April 5: The fall of Denny Hecker

  • Article by: DEE DEPASS , Star Tribune
  • Updated: April 10, 2009 - 11:40 AM

Minnesota's best-known car dealer scrambles to preserve the remains of his empire. Hecker company officials vow to stay in business, and his rivals aren't ready to count him out.

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Denny Hecker advertisement on the side of a Metro Transit bus.

Photo: Glen Stubbe, Star Tribune

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Denny Hecker's auto empire, a lifetime in the making, took but a year to crumble, undone by the end of an easy-money era that helped the 56-year-old live up to the nickname his mother gave him at birth: Lucky.

At its peak, Hecker Automotive Group was one of largest private firms in Minnesota. Hecker's network of dealerships and car rental operations stretched across the country, and he was an omnipresent pitchman in television, radio and print ads for a company that claimed annual sales of $6.8 billion.

But in the past year, Hecker has been forced to close or sell 17 of 26 dealerships. He has closed his lease and fleet sales operations and 40 of his Advantage Rent A Car locations and is selling what is left to rival Hertz from bankruptcy court for a shade over $30 million. Chrysler Financial is suing to force Hecker to repay $550 million, which includes a $50 million personal loan. Seven other lawsuits seek a total of $17 million in outstanding loans, consulting payments, rent and legal bills.

Hecker officials insist that the remaining dealerships will remain in business. Hecker declined to discuss his situation, but said his legal woes were taking a toll on his 14-year-old son.

"It is what it is," he said. "But sensationalizing it doesn't make it any easier."

Hecker isn't the only auto dealer whose fortunes have been battered by the economy and the financial plight of automakers.

His woes elicit little in the way of sympathy from area dealers, but few are willing to speculate publicly about his future. Over the years, he has tangled in court with many competitors, including Jim Lupient, Paul Walser, Morrie Wagener and former Monticello Ford dealer David Peterson. Some of these lawsuits accused Hecker of defaulting on monthly dealership payments and consulting fees, poaching key employees, or breach of contract. Most of the suits have been settled, and the terms were not disclosed.

Walser, owner of the Walser Automotive Group, has bought two dealerships from Hecker over the years. He says it's a mistake to count Hecker out.

"He always seems to land on his feet," Walser said.

Hecker, who grew up in north Minneapolis and attended Patrick Henry High School, has been selling cars since at least age 19. He bought his first Chrysler dealership in 1979 but was forced to close it after the punishing 1981-1982 recession.

With no money, Hecker turned to North Stars hockey team owner Walter Bush, who put up $50,000 to help him buy the Minneapolis Auto Auction in 1983.

'Kid throwing a tantrum'

Former car dealer Tom Clinton, who frequently attended the weekly auctions, recalls Hecker screaming and cursing when the auctioneer didn't get the price Hecker thought a car deserved.

"He was a kid throwing a tantrum," Clinton said. "That is Denny Hecker, through and through."

GE Capital bought the auction business in 1986, providing enough cash for Hecker to begin assembling a necklace of dealerships around the metro area. By 2004, the year Minnesota Entrepreneur Inc. named him Minnesota Entrepreneur of the Year, Hecker had 18 dealerships. The same year, he was a partner in a failed bid to buy the Minnesota Vikings.

Hecker appeared in most of the company's advertising, and it was ubiquitous. He made a special point of appealing to people with poor credit.

"Nobody walks," proclaimed one ad, while another said, "Credit Issues? No Problem. Guaranteed Approval."

In 2006, he bought Advantage Rent A Car with Chrysler's backing and went on to expand Hecker Automotive Group to 21 dealerships.

He moved into mortgage banking during the housing boom and also invested in the upscale Bellanotte Restaurant near Target Center and a Champps restaurant franchise. Court documents list 41 Hecker entitites, including 16 under Jacob Holdings, a name Hecker uses for some of his real estate holdings.

According to county records, Jacob Holdings owns $12 million worth of property on Cross Lake in Ideal Township, 150 miles north of Minneapolis. Another Jacob Holdings entity owns a $6.5 million home in Medina. In addition, Hecker is the owner of another Medina home listed for sale at $1.7 million.

Wayne Belisle, a partner with Hecker on two Champps Restaurant & Bars, said Hecker's work ethic is intense.

"With him, it's work 24/7," Belisle said.

Lavish gift-giver

Friends and associates describe a man who preferred the company of others rather than time alone. He'd lavish friends with pricey gifts, such as a Rolex watch or a trip on his private plane. At the Chambers Kitchen restaurant in Minneapolis, he'd tip eager valets $100 for parking his Cadillac Escalade ESV.

Belisle said Hecker let him live at one of his lake homes for five years, at minimal rent. "He was a generous guy and very good to my family," he said.

But even people who've counted Hecker as a friend over the years say he could be a fickle one, lavishing praise one day and disparaging them, often to others, the next.

His relationships with area auto dealers, who grumbled privately about Hecker's success, were often strained.

"Denny is go-getter and he has a fun personality and is a charged-up guy, and those are qualities that kind of draw you to him," Walser said. But "he will tell you he is your best friend and five minutes later he is recruiting your [top employees]. I think, after a while, you just accept it as who he is. He always kind of lives on the edge, and unfortunately these are times where that kind of approach catches up to folks a bit."

Hecker's personal life came under public scrutiny in 2004, when a former employee sued his Walden Automotive Group, Monticello Dodge store and several top managers for sexual harassment. Although the woman did not name Hecker as a defendant, one former employee submitted a sworn statement in the case claiming that Hecker pressured a worker to have sex with him, another said in an affidavit that Hecker required her to help him to hide his alleged extramarital affairs, and a third said he tolerated sexual harassment in the workplace.

