business

Federal marshals took fallen Twin Cities auto mogul Denny Hecker to jail late Monday after a judge said he was fed up with Hecker's failure to repay his public defense costs after he came into money.

A shocked Hecker was led from the packed courtroom for processing and will remain jailed at least until a hearing scheduled for Wednesday.

In the meantime, Chief U.S. District Judge Michael Davis ordered Hecker to turn over to the court $18,000 in American Express gift cards that he has in a strongbox in his home. Hecker must also produce receipts and a detailed accounting of where he spent the nearly $200,000 he gained since June from insurance policies, a 401(k) plan and a bankruptcy settlement. Accounting notes that Hecker had earlier submitted to the court were found to be conflicting or not as complete as desired by the prosecution.

Davis said that he was ordering Hecker into custody to try and "jog his memory."

The judge told Hecker: "You need to have a wake-up call that I mean business. I asked a number of questions, and maybe sitting in jail will help you remember. I want to know where the money is."

Prosecutor Nicole Engisch told the court that the government was previously aware that Hecker, 58, illegally obtained $154,000 in insurance money but only recently learned that Hecker had another $50,000 that he declined to turn over to the court.

Hecker's jailing came at the end of an unusual three-hour hearing that involved him being called on to testify. Hecker said that he obtained $15,000 in a bankruptcy settlement and $40,000 from a 401(k) plan. He also received a Toyota Tundra truck that he said he sold for more than $32,000.

Engisch noted that Hecker received the 401(k) money and settlement since he pleaded guilty to fraud on Sept. 7. She also pointed to a list of extravagant expenses that Hecker previously provided to the bankruptcy court after being sued three weeks ago by bankruptcy trustee Randy Seaver. Engisch noted several discrepancies between two versions of accounting that Hecker had provided the court.

Payments to Breck School

On one list Hecker reported that he paid thousands of dollars to send his children to Breck School in Golden Valley.

Davis asked Hecker why he thought that he should pay to send his kids to private school but not pay taxpayers back for his defense costs. Hecker replied that his children have always gone to private school and that it was a safe environment for them while he was preparing to go to jail.

When Engisch asked why he never thought to repay his legal costs, Hecker said he was never given instructions about how he should repay the government for legal expenses.

"I didn't receive any instructions ... and I didn't know the formula or how to pay for the defense," he said.

Hecker insisted he didn't have any money and that he is largely unemployable due to the hawklike proceedings of the bankruptcy trustee.

Hecker has long claimed that he has no money. He has been represented by court-appointed attorney Brian Toder since April. At the time, Hecker agreed to repay the government for its legal expenses should he ever come into money, Engisch told the court. She noted that Hecker again agreed to the same deal on Sept. 7, the day he pleaded guilty to bankruptcy fraud and to defrauding Chrysler Financial out of more than $13.8 million in loans.

Hecker was in court Monday seeking permission to change attorneys. He wanted to rehire his former attorney, Bill Mauzy, with funds provided by Hecker's longtime friend and Las Vegas resident, Ralph Thomas.

Longtime friends

Hecker and Thomas have been friends for nearly 30 years. Thomas hired Hecker to run his Minneapolis auto auction in 1981 and later ended up selling it to him. Thomas testified in court that Hecker had helped him make about $4 million over the years. Thomas has loaned Hecker money in the past and also has made his private jet available to Hecker.

"I just want to help out Denny," said Thomas after Hecker was led from the courtroom. "It's a bad deal. He went to jail and he doesn't deserve" it.

As ordered by Davis last week, Thomas was in court Monday and testified that he had paid Mauzy $55,000 in retainer and expense fees so Mauzy could represent Hecker from now until his sentencing early next year.

Thomas told the judge that the money wasn't a loan and that he did not expect to be paid back. He also said he did not want his money to be used to pay for legal costs that Hecker has incurred to date. He only wanted his money to be used for the last bit of Hecker's case.

Thomas said that he provided $30,000 of the money and that he got the other $25,000 from a North Dakota potato farmer, Ron Offutt.

Davis didn't buy the agreement. He ordered that the funds be frozen. He will review Hecker and Mauzy's motion to change attorneys on Wednesday.

Reaction to Hecker jailing varied.

"We believe the judge's ruling was appropriate," said Matt Burton, who represents bankruptcy trustee Randy Seaver. Seaver filed a lawsuit against Hecker last month accusing him of stealing $154,000 in insurance policies that Hecker either cashed in or borrowed against.

Hecker's bankruptcy attorney Barbara May called Davis's decision to jail Hecker "tragic, this is a horrible result."

May said Hecker has no more money and that he used the insurance proceeds to repay overdue bills.

Before having Hecker removed from the courtroom, the judge told Hecker: "Now is the time to show me that you don't have any money."

Dee DePass • 612-673-7725