Chrysler top boss owes IRS a cool million $$$
09-19-2009, 10:10 PM
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Chrysler top boss owes IRS a cool million $$$
Chrysler Group LLC Deputy Chief Executive Jim Press owns more than $18 million worth of real estate in some of the country’s priciest ZIP codes, but he has financial problems more commonly found on the factory floor, not the boardroom.
Executive compensation experts and auto industry officials were surprised Friday after learning Press was being pursued by IRS agents and sued by a California credit union for more than $1.4 million in delinquent taxes and a loan.
While Press’ $2.4 million annual salary could cover that debt, public records show the executive faces mounting monthly bills stemming from a costly divorce and a real estate spending spree launched after Press was hired by Chrysler in September 2007.
The lawsuit and lien reveal a truth that applies to executives and blue-collar workers, experts said.
“People who make very little and people who make very much all get into financial problems,” said executive compensation expert Paul Dorf, managing director of Compensation Resources Inc. in New Jersey. “I don’t know that he’ll be on the bread line, but I certainly would think there are other people who have seven-digit or above compensation having financial problems.”
But those problems rarely surface, experts said.
Press’ problems did. Public records show he owes the IRS almost $1 million in delinquent income taxes and is being sued by his credit union for defaulting on a $609,000 loan.
Oakland County records chronicle the toll the automobile industry collapse has taken on one of its top executives, whose financial woes mirror those of his company, which was forced into bankruptcy April 30.
Press did not respond to an e-mail seeking comment Friday. His lawyer, Wallace Handler, declined comment, and Chrysler spokeswoman Shawn Morgan also declined comment, saying the matter was “personal.”
In November, as the auto industry struggled and as Press lobbied senators to support a $25 billion bailout package, he was caught in his own financial trap, records show.
That month, Press defaulted on a $609,286 loan from Western Federal Credit Union and was pleading for more time to repay.
On Nov. 11, Press wrote a letter on Chrysler stationery to the California-based credit union.
In it, Press blamed his money problems on Chrysler eliminating his year-end bonus and said two banks refused to lend him more money or refinance his home.
“In this terrible credit environment, I have exhausted other avenues of getting a new loan which would allow me to pay you off,” Press wrote in the letter, obtained by The Detroit News. “My last and least desirable alternative is to notify you of the situation.”
He called the problem a cash-flow issue. Divorce records filed in Los Angeles County show Press earns $2.4 million a year. His ex-wife Linda receives $40,000 a month in spousal support and $16,000 a month in child support, according to court records.
‘A little surprising’
The revelations stunned auto industry analysts.
“Wow, it’s a little surprising,” said Joe Phillippi, principal of Auto Trends Consulting Inc. in Short Hills, N.J. “The way big corporations tend to work with senior guys, they don’t have to worry about these sort of personal financial things. They give you access to a financial adviser or people on the outside to do their taxes.”
The letter was written the same week as Chrysler launched a campaign to mobilize groups, including employees, suppliers and dealers, to contact congressional representatives on the importance of saving the auto industry and the company.
According to Oakland County Circuit Court records, Press had an unsecured personal line of credit with Toyota Federal Credit Union until the credit union merged with Western Federal in September 2007. Western Federal ended the practice of extending unsecured lines of credit and asked Press to pay off the loan, according to Press’ letter.
Press didn’t have the cash, however.
He asked for more time, and the credit union agreed. He owed $816,000 and agreed to make four payments starting in June 2008, according to court records.
By August 2008, Press had repaid $410,000 but defaulted in November after failing to make the first of two $203,000 payments, court records indicate.
In the November letter, Press explained why.
“I am not able to make the November and February payments due to the elimination of bonuses, which was just announced by my company,” Press wrote. The bonus was eliminated as the auto industry tumbled to historic lows and amid congressional backlash after CEOs of Detroit’s three carmakers flew on private jets to Washington, D.C., to seek emergency financing.
Press joined Chrysler LLC in September 2007 as vice chairman and co-president, which was considered a coup because of his success at Toyota Motor Corp. But it was a costly coup as Press received a compensation package reportedly worth at least $50 million — including a reported stake in Chrysler, which would have plummeted in value after the automaker filed for bankruptcy.
He was counting on a continued payday when he wrote Western Federal and asked for more time to repay the loan.
