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Sunday, April 21, 2024

NC trend: Flat tires

Greenville used-car dealership owner Tim Sutton promised dozens of people in eastern North Carolina that vehicle lending could provide safe returns of12% to 18%. But the auto dealer’s foray into consumer finance ended badly when three creditors, owed a combined $2.9 million, pushed Sutton’s Greenville Auto World into an involuntary bankruptcy in June.

Bankruptcy trustee Kevin Sink of Greenville was assigned to investigate the matter. More than $10 million may be involved from dozens of investors, according to a person familiar with the situation. “It looks like a Ponzi scheme,” the person said.

Requests for comment from Sutton, and  his lawyer Allen Brown of Greenville, were not immediately returned.

Since starting the business in 2011, Sutton recruited people to invest in or buy contracts related to specific auto purchases, according to a case filing. As car buyers made monthly payments, Greenville Auto World would make payments to the investors, many of whom knew Sutton through his leadership of the “Tim Sutton Trio” gospel music singing group.

“Many of the contracts were invested in or purchased by multiple investors at the same time. In other cases, the Contracts did not exist at all,” according to a filing that requested Sink’s hiring. Investors stopped getting paid in or before March 2023, and Sutton stopped responding to inquiries, the filing notes.

The three creditors named in the initial bankruptcy petition are: Gary Harris, a former partner in an optometry business in Greenville, who is seeking repayment of $1.9 million. Sutton Edmondson III of Oak City is asking for $562,500, while Greenville developer Michael Overton filed a claim for $428,000.

Some of the money was used for purchases of individual cars, while other investors were involved in so-called “floor planning,” which auto dealerships use to finance their inventory.

Sutton’s former business in southeast Greenville is still operating under the same name, with new ownership, according to a case filing

David Mildenberg
David Mildenberg
David Mildenberg is editor of Business North Carolina. Reach him at dmildenberg@businessnc.com.

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