(FORTUNE Magazine) – In the 1980s, a North Carolina car dealer named Rick Hendrick built an unprecedented empire in the auto retail business and ushered in the era of the "megadealer"--massive franchise networks that sell a dozen different makes or more at dealerships from coast to coast. At its peak, Hendrick Automotive had $2.2 billion a year in revenues at more than 60 dealerships. Hendrick became the toast of his native Charlotte, helping found the Hornets pro basketball team, landing a seat on the board of NationsBank's North Carolina subsidiary, and becoming a popular owner on the Nascar circuit. Randy Quaid played a character based on him in the Tom Cruise race film Days of Thunder.

The Department of Justice, however, paints a different picture of Rick Hendrick. A 15-count criminal indictment handed down by a federal grand jury suggests Hendrick built his empire on a foundation of corruption. Between 1981 and 1992, Hendrick bribed executives of American Honda Motor, the U.S. sales subsidiary of Honda, to acquire top-selling models like the Accord and to land new franchises in hot markets, says the 49-page indictment. In return he became the biggest Honda dealer in the country just as the Accord became the country's biggest-selling car.

The indictment comes in the wake of a round of federal prosecutions that exposed the little-known role played by powerful auto industry executives known as "zone managers." These executives assign new franchises and allocate vehicles to dealerships. To obtain the coveted Accord, dealers resorted to lavishing zone managers and sales executives with more than $15 million in cash, BMWs, and even homes in Beverly Hills and Palm Springs, California.

The feds got wind of the scheme in 1993 after an Acura dealer in New Hampshire filed suit against the carmaker. The dealer claimed that because he didn't cooperate with crooked Honda executives, he couldn't obtain the cars he needed and was forced to sell his dealership. Over the past four years, 21 former Honda executives and dealers either pleaded guilty or were convicted. Two of Honda's top U.S. sales executives, John W. Billmyer and S. James Cardiges, have received five-year prison sentences; both are identified in the Hendrick indictment as recipients of his largess.

Now, dozens of current and former Honda and Acura dealers unconnected with this chicanery have filed suits against American Honda under the federal Racketeer Influenced and Corrupt Organizations Act (RICO), a law more commonly associated with Mafia cases. The dealers, who are seeking to have their suits certified as a class action, claim that the convicted Honda managers ran the bribery racket under the direction of top company executives. American Honda has denied that it ever had knowledge of any such schemes, and earlier this year it filed its own lawsuit against its convicted former managers, accusing them of violating the company's own policies. Sources close to the suits have said that a class-action settlement could be upward of $1 billion--this, of course, would be very bad for Honda.

Hendrick has admitted to giving money and gifts to Honda executives but said they were acts of generosity to friends, with no quid pro quo attached. "As Rick Hendrick has always maintained, he never paid any employees of Honda in order to obtain favorable treatment of any kind," says his lawyer, Harold Bender, a former U.S. Attorney in Charlotte. Honda declined to comment on the case.

In January, Hendrick disclosed that he has myelogenous leukemia, and the case hasn't moved forward as he undergoes chemotherapy. Whether he's convicted or agrees to a plea, he will most likely lose his franchises. That would be ironic: Right at the time a trend he helped create is gathering momentum, when megadealer operations--Wayne Huizenga's Republic Industries is now the biggest--are consolidating the $600 billion auto retail market, Hendrick will almost certainly have to leave the business for good.

--Edward A. Robinson