“My employment is not in jeopardy, and I still have monthly income to service the note as President and Vice Chairman of Chrysler LLC,” Press wrote in the letter.
But last month, news surfaced that Press is expected to leave the automaker by year’s end in a management shake-up under new Chief Executive Sergio Marchionne.
And 10 months after Press wrote the plea, a larger debt surfaced.
The IRS filed a $947,410 lien against Press and his wife, Suwichada, on Sept. 1, claiming the Birmingham couple owe unpaid income taxes from 2007, according to Oakland County Register of Deeds records.
A lien is filed when taxes haven’t been paid and gives the government a legal claim to a person’s or company’s property. Liens serve as security or payment for the tax debt.
The address listed on the tax lien is a 6,800-square-foot, six-bedroom New England-style mansion Press bought last year in Birmingham. He took out a $2.2 million mortgage in May 2008, according to Oakland County property records.
Press is trying to sell the home for $3.15 million and has listed it with SKBK Sotheby’s International Realty of Birmingham.
It is the latest asset Press has tried to unload.
This summer, Press listed his four-story New York City townhouse off Park Avenue for $15.7 million.
Townhouse cost $13.5M
Public records show he bought the townhouse for $13.5 million in December 2007 — three months after being hired by Chrysler.
New York City property records show Press and his wife got a $12.96 million mortgage from Cerberus Capital Management II LP, an affiliate of Chrysler-parent Cerberus Capital Management LP.
After drawing interest from several potential purchasers, Press opted to rent the townhouse to a tenant for a year, “to allow Mr. Press a bit more time to make a decision on whether to sell it,” agent Steven Christopher Halstead said.
“It was an exceptional property, and like many other exceptional properties in New York City, fortunately there is always a group of people capable of buying them,” Halstead said.
Press and his ex-wife own a $2 million home outside Los Angeles, records show. He also owns a $470,000 condominium in New Orleans near the French Quarter, records show.
The IRS has filed identical liens in Michigan, Louisiana and New York.
Unless he arranges a payment plan or fights the lien, the IRS would be paid from any proceeds of the real estate sales, said tax lawyer Jay Kennedy of Warner Norcross & Judd LLP in Southfield. “I think that probably they’re just going to say, ‘We’ll take our $950,000 and you take the rest,’ ” Kennedy said.
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Executive compensation experts and auto industry officials were surprised Friday after learning Press was being pursued by IRS agents and sued by a California credit union for more than $1.4 million in delinquent taxes and a loan.
While Press’ $2.4 million annual salary could cover that debt, public records show the executive faces mounting monthly bills stemming from a costly divorce and a real estate spending spree launched after Press was hired by Chrysler in September 2007.
The lawsuit and lien reveal a truth that applies to executives and blue-collar workers, experts said.
“People who make very little and people who make very much all get into financial problems,” said executive compensation expert Paul Dorf, managing director of Compensation Resources Inc. in New Jersey. “I don’t know that he’ll be on the bread line, but I certainly would think there are other people who have seven-digit or above compensation having financial problems.”
But those problems rarely surface, experts said.
Press’ problems did. Public records show he owes the IRS almost $1 million in delinquent income taxes and is being sued by his credit union for defaulting on a $609,000 loan.
Oakland County records chronicle the toll the automobile industry collapse has taken on one of its top executives, whose financial woes mirror those of his company, which was forced into bankruptcy April 30.
Press did not respond to an e-mail seeking comment Friday. His lawyer, Wallace Handler, declined comment, and Chrysler spokeswoman Shawn Morgan also declined comment, saying the matter was “personal.”
In November, as the auto industry struggled and as Press lobbied senators to support a $25 billion bailout package, he was caught in his own financial trap, records show.
That month, Press defaulted on a $609,286 loan from Western Federal Credit Union and was pleading for more time to repay.
On Nov. 11, Press wrote a letter on Chrysler stationery to the California-based credit union.
In it, Press blamed his money problems on Chrysler eliminating his year-end bonus and said two banks refused to lend him more money or refinance his home.
“In this terrible credit environment, I have exhausted other avenues of getting a new loan which would allow me to pay you off,” Press wrote in the letter, obtained by The Detroit News. “My last and least desirable alternative is to notify you of the situation.”
