LAKE COUNTY, Fla. – An auto dealer who specialized in classic cars and hot rods apologized to his former customers during a bankruptcy creditor meeting last week as federal authorities continued to investigate allegations of possible fraud.
“I deeply regret that you lost money,” said Stephen Phelps, the owner of FSD Hot Rod Ranch. “It was simply a business plan I could not make work.”
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FSD Hot Rod Ranch bought and sold vintage vehicles until it abruptly closed last fall. FSD stands for “Father, Son, Daughter,” according to an archived copy of the company’s now-defunct website.
Owners of classic cars who arranged for the dealer to sell their antique vehicles were never paid, multiple lawsuits against the company allege, while customers who bought cars from the dealer claim they never received titles for their purchased vehicles.
The Eustis Police Department and the FBI have launched criminal fraud investigations into the auto dealer, News 6 has learned.
Phelps has denied committing fraud or engaging in unfair trade practices.
The business owner filed for Chapter 7 bankruptcy protection in December, listing nearly 100 creditors and more than $4 million in liabilities.
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During a creditor meeting held via a Zoom video conference last week, Phelps told a bankruptcy court trustee that FSD Hot Rod Ranch sold about 160 vehicles without any issues.
But about 40 transactions were “troublesome,” according to Phelps.
“The reality is that it was a business plan that failed,” Phelps said. “I regret it has evolved into this situation. We were struggling to pay our overhead and pay people that we owed.”
The auto dealer confirmed he sold vehicles to buyers without first obtaining the titles from the original owners.
Florida law requires licensed auto dealers to be in possession of a vehicle’s title while offering it for sale.
FSD Hot Rod Ranch instructed vehicle owners to retain the titles until full payment was received from the buyers, according to contracts filed as exhibits in lawsuits.
Former customers, employees and contractors who claim they’re owed money by Phelps were allowed to question him directly during the creditor meeting.
“Why did you promise to pay me for my truck?” asked Brett Pace.
Pace said FSD Hot Rod Ranch offered to purchase his 1972 GMC half-ton truck for $28,000 within 90 days of receiving it under a so-called “delayed payment agreement” unless the dealer sold the vehicle sooner.
Pace shipped the truck from his home in Utah to Florida in 2022 but has never been paid for it, according to a lawsuit Pace filed against Phelps last year.
“I sincerely apologize for that,” Phelps said.
“Bull(expletive),” replied Pace.
Debra Myers asked Phelps about a replica 1931 Ford Model A Phaeton that her late fiancé had purchased from FSD Hot Rod Ranch for $26,000.
After her fiancé's unexpected death last year, Myers said she discovered the dealer had never forwarded the vehicle’s title to the couple’s bank to hold as collateral for their auto loan.
“That would have been my daughter,” Phelps said in response to a question about who at FSD Hot Rod Ranch might have had conversations about the title with Myers’s bank.
Another creditor logged into the Zoom video conference, Jim McMillan, interrupted the meeting and announced he was the owner of the replica 1931 Ford that was sold to Myers.
McMillan claimed FSD Hot Rod Ranch still owes him $17,000 for the vehicle and that he was still in possession of the title.
“You can come get your car,” said Myers, who indicated she may be forced to default on her auto loan if the original owner takes back the vehicle.
As FSD Hot Rod Ranch was failing, Phelps said he got rid of all the vintage vehicles still in his company’s possession.
“Some went to the owners, some went to buyers,” Phelps testified.
Phelps mortgaged his $1 million residential property near Eustis and borrowed money from friends to pay back some of his customers, he said.
Phelps also borrowed money to convert his 10-acre property into a new events venue for weddings and other special gatherings, he told the creditors. Phelps estimated the amount was less than $50,000.
Pegasus Manor, which held a grand opening event last month, offers wedding packages ranging from $4,750 to $8,250, according to the venue’s website.
The company is owned by Beth Sobol, a former international fashion model who has indicated on social media that she is in a personal relationship with Phelps.
“I am renting the property,” Sobol told News 6 last month.
Under questioning by creditors, Phelps denied that he has been paid rent by Sobol but said he anticipates they will eventually execute a written lease agreement.
Phelps said that mortgage payments on the property now used by Pegasus Manor are temporarily deferred. He did not indicate when he would be required to resume making payments to the mortgage holder.
Phelps testified that he has no ownership interest in the event venue.
In bankruptcy filings, Phelps claimed to have no income and few assets other than his Eustis ranch.
“When I left FSD, I had no money,” Phelps said. “For the first few months, I had to borrow from everyone I knew.”
“Will we get paid?” asked Jim Ehlers, an electrical contractor who said he’s owed more than $8,300 for work performed at Phelps’s ranch.
“I don’t think so,” Phelps replied. “No.”
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