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How DeLorean Got Mixed Up in a Cocaine Scandal Trying to Save His Company 

John DeLorean wanted desperately to save his company, but selling cocaine? Who would've thought?...

The DeLorean DMC-12 is an iconic car for both famous and infamous reasons. Most people know it as the time machine in Back to the Future, car enthusiasts know it for its poor build quality and mechanical issues. Regardless, it was the only car made by the DeLorean Motor Company before it folded it 1982, though to stop that from happening, founder John DeLorean spent most of that year finding investors which led him to getting tangled up in a cocaine smuggling conspiracy.

DeLorean needed US$17 million to save the motor company from collapse. Sales of the DMC-12 only reached 6,000 units, half of its estimated break-even point of between 10,000 and 12,000 units. He lobbied the British Government to help him out, but they would do nothing unless he found another investor to match the amount.

Luckily for John DeLorean, his former neighbour, James Hoffman, had a brilliant idea to help John save his company from bankruptcy. What DeLorean (probably) didn’t know was that Hoffman was a convicted drug smuggler turned FBI/DEA informant.  

The Deal

Hoffman essentially told DeLorean in July 1982 that he could get him $15 million immediately from potential investors, but only if Hoffman acted as the middle-man and for his efforts would receive a 10% commission as well as $300,000 for “expenses,” according to Reuters.

Federal agents also had numerous phone conversations with DeLorean, acting as players in the “investment deal.” In September, Hoffman talked at length about “Colombian Investors” who could supply $30 million in exchange for a $1.8 million investment from DeLorean.

Needless to say, DeLorean started to get a wee bit suspicious. A certain Pablo Escobar might have crossed his mind. He wanted out of this situation immediately.

DeLorean contacted DMC’s corporate attorney, Tom Kimmerly, and explained what was going on. Kimmerly told him to stall as long as he could. He tried, but Hoffman threatened his daughter’s life if he backed out of the deal, so DeLorean continued communication with Hoffman.

In October, DeLorean went to meet Hoffman in Los Angeles. Before he left, he handwrote a letter to his attorney detailing a “play-acting scenario” in which he correctly believed involved using the Eureka Federal Savings and Loan as a front for laundering money. He named everyone he knew to be participants.

This letter was hand-delivered to his attorney with instructions to open it if he didn’t come back.

When DeLorean met with Hoffman and an undercover agent at a hotel room, he pretended to have the necessary funds. He believed the money would be used to procure cocaine from Colombia for sale in the U.S., so DeLorean spoke of a fake shell company whose stock he would issue to Hoffman to cover the funds. Unbeknownst to the federal agents, this promissory note was worthless.

The undercover agent brought out a suitcase and opened it in front of DeLorean. He said it was cocaine and DeLorean continued to (allegedly) play along, drumming up his company’s financial issues (not that he would have had to lie much here).

Shortly afterwards, another FBI agent entered the room and informed DeLorean that he was under arrest for “narcotics law violation.”

The Trial

DeLorean talking to the press outside the courthouse

The trial began in April 1984, and it was an absolute farce. The prosecution was made to look like fools by DeLorean’s defence despite them having surveillance tapes of the hotel room deal in which DeLorean said the cocaine filled suitcase was “better than gold.” Not only did they manage to portray DeLorean as an unwitting conspirator, they also produced evidence and testimony of the federal authorities’ misconduct.

All of the DeLorean’s meetings and phone conversations with federal authorities were recorded which gave way to a damning piece of evidence. There was an unexplained 47-minute gap of audiotape, which DeLorean claimed was where he told Hoffman unequivocally that didn’t want to be involved in criminal activity.

In one tape, DeLorean was heard telling the undercover agent, Benedict Tisa, that he no longer had money to buy into the deal. DeLorean’s defence lawyer, Howard Weitzman, told the media that this was his way of telling Tisa to “get lost… It’s a clear indication that John doesn’t want to participate in a narcotics transaction.”

Tisa also admitted to destroying evidence, “I may have rewrote the pages [sic].”

To which Weitzman responded, “And you destroyed the original?”

“Yes, a portion of them,” confessed Tisa though he would later contradict that statement after being berated by Assistant U.S. Attorney, Robert Perry, for his testimony (which was caught by open microphones leading to the adjacent press room).

“I did not destroy what I considered evidence,” Tisa said the following day. “I considered them to be work notes. After reviewing my notes last night, I believe I was mistaken in what I had said.”

The defence called their only witness, former DEA agent, Gerald Scotti, who testified that Hofmann bragged to him that he would “get John DeLorean for you guys” after reading about DeLorean’s financial problems in the Wall Street Journal.

“I knew from a long way back the government would go to any lengths to prosecute Mr. DeLorean,” Scotti told the court. “But I thought there was a limit to it – a bottom to it. Now, I’m not sure of it anymore.”

Scotti added that during the investigation, Hoffman admitted that he was “setting up an innocent man.”

The final nail in the coffin for the prosecution was their own star witness, Hoffman. According to the Washington Post, Hofmann told the court that during a conversation with DeLorean in 1980, the DMC-owner mentioned celebrities whom he knew to be using or selling cocaine, and indicated that he believed Hoffman’s aeroplane sales business was a cover for drug trade.

After Hoffman admitted his involvement, he claimed that DeLorean told him that he “shouldn’t think that all the money he has raised for his car company he had raised from loans and investments. He had at least one episode of trafficking in cocaine for profit.”

DeLorean scoffed loudly in the courtroom at this statement.

Hoffman went on to describe the convoluted way in which the two men reconnected in 1982 that involved a cryptic phone call, and a letter from Zachary DeLorean asking for financial aid.

When asked by the defence who first mentioned the word “cocaine”, Hoffman said, “He brought up the subject of doing something narcotically… I said, ‘Maybe we can do a cocaine deal.’ So to answer the question, I guess it was me.”

The defence went on to attack Hoffman’s character, telling the jury that Hoffman had failed to pay taxes for eight years, was evicted from a San Diego house for non-payment of rent, and fenced stolen goods for an associate. Not to mention his drug smuggling conviction.

It wasn’t hard to compare Hoffman unfavourably to DeLorean who had no criminal history. The problem for the defence was that Hoffman wasn’t cracking under cross-examination like expected, until it emerged that he was trying to work a deal with government for a share of any money seized in the case.

Judge Robert Takasugi, blasted Hoffmann as a “hired gun” and found it “offensive” that the prosecution hadn’t revealed Hoffman’s “demanded” share of the money.

After this, the defence didn’t even call DeLorean to the stand.

“We don’t believe he [has] anything to defend,” the defence said. “The burden is on… the Government to prove their case beyond a reasonable doubt. I don’t think they’ve done that.”

After 29 hours of deliberation, the jury acquitted DeLorean of all charges. They felt DeLorean had been entrapped, and that he wouldn’t have tried to engage in criminal activity had the opportunity to save his business not been dangled in front of him by the government.

DeLorean might have been acquitted but his reputation as a businessman was in tatters. When asked by the media whether he would continue his career in the auto industry, DeLorean said bitterly, “Would you buy a used car from me?”

John DeLorean died from a stroke on March 19, 2005 at the age of 80.

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