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A Glut of Used Hogs Is a Drag on Harley-Davidson:Former leader of Outlaws Motorcycle Club pleads guilty to racketeering conspiracy.

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Fox 6

SCHERERVILLE, Ind. — Orville Cochran, a former leader of the Outlaws Motorcycle Club has pleaded guilty to one count in a four-count federal indictment — racketeering conspiracy. He and others are alleged to have conspired to assault and murder members of rival biker groups in Indiana in the 1990s.

In 2001, a warrant was issued for Cochran’s arrest, out of Milwaukee, by the U.S. Marshals.

According to the federal indictment, Cochran and others employed by or associated with the Outlaws Motorcycle Club, between January of 1988 through at least May of 2001 committed “murder, attempted murder, conspiracy to commit murder, arson, attempted arson, conspiracy to commit arson, extortion, attempted extortion and conspiracy to commit extortion and narcotics trafficking in Illinois, Indiana, Minnesota, New York and Wisconsin — with the defendants agreeing that a conspirator would commit at least two acts of racketeering.

During this time period, the indictment says Cochran was a member or president of the Chicago Southside Chapter of the Outlaws Motorcycle Club — part of the “Midwestern White Region” of the international organization.

The indictment says the Outlaws had a longstanding rivalry with the Hell’s Angels biker club and their affiliates, and until around 1993, the Outlaws controlled the Wisconsin, Illinois, Indiana territory — with the closest Hell’s Angels chapter located in Minneapolis. In late 1993 or early 1994, leaders of the Outlaws believed the Hell’s Angels might be trying to gain a presence in the Outlaw’s “White Region” territory by “patching over” one of their affiliates that was present in Chicago, Rockford, Calumet City, Ill. and South Bend, Ind.

Outlaws members agreed “they would engage in a series of assaults” against the “Hell’s Henchmen” and other affiliates to discourage them from becoming Hell’s Angels chapters, and to prevent the Hell’s Angels from infiltrating their territory. They also agreed they would support other Outlaws chapters dealing with similar rivalries — considering themselves to be “at war” with rival biker clubs.

According to federal prosecutors “in furtherance of this war, various members of the White Region committed racketeering offenses.”

In June of 1994, Cochran and other Outlaws traveled to the Illiana Motor Speedway in Schererville, Ind. “to assault rival bikers” at an event known as “Summer Madness.” The then-Outlaws VP told investigators the “assaults” could include beating the rival bikers, running them over with a car or motorcycle or shooting them “to discourage Hell’s Angels affiliate club members from continuing to associate with the Hell’s Angels — and send a message to the Hell’s Angels that their presence would not be tolerated in Outlaws territory.

The indictment notes Outlaws members from Milwaukee and Wisconsin planned to attend this event — with CCW permit holders “directed to arm themselves” and two vans, one armored from Milwaukee, containing firearms and other weapons, were brought to Indiana as part of the “Outlaws caravan” to the speedway.

The night before the event, the indictment says Outlaws members learned their regional boss had been shot and seriously injured while riding on the Dan Ryan expressway in Chicago after leaving an event at the Gary clubhouse in Indiana. Outlaws members believed the Hell’s Henchmen were responsible — with the Hell’s Angels courting them. The Outlaws’ animosity for the Hell’s Angels grew after this incident.

On June 26, 1994, the boss of the Gary Outlaws assembled the group in Gary for the ride to the speedway. There, they set up their two armored vans, and duties were assigned to the members in attendance. An Outlaws member said the Indianapolis chapter boss said if rival bikers were present, Outlaws “were to shoot to kill.”

According to the indictment, during the event, Outlaws approached an ATF agent and some sheriff’s deputies and asked why the ATF wasn’t in Chicago “arresting Hell’s Henchmen,” stating that if rival bikers showed up “there would be dead bodies all around.”

As it turned out, no rival bikers showed up, and the Outlaws packed up and left. The procession was followed, and the second armored van ended up stopped by police. A driver and five passengers from the Milwaukee Outlaws chapter were inside, along with numerous weapons and rounds of ammunition.

In June of 1996, the indictment says Cochran and other Outlaws traveled to the US 41 International Dragway in Morocco, Ind., “to assault and kill members of rival biker groups.” This, after the Outlaws learned the Hell’s Angels had a big presence at this event in 1995, and they reserved several hundred tickets for 1996. Two old surplus-type police vehicles were used for security by the Outlaws at the event — with firearms concealed inside.

Ultimately, rain resulted in the cancellation of the event — and most people left, but the Outlaws remained for three days. No rival bikers showed up.

Cochran faces up to 20 years in prison, and $250,000 in fines, along with a $100 special assessment and three years of supervised release.

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Harley-Davidson Inc. HOG -0.88% is facing a particularly tough competitor for new riders: its own used motorcycles.

Three used Harleys are sold in the U.S. for every new one. A decade ago, it was the other way around. New motorcycle sales in the U.S. are down by half from a 2006 peak, while used sales are up 13%.

