Former auto magnate Denny Hecker and alleged co-conspirator indicted on fraud charges

Auto magnate Hecker indicted on fraud charges

MINNEAPOLIS — Denny Hecker, the Minnesota auto magnate whose face adorned billboards and buses across the Twin Cities before his empire collapsed, was indicted Wednesday on federal conspiracy, fraud and money laundering charges in an alleged scheme to defraud lenders and others of millions.

The seven-count indictment alleges the scheme was created in part to fund Hecker’s extravagant lifestyle, and ran from September 2007 through at least last June.

Hecker and a former executive in his company, Steven Joseph Leach, are each charged with one count of conspiracy to commit wire fraud and five counts of wire fraud. Hecker is also charged with one count of money laundering.

Marsh Halberg, Hecker’s attorney, said Wednesday that Hecker maintains his innocence. Hecker is scheduled to make his first court appearance Thursday.

“Now tomorrow, finally, is the start of a long journey for us to be able to show our side of things,” Halberg said.

An attorney for Leach didn’t immediately return a phone call.

Hecker was one of Minnesota’s largest auto dealers, at one point claiming a reported $6.8 billion in annual auto sales and service. As recently as 2008, he owned 26 dealerships as well as leasing and fleet businesses, a mortgage brokerage business, Advantage Rent A Car, and multiple real estate and restaurant holdings.

Hecker’s high profile included appearing in ads for his dealerships. In 2004, he even expressed interest in purchasing the Minnesota Vikings with a group of other investors.

Hecker lived the high life, with a 52-foot yacht and private jet, fancy cars and multimillion-dollar homes. He traveled to luxurious destinations, hit Las Vegas casinos, and bought furs, jewelry and other extravagant gifts for friends.

But his empire started crumbling in late 2008, when he lost some credit lines and had to close or sell his dealerships. Hecker filed for bankruptcy last June, claiming $787 million in debt and $18.5 million in assets.

The federal indictment is the latest of his legal problems.

It alleges that in order to fund the businesses and purchase vehicles, Hecker borrowed money from commercial lenders, and used the purchased vehicles as the primary collateral.

It says in the fall of 2007, Hecker, 57, of Medina, and Leach, 54, of Burnsville, gave fraudulent documents to Chrysler Financial Services Americas to obtain $80 million in financing to purchase 5,000 vehicles from Hyundai Motor America.

The indictment says the documents included a letter from Hyundai that was changed at Hecker’s and Leach’s direction. It also says the documents failed to give the true nature and value of Hecker’s collateral, and left out details about incentive payments Hecker received from Hyundai. Chrysler Financial loaned Hecker and his businesses the money — and lost more than $10 million in the transaction.

According to the indictment, Leach resigned in December 2007 “in an attempt to distance himself from the fraud in which he had participated.”

The indictment also alleges:

—Hecker and others covered up the fraud and Hecker filed for bankruptcy to avoid paying lenders.

—Hecker has concealed assets during the bankruptcy proceedings.

—Hecker kept vehicle sales proceeds rather than paying off lenders who were owed the proceeds.

—Hecker kept customers’ payments for sales taxes, vehicle taxes and license fees instead of forwarding them to the state.

On the money-laundering count, the indictment says that on Nov. 30, 2007, Hecker transferred about $500,000 — which was allegedly derived from criminal activity — from his business account into his personal account.

From his divorce proceedings last year to the bankruptcy, Hecker’s problems have been played out in courtrooms in recent months. Several belongings, from golf clubs to scooters, have been auctioned off. Court filings indicate he’s been supporting himself with consulting fees, loans and his 401(k) account.

He faces several lawsuits from lenders. Chrysler Financial sued him for defaulting on $550 million in loans and it won a judgment for $477 million — but sued him again, alleging fraud.

In 2004, a sexual harassment lawsuit against some of his executives didn’t name him, but court documents accused him of harassment. He said the lawsuit was full of lies, but settled for an undisclosed amount.