Whatever happened to Eller Industries and
Indian Motorcycle?


The Documents:

Letter to the Estate | American Iron Article | Valuation Brief | Easy Rider Article

Request for Judge's Recusal | Response to Notice of Disapproval


The information referenced above and below are posted in response to the lies and distortions about Leonard S. Labriola contained within documents filed with the Federal District Court by the Receiver, Richard Block, and his company, Sterling Consulting, in the matter titled 95-Z-777, Eller Industries, Inc. Plaintiff, v. Indian Motorcycle Manufacturing Inc,  New Mexico corporation, Defendant.  Increasing the potential for reputational damage is the ease with which these documents can be found online.

The information posted here, which includes independent magazine articles and contemporaneous documents authored by Mr. Labriola, will tell the true story about what transpired.  This way anyone with an interest in this matter can read both accounts and decide for themselves which to believe.

In short, after investing thousands of dollars to establish the receivership and then working with the receiver daily for almost three years – three years during which Mr. Labriola drew no salary and covered all of his own expenses - his company, Eller Industries, entered into contract with the federal district court to purchase the Indian Motorcycle trademark rights in classes 12, 25 and 28.  While making the fallacious claim that Eller was in breach of its contract, eleven months later the court actually breached the contract and sold the trademarks to another party claiming to offer greater value to the estate.

The ensuing court battle was very simple.  The parties led by Eller Industries were fighting to have an open and honest evidentiary hearing to determine which of the two contracts offered the greatest value to the members of the Indian Motorcycle estate.

In an open and honest forum this would be very simple, as experienced professionals make these kinds of evaluations every day. However, when the officer of the court controlling the assets owned by the estate is being paid $20,000 per month by the company with the vastly inferior bid, as he was in this case, it is anything but simple.

Eller was a public company whose contract with the estate would have delivered $20 million in cash and 9 million shares of stock which constituted 40% (forty percent) of all issued and outstanding shares of the company.  On the day the Receiver reneged on the contract, these shares were trading on the open public market for $4.00 per share.  This meant that the value of the cancelled Eller contract was at least $56 million - $20 million in cash and $36 million in stock.  As the company grew, each $1.00 increase in share price would have delivered another $9 million to the over 400 members of the estate who would have received the shares.

Eller's bid was presented together with Eller's business plan, Eller's management team which included nationally recognized executive luminaries such as Bob Lutz who had recently retired as president and CEO of Chrysler, Eller’s sales and distribution plan which had been established throughout the U.S., Europe, Australia and Japan, and Eller's Indian Motorcycle development program, which was developed and being managed by a team of top designers and engineers at Roush Industries.  This combined package had received accolades in publications ranging from Wall Street Journal to Cycle World to American Iron, whose article is posted here.

The company the receiver breached Eller’s contract in favor of was IMCOA.  IMCOA was a private company whose contract offered $20 million, and stock that constituted 4% (four percent) of all outstanding shares.

Remember, Eller's offer included 10x that value - 40% of all outstanding shares which meant 40% of all future earnings the company would generate, as well as 40% of the growing value of the Indian Motorcycle Company at a time when Harley Davidson was worth many billions of dollars.

Most damaging of all was that IMCOA’s 4% offer was for 4% of a company whose business model was mocked as a joke and insult by most of the motorcycle industry analysts and press who, perhaps not surprisingly, proved prophetic as IMCOA went bankrupt four years later.

Present to support Eller’s contract at the Federal Court hearing was

  1. The Cow Creek Band of the Umpqua Tribe of Indians who had invested millions of dollars into Eller's motorcycle development project and who was going to build Eller’s manufacturing facilities on their tribal lands in Oregon;
  2. Companies with millions of dollars invested into Indian Motorcycle brand licenses which would either benefit from or be hurt by the eventual trademark owner, and
  3. Most significantly, hundreds of individuals and businesses that together constituted approximately 80% of the receiver's entire estate, the estate the receiver was charged with the responsibility to protect.

At the hearing in support of the IMCOA contract was

  1. No One
In addition, while all of this was going on, IMCOA was paying the receiver a $20,000 per month consulting fee.  Think about that.  The Federal Judge allowed the receiver to reneged on the Eller Contract, which was actively supported by 80% of the estate, while he was accepting a $20,000 per month consulting fee from IMCOA, whose contract was rejected by the estate.

Regarding which party was in breach of the contract, consider the following.

The receiver claimed Eller was in breach for failing to deliver $20 million by the contract closing date. The only asset being purchased was the Indian Motorcycle trademark and so of course, the key requirement of the purchase and sale contract from Eller’s perspective was that before it handed over $20 million:

8.1.3. Seller shall be in the position to assign all of the Purchased Assets to Purchaser, including without limitation, the Trademark, free and clear of Liabilities.

8.1.4. The Trademark, when assigned, shall be uncontested in International Classes 12, 25, and 28 in the United States.

However, at the same time the receiver claimed Eller was in breach for not delivering $20 million, he was actively litigating with Kawasaki who contested the validity of the trademarks claiming they were in the public domain; no small challenge. If Kawasaki prevailed, the trademarks would be worthless. Clearly, the receiver was in breach of the contract.

Most telling is the testimony of Judge Schlatter. He testified live in court and confirmed the receiver’s breach by testifying that, “To the extent that there were things [the receiver] was not able to provide, I think any remedy for those things is just for Eller to just walk away. If they don't like the condition of the Kawasaki litigation, walk away.”

Unsuccessful in our direct effort to have an open, evidentiary hearing, Leonard S. Labriola tried using a different tactic. He refused the receiver's buy-out offer of approximately $90,000 as it included a requirement that he sign a "gag order" and commit to never discuss the details of the events that had transpired.  Instead, he filed the documents attached to this website with that same court.

As the linked documents demonstrate, Mr. Labriola chose to tell the truth, on the record and at great personal risk, in a letter to the estate and in documents signed under penalty of perjury and filed with the court.  These documents aggressively attack the receiver and the court for the corruption, ineptitude, ignorance, deception, and self-dealing that had infected the entire process. 

The expectation was that this would provoke a legal challenge by the receiver and the judges involved, Judge Zita Wiensheink and Judge O. Henry Schlatter, and that they would haul Mr. Labriola into court to challenge the accusations.

Mr. Labriola was certain that, if only to protect their reputations and the credibility of the court, they would challenge him in open court and force him to testify on the stand, under oath, and demand proof of his “outrageous accusations”, a challenge he was anxious to address.

But they did not.  Instead, the receiver filed even more documents that included even more unsubstantiated - totally fabricated out of thin air - lies and gross distortions and even more brazen attacks on his character and reputation.

They could not challenge him, and had to attack him further because they all knew that every single claim in these documents is not only 100% true and accurate, but there would be a line of people willing to fly across the country at their own expense to testify under oath as to their accuracy.

Today, while this all may be old news, nothing dies on the internet.  Since the documents that attack the character of Leonard Labriola continue to present themselves on internet searches, it is important that the truth is also posted so that readers can decide for themselves which version of the Indian Motorcycle story is the truth because the truth does matter.  Maybe not in court, but in the whole scope of things we have to believe that it does.


The Documents:

Letter to the Estate | American Iron Article | Valuation Brief | Easy Rider Article

Request for Judge's Recusal | Response to Notice of Disapproval