business

For the second time in two months, federal agents on Thursday raided the now-silent headquarters of bankrupt auto mogul Denny Hecker, searching for evidence of bankruptcy fraud, conspiracy, mail fraud, wire fraud and money laundering.

Armed with a search warrant, FBI and IRS agents entered the Denny Hecker Automotive Group headquarters in St. Louis Park.

Hecker has not been charged with any such crimes.

"Denny obviously denies any wrongdoing," said his criminal defense attorney, Marsh Halberg.

Halberg said he got a call from the Federal Bureau of Investigation on Thursday morning requesting access to Hecker's office building. Hecker, who is out of town, gave him the OK over the phone to let in the agents.

"I pledged to be fully cooperative," Halberg said. He described the search warrant as "very broad."

The warrant seeks evidence of alleged fraud going back to 2002. Some of the items listed in the warrant are very specific.

The once-lively headquarters at 500 Ford Road in St. Louis Park was subdued Thursday. Agents wearing blue FBI jackets took briefcases inside and began a long search.

State investigators and agents with the IRS Criminal Investigations Division searched the office and five other Hecker properties last month seeking evidence that Hecker's dealerships had failed to relay vehicle sales taxes to the state. The state was also investigating hundreds of customer complaints that Hecker had failed to pay off loans for trade-in vehicles and failed to process the paperwork on customer car titles and license plates.

This time around, the search warrants touch nearly every aspect of Hecker and his businesses, which have been accused of fraud, forgery, embezzlement and other wrongdoing by bankruptcy trustees, State Farm Mutual Auto Insurance or Hecker's longtime financing partner, Chrysler Financial.

Hecker and his attorneys previously denied wrongdoing and said they will fight the allegations in court. Reached by cell phone Thursday, Hecker referred all inquiries to Halberg.

Agents searched for evidence of bankruptcy fraud, conspiracy, mail fraud, wire fraud and money laundering in computers, contracts, canceled checks, files, Rolodexes and other documents.

The warrant indicates that they were looking for "altered or forged" invoices, bills of sales or other documents, as well as "fraudulently obtained floor plan agreements" -- the financing behind a dealership's inventory. They looked for materials related to Hecker's dealings with Chrysler Financial, Hyundai Motor, Toyota, General Motors, Suzuki, Nissan and Mitsubishi, as well as GE Capital, GELCO, GE Fleet and even the financing for his repossessed Bombardier Challenger aircraft.

The breadth of the search indicates authorities are looking for evidence related to allegations made in civil cases, in bankruptcy filings and by business associates.

Part of the search warrant appears related to a 2005 Automotive News article, which reported that Hecker allegedly traded $15.8 million worth of advertising credits to Mitsubishi in exchange for at least 1,100 cars. Mitsubishi managers told the publication the ad credits turned out to be virtually worthless. FBI agents searched for records relating to those allegations, including "advertising time credits or discount credits for commercial TV airtime" related to Mitsubishi.

In September, State Farm Mutual Auto Insurance Co. sued Hecker's Advantage Rent A Car and Southwest-Tex Leasing companies, accusing them of inflating auto repair bills on hundreds of rental car claims. State Farm is demanding more than $1 million in damages. Documents involving both of those Hecker companies are part of the search warrant.

Agents also looked for records involving Chrysler Financial, which sued Hecker in January for defaulting on $550 million worth of loans. It recently won a judgment for $477 million but sued Hecker again this month, accusing him of fraud and embezzlement and of forging Hyundai Motor lease documents to secure $83 million in loans from Chrysler Financial. Chrysler Financial has asked the bankruptcy court to refuse to write off the $83 million.

Hecker denied the allegations. He accused Chrysler Financial of ruining his business by unfairly pulling his credit line in October. That prompted bank accounts to be frozen and his dealership funds to dry up, Hecker said in past interviews.

But allegations continued to mount against Hecker, whose once ubiquitous ads made him practically a household name in Minnesota.

In June, a U.S. bankruptcy trustee accused Hecker's Advantage Rent A Car and five other Hecker companies of civil fraud, claiming they diverted up to $148 million in funds before Advantage filed for bankruptcy in December. Hecker's attorneys denied those allegations, saying the trustee failed to consider the money went to repay loans.

In addition to Chrysler Financial, Hecker owes millions to Hyundai, Toyota Motor Credit, the IRS, GELCO, GMAC Mortgage, business partners, cities, banks and employees and hundreds of other creditors.

Hecker filed a personal bankruptcy liquidation petition June 4. In a filing this month, he said he owes creditors $767 million and had just $18.5 million in assets.

This month, bankruptcy trustee Randy Seaver grilled Hecker in a hearing about how he paid bills, when he paid stock margin calls, bought or sold or lost certain property, and whether he had deposited funds in offshore accounts or with friends or family members. The search warrant shows agents are looking for evidence of money transfers to third parties.

Dee DePass • 612-673-7725

Paul Walsh • 612-673-4482