Hecker denied the allegations, and the lawsuit was settled later that year. The terms were not revealed.

A tough business at best

Selling cars is a tough business even in the best of times, and with car sales plunging these are among the worst of times ever for auto dealers around the world.

Detroit's Big Three are losing billions of dollars a year and, in a bid to avoid bankruptcy and win federal subsidies, they're slashing costs and ending financing arrangements with dealers around the country, forcing many out of business.

Chrysler, Hecker's financial backer for more than two decades, was sold to a private equity group in 2007. Its financing division sued him in January, claiming he failed to repay it after selling more than 570 cars it had financed.

Bruce Gillispie, a former salesman at Hecker's defunct Bargain Connection in Blaine, said money trouble was apparent in October. Checks for sales commissions were limited to $600 every two weeks. If a salesman earned more than that, payment rolled over into the following pay period.

Gillispie said he grew suspicious when Chrysler officials arrived from Michigan around mid-November and never left.

Convinced that the Blaine operation was going to close, Gillispie and his colleagues began packing up their desks early on Nov. 21. But a manager from Hecker's St. Louis Park headquarters arrived and assured them the dealership would remain open.

Three hours later, the dealership locked its doors. Gillispie said he's still owed about $500 for unused vacation time.

Workers at Hecker's Monticello Ford and Dodge dealerships also suspected last fall that the end might be nearing. They cited unpaid bills, including a shut-off notice from Xcel Energy. And auditors from Chrysler suddenly moved into their offices, too.

On Saturday, Nov. 22, they got a FedEx package from Hecker's office telling them that they no longerhad jobs.

Chrysler swooped in to handle the chaos as vendors pounded on locked doors demanding payment for parts. Customers showed up who had cars in shop bays or had titles in need of processing. Meanwhile, workers gathered to cry and to curse Hecker between beers at the River City Foul Line in Monticello.

"He left a lot of employees stranded, people with families and mortgages," said Candie Marudas, who worked at the Monticello dealership for 20 years, four of which were for Hecker. Now she struggles with the mortgage and soon will turn to a discount food shelf for groceries.

Several customers have written letters of support for Hecker dealerships, but others have filed complaints with the Better Business Bureau or the Minnesota Attorney General's Office over service, warranty and other problems. In a federal lawsuit against Hecker's former Southview Chevrolet dealership in Inver Grove Heights, General Motors claimed that the dealership had fallen short on customer satisfaction surveys compared with other Minnesota dealers.

In Blaine, 67-year-old Mary Ann Miller said she is still waiting for Hecker to send her $1,100, half the cost of rebuilding an engine on a Honda she bought in August at his bargain lot in Blaine.

Invoices left unpaid

Chris Webb, owner of Complete Auto Services in Blaine, strolled through his shop yard head down, hands jammed in pockets, noting engines, mufflers and transmissions that came out of vehicles from Hecker's bargain lot across the street. Webb said he's still owed $700 for fixing the large white truck with Hecker's name on the side. It's still parked in Webb's yard.

Back inside his office, Webb fanned through 18 invoices totaling $13,852, some of which go as far back as July.

"This definitely puts us in a financial burden," said Webb, a Hecker vendor for the past five years.

In December, Hecker crashed his car into a telephone pole not far from his home and spent two days in the hospital. Plymouth Police Capt. Craig Lindman said the accident investigation remains open because a backlog at the Bureau of Criminal Apprehension's lab has delayed completion of a blood-alcohol report.

The million shares of Dollar Thrifty stock Hecker bought last year have lost 90 percent of their value. His Challenger jet is for sale; Hecker's broker hopes to get $13 million. Hecker's Jacob's Exotic Motoring website includes a picture of his 52-foot Hatteras yacht, indicating that he's taking offers.

Paul Rubin, who owns Superstore dealerships in White Bear Lake and Belle Plaine, said he thinks Hecker may end up having to sell or close his remaining dealerships, though he hastened to add that he hopes it won't come to that.

But if it does, Rubin hopes General Motors doesn't line up new dealers. Fewer dealers would benefit those who remain, including Rubin.

"Yes, there will be less competition and we will hopefully win some of their clientele," he said.

No plans to close

Hecker Automotive President Barbara Jerich said last week that Hecker's nine remaining dealerships aren't going anywhere anytime soon.

"There [are] no current plans to sell the other dealerships," Jerich said. When the Pohlad Group bought two Hecker dealerships recently, it expressed an interest in others, she said. "But at this stage we have a core group of locations and dealerships that we want to continue to operate."

They face some tough challenges. Employees at dealerships in Minnesota learned last week that their company health insurance was allowed to lapse for several days, and some said they did not receive their paychecks Tuesday. Jerich said the company hoped to resolve the issues quickly.

Still, Erik Dove, vice chairman of the Hecker Automotive Group and president of the bankrupt Advantage Rent A Car, insisted, "We do have eight [Minnesota] dealerships ... and we have 500 or so employees that are still part of our operations. We expect the [remaining] dealerships to survive and come out [profitable] as things improve."

Dove and Jerich acknowledged that Hecker won't be able to pay workers for unused vacation time at dealerships that closed, however. Vendors who are owed money will be paid if the dealerships have enough cash after the Chrysler lawsuit, Jerich said.

"At this moment, it is not under our control," she said.

Star Tribune staff researchers Sandy Date and John Wareham contributed to this report. Dee DePass • 612-673-7725

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