Investigators are piecing together what happened in a Chisholm classic car restoration business, which has shut down.
The cars rolled in from all over the country to a shop in northern Minnesota -- a rusted 1958 Plymouth Fury from Alabama, a red 1958 Plymouth Belvedere from Florida, a 1967 Ford Shelby Mustang GT500 from Colorado. The father and son who owned the restoration shop were supposed to return the collector cars to their glory days of gleaming paint and fast engines.
Instead, the dreams of more than a dozen classic car collectors were dashed when Memory Lane Classics in Chisholm hastily shut down this spring in the wake of a criminal investigation of the shop's owners, Scott and Edwin Verdung.
Local and state investigators are poring over the shop's financial records as they try to sort out a warehouse of half-finished cars and rare car parts. When word of the closure spread online through the classic car community in June, customers rushed to Chisholm to pick up their cars and parts. Many who had paid between $30,000 and $80,000 found their cars in various stages of completion.
Chisholm Police Chief Vern Manner said the investigation is still in the early stages, and he can't estimate the number of customers or the amount of money involved yet. He plans to present the case to a federal prosecutor because the customers are from other states and countries. Memory Lane Classics had been operating in Chisholm for about five years, Manner said.
"The money went somewhere, but it doesn't matter where," Manner said. "It doesn't make it less of a fraud."
Edwin Verdung, 23, told Whistleblower that there was no fraud. He said the business fell apart because Memory Lane employees didn't do their jobs, forcing the company to spend more to finish the work. All of the money he and his father received went back into the business for payroll, cars and parts, he said.
"We didn't put any money in our pocket," he said.
He said he is cooperating with authorities and plans to help sort the shop's inventory so parts can be returned to their owners. He said he and his father, Scott Verdung, "have split over this whole situation," and he doesn't know where his father is. Scott Verdung could not be reached for comment.
"We had every intention of building the cars and finishing the cars," Edwin Verdung said. "I am trying to make a resolution of everything."
Customers left with a mess
Jason Carter, a captain in the Alabama National Guard, signed a contract with Memory Lane Classics in October 2008 to restore his 1958 Plymouth Fury. He had been referred by a friend and checked out the company's Better Business Bureau rating, which was an A until a few weeks ago. The project was supposed to be completed last November, and Carter received e-mailed pictures every couple of weeks to show the progress. Carter paid $35,500 to Memory Lane but got worried in February when the deadline had passed.
He exchanged e-mails and photos with another Memory Lane customer. That's when they discovered they were being sent photos of the same car. Carter called the Chisholm police and flew to Minnesota. His car was in pieces, and he couldn't find expensive parts he had turned over to Memory Lane.
"It's a dream of mine shattered," Carter said. "The whole time I was in Afghanistan getting shot at, I thought I was going to be able to come home and drive my dream car."
Carter has since turned his car over to another restoration shop, but he doesn't know how he will come up with the money to finish the job.
Dan Falk, who lives in Michigan, said he paid Memory Lane $35,000 to find him a 1958 Plymouth Fury and restore it last June. As the months went by, he tried to get details about the car, including the vehicle identification number. In May, Falk visited the shop and even took pictures with the car the Verdungs said belonged to him. It was only after the Chisholm police began their investigation that Falk learned a California man had also been promised the car.
"I've come to the conclusion that I'm probably not going to end up with anything," Falk said.
Manner said Memory Lane had a "terrible" inventory system, and unless the customers can show a clear title or ownership of a car or parts, they will likely have to pursue civil litigation to find out if they will get anything.
Civil suits are piling up against the Verdungs and Memory Lane. Before they shut down the shop, which operated in a rented warehouse, they had already been sued more than a dozen times since 2007. A number of them resulted in judgments that remain unpaid. Several customers said they don't know if they will bother taking legal action because they don't think there is any money to recover.
Scott Verdung and his wife, Barbara Verdung, had previously operated Memory Lane Classics in West Palm Beach, Fla., but they filed for bankruptcy in Florida in 2005, according to court records.