A U.S. bankruptcy trustee Wednesday sued fallen auto mogul Denny Hecker and his girlfriend Christi Rowan for allegedly hiding assets from the court by cashing out or borrowing against $124,353 in Prudential Life Insurance policies held by Hecker and his daughter, Holly.
Hecker is also accused of using a bank and a check-cashing firm to convert policies to cash and issue money orders to Rowan to hide the insurance proceeds from the court.
Bankruptcy trustee Randy Seaver alleges in the lawsuit that Hecker initially cashed out a $30,000 insurance policy in June and used it to open an account at 21st Century Bank. The money, which bank officials quickly returned to Hecker after realizing who made the deposit, is the property of the bankruptcy estate, Seaver said.
The complaint also accused Hecker of writing four checks totaling $124,353 against Prudential insurance policies in June. Seaver submitted to the court a loan application form signed by Hecker that sought to borrow $30,000 against a policy in the name of Hecker's daughter, Holly.
Seaver said Hecker and Rowan used Your Exchange check-cashing services to cash checks from the insurance company. "Hecker converted the Prudential check proceeds to cash, Western Union money orders and a pre-loaded Mastercard. Hecker thereafter provided Western Union money orders to Rowan," the complaint said.
By doing so, "Hecker has converted assets of this bankruptcy estate. Rowan has assisted Hecker in this endeavor. Based solely on those [four] checks Hecker negotiated at Your Exchange, it appears that Hecker had over $120,000 in his possession and control from June to August 2010."
That development is important because Hecker has repeatedly claimed he had no money. Wednesday's allegations potentially could complicate a plea agreement Hecker reached earlier this month with federal prosecutors. Hecker was charged with 26 counts of wire and bankruptcy fraud and conspiracy in the spring but pleaded guilty on Sept. 7 to one count each of fraud and conspiracy. In that plea deal, under which some bankruptcy fraud allegations were dropped, Hecker could face up to 10 years in prison.
Asked if Wednesday's bankruptcy lawsuit might threaten Hecker's plea deal with U.S. prosecutors, trustee attorney Matthew Burton declined to comment.
Hecker's attorney, Barbara May could not be reached for comment.
Hecker filed for bankruptcy in June 2009, claiming $767 million in debt and $18.5 million in liabilities. At the time, he reported that only one of the nine insurance policies he created for family members had a cash surrender value and that it was worth just $12,000, not $120,000.
In April of this year the court appointed a federal public defender for Hecker at taxpayers' expense.
In March Hecker abandoned efforts for bankruptcy protection, saying he needed to focus his energy on his criminal case. At the time, he still owed nearly $400 million to auto finance companies, banks and creditors. In Wednesday's complaint, Seaver noted Hecker is still on the hook for more than $200 million after various repossessions, dealership sales and other moves by creditors.
$30,000 Prudential check
Seaver said he first learned in July that Hecker had deposited a $30,000 check from Prudential into a 21st Century Bank account in early June. Seaver's attorney Matthew Burton then contacted May, Hecker's attorney.
According to e-mails submitted to the court, May told Burton that one of Hecker's Prudential life insurance policies lapsed six months prior to his June 2009 bankruptcy filing.
"Apparently the insurance company sent Denny a check for the proceeds which he thought were lost," she wrote in a July e-mail regarding an initial $30,000 insurance check. May promised to quickly get those funds from Hecker and surrender them to the bankruptcy estate.
According to court documents, May subsequently provided Burton with copies of checks and an accounting of how Hecker spent all but $20,000 of the $124,353 in insurance money. She was able to secure and return at least another $15,000 to the trustee from Hecker. It is unclear how much in total has been turned over to the estate.
The lawsuit demands Hecker and/or Rowan surrender to the court all Prudential checks and proceeds and Western Union money orders since June 2009. It also asks the court for an injunction barring Hecker and Rowan from using, transferring or destroying any property of the bankruptcy estate.
Earlier this week, Seaver asked for the court's permission to investigate Hecker's insurance policies and question a local Prudential insurance agent named Mike Nelson. Seaver also asked permission to examine Pawn America, PayDay America and other entities to see how Hecker had used them. A court hearing is scheduled for Sept. 29.
Hecker once owned 26 auto dealerships and several car rental and fleet operations.
Dee DePass • 612-673-7725
