Dethroned auto mogul Denny Hecker sat glumly in court Wednesday afternoon as his attorney and the attorney for the trustee overseeing his bankruptcy wrestled over records in one of the more high-profile bankruptcy cases in Minnesota.
Hecker's lawyer demanded access to all of the records from the trustee's investigation into Hecker's finances and spending habits. And the attorney for trustee Randy Seaver shot back that Hecker needed to file an "honest" bankruptcy petition without gaping holes, unreported assets, gifts and transfers. He noted that he filed a new motion Wednesday for more Hecker e-mails, bank and credit card records, insurance, property maintenance records and other documents.
At a separate hearing Wednesday morning, U.S. bankruptcy Judge Robert Kressel granted permission to sell Hecker's Crosslake boat docks and a Harley motorcycle back to Hecker for $40,000 on the condition that he say where he got the money. Chrysler Financial attorney Stephen Grinnell had argued that it made little sense for Hecker to spend so much when he owed creditors millions. Hecker filed for bankruptcy in June and owes $767 million to hundreds of creditors, including a $477 million debt to Chrysler Financial. Hecker reported $18 million in assets, which are being liquidated.
In an interview Hecker's bankruptcy attorney, Clint Cutler, said he wasn't surprised that the judge let Hecker buy back his boat docks and Harley. "The source of the funds is not property that the trustee is administering," he said.
Chrysler suspects otherwise. Grinnell cited an "extraordinary motion" Seaver filed Tuesday that accuses Hecker of hiding assets and failing to complete timely and accurate property schedules for the court.
In his motion, Seaver lambasted Hecker for taking vacations to Hawaii and Las Vegas and trying to buy a $2.4 million Kenwood home in August, while simultaneously seeking filing extensions from the court and failing to fully disclose his income, expenses and property ownership. Seaver and his attorney, Matt Burton, complained that Hecker frequently reported assets only after they obtained the information from other sources.
"The game of concealing assets continues for the debtor," Seaver wrote, noting that he discovered a previously unreported $154,000 ring that Hecker gave to Jessica Robb; a $30,000 dog he bought for girlfriend Christi Rowan just months before the bankruptcy, and a $7,500 rental fee that Hecker agreed to pay to rent a home in Sturgis, S.D., in late July.
Burton criticized Hecker for seeking an order that would force Seaver to share the records he has amassed. "If all debtors treated their obligations under the Bankruptcy Code with such disdain, the system would fail," Burton wrote.
Cutler complained that Seaver's comments were "highly inflammatory and inaccurate in many respects." He told Kressel that Hecker already had turned over "voluminous" amounts of information. The bankruptcy petition requires Hecker to list all gifts and property transfers, but only for the 12 months preceding the bankruptcy, Cutler said. He said Hecker has largely complied and complained that Seaver was unfairly demanding records to which he's not entitled.
Cutler noted that Hecker is handicapped because he lacks access to his complex business and personal records, as they were seized during state and federal raids earlier this year.
Burton called Cutler's argument "a crutch." He said Hecker has never asked to review the records.
Kressel denied Hecker's broad request for Seaver's investigative documents, though he said Hecker is free to seek specific information. He also gave Hecker 15 days to amend his existing bankruptcy schedules with complete and accurate information.
Hecker, who until one year ago owned 26 dealerships, Advantage Rent A Car and other auto leasing and fleet operations that once produced a reported $6.8 billion in annual revenues, is being sued by more than eight auto financing firms and banks. He's under investigation by the IRS, FBI and the state of Minnesota on suspicion of fraud, conspiracy and embezzlement. A grand jury has been convened by the U.S. Attorney's Office to investigate the case for possible criminal charges.
Hecker has denied any wrongdoing. He previously filed a motion asking the court to stay Chrysler Financial's lawsuit accusing him of fraud while the grand jury investigates. Arguments on that motion were delayed Wednesday until Oct. 21.
Dee DePass • 612-673-7725
