Chrysler exec Jim Press owes IRS, credit union more than $1.4M

Chrysler Group LLC Deputy Chief Executive Jim Press owes the IRS almost $1 million in delinquent taxes and is being sued by his credit union for defaulting on a $609,000 loan, according to records obtained by The Detroit News.

Oakland County records chronicle the toll financial industry turmoil and the automobile industry collapse have taken on one of its top executives, whose financial woes mirror those of blue-collar workers and average Joes living paycheck to paycheck -- only on a much grander scale. He recently hired a lawyer, Wallace Handler, who specializes in bankruptcy cases.

Handler and Chrysler spokeswoman Shawn Morgan declined comment this morning.

Last November, as the auto industry teetered on the brink of bankruptcy, 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. In a letter dated Nov. 11, 2008, and drafted on Chrysler stationery, Press blamed his money problems on the Auburn Hills automaker eliminating his year-end bonus and said two banks refused to loan 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."

The letter was written the same week as his company launched a formal campaign to mobilize groups including employees, suppliers and dealers to contact congressional representatives on the importance of saving the auto industry and Chrysler.

It is rare for a highly paid executive to run into such financial problems, said executive compensation expert Paul Dorf, managing director of Compensation Resources, Inc. in New Jersey.

"Normally we don't think people who are making multi-millions of dollars are getting into that problem," he said. "The reality is people who make very little and people who make very much all get into financial problems. It is an anomaly that it came to light."

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 Nov. 11 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 basis of my agreement to make the November and February payments was the pending receipt of my year end bonus."

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.

It had been 14 months since Press was wooed away from Toyota Motor Corp. to run Chrysler's troubled sales operations.

Press joined Chrysler LLC in September 2007 as vice chairman and co-president, which was considered a coup because of his success at the Japanese automaker. 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 bankruptcy April 30.

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 last November.

But last month, news surfaced that Press is expected to leave the automaker by year's end in a management shakeup under new Chief Executive Sergio Marchionne.

Dorf said the lawsuit and lien are an embarrassment for Press and Chrysler -- and may have factored into his departure.

"They don't need an embarrassment like that," he said. "If the company is saying, 'Wait a minute, we're considered the pariah of the auto industry for the kinds of changes we've made, the way we've had to lay off thousands of workers, plants and all that, you're supposed to be above the fray.'"

Despite Press' plea, the credit union sued him on June 30 in Oakland County Circuit Court for more than $467,000.

"Despite the demands for full payment by plaintiff and plaintiff's counsel, defendant has failed to pay...," Western Federal's lawyers wrote in a court filing.

Court records show the process server was unable to serve Press with a copy of the lawsuit.

The server went to his Birmingham home five times. Each time, there was no answer at the door, according to court records.

The server then went to Chrysler headquarters in Auburn Hills, but was turned away.In the letter to Western Federal, Press blamed the default on a "cash flow issue."

But records show he has other apparent financial problems.

The IRS filed a $947,410 lien against Press and his wife, Suwichada, on Sept. 1 claiming the Birmingham couple owes 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 during the recession.

This summer, Press listed his four-story New York City townhouse off Park Avenue for $15.7 million.

Public records show he bought the townhouse for $13.5 million in December 2007 -- two 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 L.P., an affiliate of Chrysler-parent Cerberus Capital Management, L.P.

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 added.

Press also owns a $470,000 condominium in New Orleans near the French Quarter, records show.