Milwaukee-based Harley in 2018 is heading for its fourth straight year of declining sales as the company’s core older customers scale back purchases while younger riders fail to pick up the slack. A glut of used Harley-Davidsons has emerged after years of strong sales growth and production volumes, and offers a variety of choices for those unwilling to splurge on pricey new models.

Rough Ride

Harley’s sales have fallen in the U.S., while sales of used motorcycles have climbed in the past decade.

“It comes down to price, always,” said Jim McMahan, co-owner of a Harley dealership in Greensburg, Pa. “There are people who just don’t want to spend $18,000 to $25,000 on a new motorcycle.” Used Harleys in good condition can cost less than $15,000, dealers say.

Harley wants to reverse its sales slump by drawing new riders with 16 middleweight bikes it plans to roll out by 2022. Among them will be the company’s first electric model, which will make its debut next year.

Harley hasn’t released prices for the new bikes, but dealers expect many of the models will be cheaper than the big bikes that make up the core of the current lineup. Offering more motorcycle choices at lower prices could lure younger riders to the Harley brand for the first time and help offset slumping sales of traditional models.

Heather Malenshek, Harley’s vice president of marketing, said used Hogs—as the brand’s motorcycles are affectionately known—aren’t the company’s biggest problem. “The greatest challenge is to bring younger people into the sport,” she said. “Our used-motorcycle base is a great way to get them in.”

But some Harley fans—including one Harley salesman—say the price of a new Harley deterred them from buying one. John Call, 31 years old, has sold Harleys at a dealership outside of Cleveland since 2016. In buying his first Hog last year, he chose a used 2009 Dyna Fat Bob for just under $10,000.

“A new Harley isn’t really practical for me,” he said. “I’ve got a growing family.”

Harley-Davidson motorcycles tend to have long lives. They don’t wear out easily or go out of style quickly and owners tend to take care of them, making the bikes appealing in the used-motorcycle market.

Harley has struggled to lessen its reliance on baby boomers, whose growing discretionary income and passion for hobbies including motorcycle riding brought the company back from the brink of bankruptcy in the early 1980s. Now, those riders are aging and buying motorcycles less frequently. But younger riders often can’t afford as many bikes as their parents or don’t see themselves living the Harley free-spirit lifestyle.

In response, the company is pursuing younger people who don’t fit the profile of a typical Harley fan: male and clad in a black T-shirt and leather vest. On Monday, Harley said it would start selling its popular branded apparel through Inc. Currently, Harley apparel is sold through the company’s website or at dealerships.

Some dealers said the move could diminish foot traffic to their businesses. “We generate a lot of revenue from our general merchandise,” said Scott Maddux, a Harley dealer near Knoxville, Tenn. “It’s an important part of our business.”

Two of Harley’s new models will be dual-purpose bikes for riding on both paved and unpaved roads, a motorcycle category that is growing in popularity in the U.S. Nine will be sports bikes with racing-style body features and seating to reduce wind drag. Harley doesn’t currently compete in either of these categories.

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Some dealers said they doubt customers for those kinds of bikes will one day trade up for a new, expensive Hog. Ms. Malenshek acknowledged some might not, but said Harley also needs to accommodate riders who aren’t interested in its traditional models.

“The point of all of this is bringing new customers into the brand that weren’t there before,” she said. “They don’t all want to be in the lifestyle. You can have Harley on your terms.”

The new models are also designed to attract riders overseas, where Harley wants to generate half its sales a decade from now, up from about 39% currently. Harley in June said it would shift production of motorcycles bound for Europe out of the U.S., after the European Union imposed what would have amounted to a roughly $2,200 tariff on each Hog imported from the U.S.

President Trump and unions representing Harley workers said Harley was using the trade fight to justify existing plans to move production overseas. Harley said that assertion was false.

Many foreign markets are dominated by Harley’s competitors. Japan’s Kawasaki Heavy Industries , Suzuki Motor Co. and Honda Motor Co. make popular utilitarian bikes, while Germany’s BMW AG and Italy’s Ducati, owned by Volkswagen AG , make higher-priced models.

Harley faces those same competitors in the U.S., too, along with a resurgent U.S.-based competitor in Indian Motorcycles, owned by Polaris Industries Inc.

Harley still accounts for about half of sales of U.S. motorcycles built for riding on highways. That share has held steady in recent years even as its own sales stalled because the market for new motorcycles overall has shrunk since the 2008-2009 recession.

And some riders of used Harleys do eventually buy a new one. Sarah Pellatiro of New Kensington, Pa., bought a new Harley Sportster this year for just under $12,000 after riding a used version for three years. Ms. Pellatiro said she chose the middleweight bike over a larger, more expensive model because she was confident she could handle it in traffic after gaining experience with a used Sportster.

“I got that bike right when I was still learning how to ride,” said the 32-year-old photographer and silversmith. “I don’t think I’ll ever ride any brand other than Harley from here on.”

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