How Fraud Brought Down the First Bellwether Case Against GM

When Robert Kleven switched on the news for his drive to work two weeks ago, he had no idea he was about to sink a high-profile lawsuit against General Motors Co. and embarrass one of the best-known plaintiffs’ lawyers in the U.S.

The news anchor described a long-awaited trial starting in federal court in Manhattan that day, the first over a deadly defect in millions of GM ignition switches. The plaintiff was a 49-year-old postman named Robert Scheuer. Kleven, a real estate agent in Tulsa, Oklahoma, knew that name. Two years earlier, he said in an interview, Scheuer had pulled a fast one on him.

Scheuer had altered a government check stub to make it look like he had hundreds of thousands of dollars in the bank, Kleven said. On the strength of that stub, Kleven had let Scheuer and his wife, Lisa, move in to a new house in suburban Tulsa before they had paid for it. He had to evict them and their two daughters, he said, when he learned that Robert Scheuer had added a “441” to the $430.72 stub to turn it into a deposit of $441,430.72.

So Kleven called GM.

“I didn’t want them getting away with another scam,” the 43-year-old agent with Concept Builders Inc. said.

The couple went on to testify under oath that injuries Robert sustained in a May 2014 wreck in their Saturn Ion had led to the eviction from their “dream house.” GM accused them of perjury. The Scheuers dropped their lawsuit less than halfway through the trial, without getting a penny from GM.

‘Perry Mason’ Moment

It was a lucky break for the automaker, which has already spent more than $2 billion to resolve investigations and a securities lawsuit over the flawed ignition switches, as well as death and injury claims.

It was a stunning blow to plaintiffs’ attorney Robert Hilliard, who has signed settlements with GM in more than 1,300 ignition switch cases and is one of three lead lawyers appointed to manage the hundreds of cases that remain. On Monday, Lance Cooper, a rival lawyer with clients in the mass litigation now under way, asked U.S. District Judge Jesse Furman to remove the three as lead attorneys; the three called the request unfounded. On Wednesday, Cooper asked Furman to take back his approval of a fund for Hilliard’s settlements.

And it was a far cry from Hilliard’s plan to make the Scheuers the public face of GM’s victims by portraying them as a hardworking Oklahoma family brought down by corporate greed. GM had known about its defective ignition switches, which could suddenly cut off the engine, disabling power steering and brakes and preventing air bags from deploying.

Instead, Robert and Lisa Scheuer have hired criminal defense attorneys, respectively Priya Chaudhry and Charles Clayman. The lawyers declined to comment on the allegations against their clients.

Dramatic revelations are unusual in U.S. litigation these days, when reams of evidence and testimony are reviewed before the trial begins, making Kleven’s appearance on the scene a rare “Perry Mason” moment, said Leonard Niehoff, a law professor at the University of Michigan.

“The typical television scenario where a witness comes out of nowhere in a trial doesn’t actually happen much, because the parties have so many opportunities to find out the facts before it starts,” Niehoff said. “It’s a remarkable development.”

Bellwether Cases

Hilliard said he was blindsided by the check stub.

“There were no red flags,” he said. He had sent a team to Oklahoma for three days to conduct interviews with the Scheuers. “We interviewed all his doctors. I stayed with him for a day.” GM itself would never have learned about the stub, Hilliard said, “but for one p—ed-off Realtor.”

One thing that p—ed-off Realtor doesn’t understand about the Scheuers: “I don’t know how they were ever chosen for that case,” Kleven said.

The Scheuer case was one of six bellwether ignition-switch trials scheduled for Manhattan federal court this year to help plaintiffs and GM test strategies and calibrate settlements. The bungled lawsuit was actually chosen by the plaintiffs as the first of the bellwethers. Hilliard maintains that Robert Scheuer’s accident bore every hallmark of a “textbook bellwether.”

Then there was that dream house. The Scheuers had offered a variety of reasons why the eviction was GM’s fault – that memory loss from the crash had caused Robert to misplace a check for the down payment, that his injuries had prevented him from working overtime so he could afford the house.

Confronting Scheuer on the witness stand with Kleven’s evidence for the first time, Mike Brock, a lawyer for GM, repeatedly asked him why he had lost the house if he had more than $441,000 in his bank account to cover its purchase. Scheuer, just two days into the trial, repeatedly said he couldn’t remember the details because of his pain medication.

At one point Brock asked whether Scheuer had put the public at risk by driving around Tulsa on drugs that apparently left him with no memory of a three-month time period.

“I can’t – I don’t know,” Scheuer said. “I didn’t hit anybody.”

Your Guy Lied

The house “was just part of the color of the story,” said Hilliard, 57, never intended as an important part of the case. He said he was baffled when GM’s lawyers, cross-examining Lisa Scheuer, asked her in detail about emails between her and Kleven. That exchange took place after the real estate agent had called GM but before Hilliard knew about it. “I didn’t understand where they were going with it,” he said.

It wasn’t until Jan. 17, five days after the trial opened, he said, that GM contacted him to say, “We think your guy lied about the house.”

In a moment of black humor after learning that the Scheuers had hired separate criminal defense attorneys, Judge Furman wondered aloud whether Lisa Scheuer, if forced to take the stand again, might “throw her husband under the proverbial bus, or GM car.”

$441,430.72

GM initially met Kleven’s call with reservations, since many people offer information in highly publicized cases that doesn’t pan out, spokesman James Cain said. But the claims were intriguing enough for the company’s trial lawyers in New York to send a forensic technology investigator and two lawyers to Tulsa to verify them, searching the text messages and emails even as the trial continued. The real estate agent’s story dovetailed with suspicions GM had had about Scheuer all along, including his foggy recollection of the dream house debacle, Cain said.

“Things that we didn’t understand became crystal clear the longer we talked to Mr. Kleven, and we became more confident in his story, since he had page after page of evidence. It was amazing,” Cain said. “Your goal is always to make sure the truth comes out, and we were confident.”

Kleven described to GM’s lawyers how he began to lose patience with the Scheuers and their $441,430.72 check stub, from Robert’s federal government retirement plan, when the cash failed to materialize. Scheuer continued to say the check had been deposited, while offering various excuses for delays in accessing the funds, according to Kleven.

Finally, Kleven arranged to meet Scheuer at his bank to find out just where the money was. He sat next to Scheuer in a meeting in one of the bankers’ offices, he told GM.

“We sat in the two chairs in front of his desk, and [the banker] said there has never been a deposit by you of this amount at this bank, or any location,” Kleven recalled. “That was the end.”

Hilliard Loyalists

Hilliard still has plenty of fans. Among them is Lakisha Ward-Green, a client who settled with GM after alleging that a defective ignition switch had caused an accident that killed her passenger, a 16-year-old friend she was driving home from school. GM’s massive vehicle recalls came too late to keep Ward- Green from serving a three-month jail sentence over the death. Hilliard helped her get the conviction erased last year.

“He had a very good and strong argument and defended me 110 percent,” said Ward-Green, who added that she has moved on with her life. “He helped a lot of people, not just me.”

Kleven, who sold the home briefly occupied by the Scheuers, also said he has moved on – but can’t understand how Robert and Lisa Scheuer thought they could live in a house without paying for it. The stub could only have delayed the inevitable.

“I still can’t wrap my head around what they were doing,” Kleven said. “He probably thought he’d get the money from GM.”