Denny Hecker should stew in his own debts, the trustee overseeing the former auto dealer's bankruptcy petition declared Wednesday.
A suit filed by bankruptcy trustee Randy Seaver accuses Hecker of lying, fraud and scheming to conceal cars, cash, property and other significant assets from the federal bankruptcy court. If Seaver has his way, Hecker won't be allowed to use the protection of bankruptcy court to shield assets and escape the $767 million in debts he has amassed to scores of banks, casinos and other creditors around the country. Those creditors would then be free to fight for his $18.5 million in assets.
The once-flamboyant Hecker could lose all his assets and more -- he would be on the hook with each creditor until he either pays what he owes or works out a settlement, said attorneys not associated with the case.
Hecker has 30 days to respond to Seaver's suit.
The suit is the latest wrench thrown into a messy bankruptcy case that has progressed like a barroom brawl over seven months. Since its filing in June, the case has been plagued with distractions that included stalling tactics, federal raids on Hecker's homes and businesses, side lawsuits and creditor allegations that Hecker committed fraud to get bank and auto financing loans for his once-vast business holdings. Hecker is being investigated by a federal grand jury, but he has denied any wrongdoing.
"Late today, a complaint was filed by bankruptcy trustee Mr. Seaver making certain allegations and claims," Hecker said in an e-mail Wednesday afternoon. "This complaint is currently under review by Denny Hecker and his attorneys who deny the claims and allegations made by the trustee. A more formal response will be made with the courts in the proper venue."
Seaver accused Hecker of using his Northstate Financial Corp. to hide ownership of boats, six Harley Davidson motorcycles, a Cadillac Escalade, a Mitsubishi convertible, a "Tom Car" ATV and other assets. They were listed as "held for resale" but in reality "were held personally by Hecker for his own personal use, benefit and enjoyment," the complaint says.
By leaving the titles of expensive assets under the auspices of Northstate Financial, "Hecker was able to avoid paying sales tax and the items were not easily traceable to Hecker," the complaint says.
Under the heading, "The Crosslake Scheme," Seaver also accused Hecker of lying to the court by claiming that vast vacation property in Crosslake, Minn., was his homestead and therefore should be exempt from liquidation. He allegedly falsified lease agreements for two other Crosslake properties he owned. The trustee also alleged that Hecker concealed several Rolex watches worth more than $40,000 from the trustee, spent money wildly, and transferred expensive gifts and hundreds of thousands of dollars to girlfriend Christi Rowan without logging it into court records as required.
Some of the more outlandish things Seaver alleged involved Rowan. He said she helped Hecker obtain a 2009 Land Rover because he could not obtain financing while in bankruptcy. Rowan, a freelance photographer, allegedly falsified loan applications in April by claiming falsely that she was a lawyer for Gannett making $189,000 a year. "Rowan also altered her 2008 W-2 to state that she had earned $189,500 in 2008. She presented that falsified W-2 with the intention of obtaining credit for the purchase of the Hecker Land Rover," Seaver's complaint says.
Rowan's credit was approved and she got the Land Rover, which Hecker drove and paid for, the complaint says. Monthly payments were $2,178.16, and $13,000 was reportedly due at the time of the closing. Seaver said Hecker did not disclose his ownership of the Land Rover.
Other allegations included Hecker paying for lavish vacations for Rowan, her $4,000 a month rent at the Whitney Hotel in Minneapolis, living expenses while residing in his Medina mansion and tuition payments so Rowan's daughter could attend Breck School.
Seaver alleged that Hecker paid $159,000 in Rowan's credit card charges, including $30,000 for a dog and $11,000 for her vacations. He says that in the year leading up to his bankruptcy, Hecker paid Rowan $235,000 in cash and checks. Included among the cash was $7,000 for cosmetic surgery.
Seaver's allegations are "unusual" among bankruptcy cases, said Mark Kalla, a Dorsey and Whitney bankruptcy attorney who has no role in the case.
"If the judge finds that there is a fraud committed on the court, he won't hesitate to deny a discharge [of debt]. The bankruptcy code gives the honest debtor a fresh start. But mess with that and forget it," Kalla said. "A debtor that doesn't abide by the rules doesn't deserve and won't get the protections offered by the bankruptcy code. If the court denies this discharge [Hecker] will have it forever unless he pays it off."
Jim Lodoen, an attorney with Lindquist and Vennum, said maybe 1 percent of bankruptcy filings result in a trustee suing so that a judge does not discharge a debt. "It's always a heavy-hitter kind of case" where you see such requests, Lodoen said.
If Bankruptcy Judge Robert Kressel doesn't discharge Hecker's debts, "It's the worst of both worlds for the individual who filed for bankruptcy because your debts are not discharged but all your assets are subject to the trustee for liquidation to the creditors," Lodoen said. "It's a bad day."
Kalla said if Hecker loses this case, he would be hardpressed to ever get significant credit again. "It's pretty hard to get credit when you have $1 billion in debt that is never going to be discharged." he said.
Dee DePass • 612-673-7725
