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Hendrick sentenced in Honda kickback scandal

December 31, 1997 GMT

ASHEVILLE, N.C. (AP) _ Balancing compassion with justice, a federal judge on Wednesday sentenced auto dealer and NASCAR team owner Rick Hendrick to three years probation for his part in the American Honda Motor Co. bribery and kickback scandal.

Under the terms of his sentence, Hendrick, who is suffering from a life-threatening form of leukemia, will be confined to his Charlotte home for 12 months, during which time he cannot participate in his automobile business or his NASCAR operations. He was also ordered to pay a $250,000 fine.

U.S. District Court Judge Lacy Thornburg imposed the sentence after listening to statements from Hendrick, his lawyers and three witnesses who testified on Hendrick’s behalf.

``I’ve come to realize that what I did was wrong and I accept responsibility for that,″ Hendrick, 48, told the court as he apologized to his family, friends and employees.

``I would rather die than hurt these people the way I have,″ he said as his wife, Linda, sobbed.

In August, Hendrick pleaded guilty to mail fraud, admitting that he sent $20,000 in cash to a Honda executive. In exchange for the guilty plea, prosecutors agreed to dismiss a conspiracy charge and 13 money-laundering charges. The mail fraud charge carries a maximum punishment of five years in prison and a $250,000 fine.

Assistant U.S. Attorney Jerry Miller told Thornburg Wednesday that prosecutors wanted a sentence that took into consideration Hendrick’s illness, but that also had the punitive and deterrent effect the government wanted.

``What we have here is a serious crime committed by a man who has been stricken with a serious disease,″ said Miller, who asked the judge for 16 months of home detention.

Defense attorney Harold Bender argued that 10 months was enough. ``He has been punished by someone of higher authority when he was stricken with this illness,″ Bender said.

U.S Attorney Mark Calloway said he was satisfied with the sentence.

``The sentence called for by the plea agreement tempers justice with mercy,″ Calloway said.

Two weeks before he was indicted by a federal grand jury in Asheville in December 1996, Hendrick learned that he was suffering from chronic myelogenous leukemia, a form of bone-marrow cancer. According to an affidavit submitted by Hendrick’s doctor and presented to Thornburg on Wednesday, his illness may be headed toward remission, but he needs a bone marrow transplant to survive.

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``I’ve accepted the fact that I may only have a couple of years to live,″ Hendrick told the court. ``And I am at peace with that because I have been blessed with a wonderful family and friends.″

Hendrick’s sentencing ended a three-year battle with the federal government over how he built one of the largest car dealership empires in the country.

But Hendrick _ who also owns NASCAR racing teams featuring drivers Jeff Gordon, Terry Labonte and Ricky Craven _ still faces at least 50 lawsuits from dealers accusing him of unfair competition. Thornburg told Hendrick that he will be required to make restitution in those cases if he is found liable.

Hendrick is among 23 defendants who have either pleaded guilty or been convicted in federal court in connection with the government’s ongoing investigation into corruption at American Honda. Hendrick’s brother, John, who was charged with conspiracy, paid a $120,000 fine.

The scandal grew out of trade policies in the 1980s, when the Japanese government, under U.S. pressure, limited exports to the United States.

Honda franchises brought big profits, as dealers could sell the cars for thousands more than their sticker prices. Honda executives, taking advantage of the demand, solicited bribes from dealerships in exchange for new dealerships and extra shipments of cars.

In all, Honda employees accepted $15 million in bribes and kickbacks, including cash, cars, real estate and jewelry, prosecutors say.

Hendrick’s name surfaced in the government’s investigation almost three years ago when a federal prosecutor in New Hampshire accused Hendrick of giving cash payments and gifts to Honda executives in exchange for favorable treatment.

Hendrick acknowledged giving hundreds of thousands of dollars in cash, BMWs and houses to Honda executives. But he said he didn’t receive anything in return.

Hendrick said it was his generosity with friends, not a desire for personal gain, that sucked him into the scandal.