz’ profit margin took a hit when he could no longer modify vans in his shop, but Kutz’ does not claim this as an excuse. “NMEDA was helping dealers become more professional,” Kutz says. “The inspection process was a good thing for the industry. Yes, we used to lower floors in our own shop — you had to build your own adapted vans because that’s the only way you could get them. With the advent of crash testing, only a few companies remained major manufacturers. It was a better system.”

After 28 years in business and one major failure that sent shock waves throughout the adaptive mobility industry, will Kutz ever get back into the business?

“I don’t know. I probably won’t own my own business. Mobility Works has hired me, but I’m in a kind of holding pattern for now.”

Dale Bills, general manager for Mobility Works, confirms that Kutz was hired by his company, but not for long.

“We’re expanding and growing all the time, and Kutz was a competitor of ours,” Bills says, “so when we heard that he was going out of business, right away we hired him. But when we started hearing all the stories of his customers getting burned, we immediately suspended his employment. He never actually worked here or drew a check. We could see the handwriting on the wall — and this was not someone we wanted to have around.”

Were Kutz’ actions, while seemingly dishonest and predatory, in effect the result of bad management, a decline in consumer demand and the credit crisis? If so, then perhaps he may be seen as a victim himself. Bankruptcies have run rampant in the wake of the economic disaster that has trickled down from investment giants to banks to the automotive industry to small businesses to homeowners. On June 26, 2009, Kutz’ business, ADS, filed bankruptcy, declaring assets of $121,957 and debts of $773,721.

By early February 2010 no criminal charges had been filed against Chuck Kutz. But those who claim they were ripped off still have one looming question: Where did their money go?

EDITOR: At press time, NEW MOBILITY learned that Larry Singer would finally get the adaptive minivan that he paid for in May 2008. Mobility Works was set to install electronic hand controls and complete the conversion process. General Manager Dale Bills confirmed that when the vehicle was completed and registered in Singer’s name, California’s Voc Rehab would pay for the modifications — for the second time.