He called the problem a cash-flow issue. Divorce records filed in Los Angeles County show Press earns $2.4 million a year. His ex-wife Linda receives $40,000 a month in spousal support and $16,000 a month in child support, according to court records.
‘A little surprising’
The revelations stunned auto industry analysts.
“Wow, it’s a little surprising,” said Joe Phillippi, principal of Auto Trends Consulting Inc. in Short Hills, N.J. “The way big corporations tend to work with senior guys, they don’t have to worry about these sort of personal financial things. They give you access to a financial adviser or people on the outside to do their taxes.”
The letter was written the same week as Chrysler launched a campaign to mobilize groups, including employees, suppliers and dealers, to contact congressional representatives on the importance of saving the auto industry and the company.
According to Oakland County Circuit Court records, Press had an unsecured personal line of credit with Toyota Federal Credit Union until the credit union merged with Western Federal in September 2007. Western Federal ended the practice of extending unsecured lines of credit and asked Press to pay off the loan, according to Press’ letter.
Press didn’t have the cash, however.
He asked for more time, and the credit union agreed. He owed $816,000 and agreed to make four payments starting in June 2008, according to court records.
By August 2008, Press had repaid $410,000 but defaulted in November after failing to make the first of two $203,000 payments, court records indicate.
In the November letter, Press explained why.
“I am not able to make the November and February payments due to the elimination of bonuses, which was just announced by my company,” Press wrote. The bonus was eliminated as the auto industry tumbled to historic lows and amid congressional backlash after CEOs of Detroit’s three carmakers flew on private jets to Washington, D.C., to seek emergency financing.
Press joined Chrysler LLC in September 2007 as vice chairman and co-president, which was considered a coup because of his success at Toyota Motor Corp. But it was a costly coup as Press received a compensation package reportedly worth at least $50 million — including a reported stake in Chrysler, which would have plummeted in value after the automaker filed for bankruptcy.
He was counting on a continued payday when he wrote Western Federal and asked for more time to repay the loan.
“My employment is not in jeopardy, and I still have monthly income to service the note as President and Vice Chairman of Chrysler LLC,” Press wrote in the letter.
But last month, news surfaced that Press is expected to leave the automaker by year’s end in a management shake-up under new Chief Executive Sergio Marchionne.
And 10 months after Press wrote the plea, a larger debt surfaced.
The IRS filed a $947,410 lien against Press and his wife, Suwichada, on Sept. 1, claiming the Birmingham couple owe unpaid income taxes from 2007, according to Oakland County Register of Deeds records.
A lien is filed when taxes haven’t been paid and gives the government a legal claim to a person’s or company’s property. Liens serve as security or payment for the tax debt.
The address listed on the tax lien is a 6,800-square-foot, six-bedroom New England-style mansion Press bought last year in Birmingham. He took out a $2.2 million mortgage in May 2008, according to Oakland County property records.
Press is trying to sell the home for $3.15 million and has listed it with SKBK Sotheby’s International Realty of Birmingham.
It is the latest asset Press has tried to unload.
This summer, Press listed his four-story New York City townhouse off Park Avenue for $15.7 million.
Townhouse cost $13.5M
Public records show he bought the townhouse for $13.5 million in December 2007 — three months after being hired by Chrysler.
New York City property records show Press and his wife got a $12.96 million mortgage from Cerberus Capital Management II LP, an affiliate of Chrysler-parent Cerberus Capital Management LP.
After drawing interest from several potential purchasers, Press opted to rent the townhouse to a tenant for a year, “to allow Mr. Press a bit more time to make a decision on whether to sell it,” agent Steven Christopher Halstead said.
“It was an exceptional property, and like many other exceptional properties in New York City, fortunately there is always a group of people capable of buying them,” Halstead said.
Press and his ex-wife own a $2 million home outside Los Angeles, records show. He also owns a $470,000 condominium in New Orleans near the French Quarter, records show.
The IRS has filed identical liens in Michigan, Louisiana and New York.
Unless he arranges a payment plan or fights the lien, the IRS would be paid from any proceeds of the real estate sales, said tax lawyer Jay Kennedy of Warner Norcross & Judd LLP in Southfield. “I think that probably they’re just going to say, ‘We’ll take our $950,000 and you take the rest,’ ” Kennedy said.
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