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2 Investigators: Navistar Accused Of Knowingly Selling Bad Engines; 'We Just Got Rid Of Them'

CHICAGO (CBS) -- A local truck and bus manufacturer is at the center of at least one lawsuit, alleging it's providing faulty engines.

CBS 2 Investigator Dave Savini reports on the allegations against Navistar, a local Fortune 500 company accused of making faulty engines for school buses and other vehicles; and the potential danger, along with crushing costs to small family businesses.

Mike Wagner runs a school bus company, Lakeview Bus Lines, that is supposed to transport thousands of children a day to schools in Chicago and the northern and western suburbs.

"We just got rid of them," Wagner said about busses with faulty engines. "Some I gave away, some I donated."

His buses kept breaking down, even while filled with children in the dead of winter.

"That would scare the heebie jeebies out of me, because you've got a cold bus, can't run it, you've got no heat, you've got little people on the bus," said Wagner.

He blames the engine, and says it was manufactured with a faulty emissions system - a design flaw that recirculates exhaust gases back into the engine causing it to fail.

"It just could not stay on the road without breaking down," said Wagner, who added the buses broke down too many times to count.

The engine is called the MaxxForce 7 and was built by the Navistar Corporation, which is headquartered in Lisle, Illinois.

Kyle Ballauer, an operations manager at air freight company, Global CFS Inc., says the MaxxForce 7 engine in his delivery truck broke down so many times it actually is cheaper to keep it parked.

"The vehicle has been here two years," said Ballauer as he shows the truck. "You can see the weeds growing around it."

The company stopped using it because of the repeated problems.

"Anywhere the vehicle would end up, the truck would die out," said Ballauer.

Ballauer and Wagner's companies are suing Navistar, accusing the business of knowingly selling defective engines and costing them lost business and huge repair bills.

The Fortune 500 company faces similar allegations involving another MaxxForce engine - the MaxxForce 13. An estimated 60,000 were sold during the last decade. YouTube videos show truckers nationwide complaining Navistar failed to properly test the engines and then knowingly sold defective ones.

"The motor is pretty much junk," said one trucker, while another said, "My truck was in the shop every week for 13 weeks straight."

Maxx force junk by Iowa 2 cylinders on YouTube

Kip McDowell runs Williams National Lease. He says his company lost millions because of Navistar engine breakdowns.

"There was an inherent flaw in their design and it would just get worse and worse and worse," said McDowell.

Navistar recently lost a $30 million dollar Tennessee lawsuit, alleging fraud over its MaxxForce 13 engines. A former Navistar executive testified certain engine years were not tested, saying "we didn't test (expletive)."

He also testified, there were, "trucks down all over the place."

"They wouldn't start. They had white smoke. You name it," he added.

Nearly 100 plaintiffs are suing Navistar in Illinois, including McDowell's family.

"We were fearful that we would go out of business," said McDowell.

His company, which was started by his wife's father, Ozzie Williams, 50 years ago, had to get rid of 20 trucks with the MaxxForce engine; and says they will no longer buy anything built by Navistar.

McDowell says, in addition to lost business, dozens of truck drivers quit because they got tired of all the breakdowns. He posted a video on his company's Web site to show he was removing the last of his MaxxForce engine trucks from his Michigan City, Indiana lot.

Attorney Bruce Rose represents Mike Wagner and Kyle Ballauer's companies. Their lawsuits accuse Navistar of fraud, including selling engines without properly testing them.

"They claim they were testing," said Rose. "Apparently the Navistar personnel can't even agree on how much they were testing, and what the value of the testing was."

In Mike Wagner's case, he believes the company lost six to seven million dollars.

"It's hard for me to talk about because it's so painful," said Wagner. "Because you buy something from someone thinking you're going to get one thing and it turns out you get a lemon and then you're told there's nothing they can do about it."

Navistar stopped making MaxxForce engines after complaints piled up.

Company officials would not comment on any pending lawsuits. In the past, officials have said they did test the engines.

Navistar is appealing the $30 million Tennessee verdict. Published reports estimate if Navistar loses similar cases, the company could end up paying out billions.

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