Federal authorities are investigating the business dealings of Denny Hecker stretching as far back as a decade, according to affidavits unsealed this week.
The FBI affidavits, which relate to searches of Hecker's homes and businesses conducted last year, reveal that federal officials have taken a far broader look into Hecker's auto fleet loans, insurance claims and airplane financing deals than was previously known. Some of the suspected fraud described in the affidavits took place long before Hecker's auto empire began to crumble in late 2008.
The affidavits, which are not criminal charges, describe numerous alleged schemes involving sums ranging from $500,000 to $59 million.
Investigators received many of their leads from former Hecker employees, including two who told of seeing more than $500,000 in cash in a safe at his headquarters shortly before his business collapsed.
Hecker, who once owned 26 auto dealerships and other leasing and fleet operations, faces federal charges of defrauding lenders in 2007 and 2008 on auto financing deals, including an $83 million loan with Chrysler Financial. He also is charged with defrauding the court in his personal bankruptcy by hiding assets and with not paying customers' state vehicle taxes, license fees or liens on vehicle trade-ins.
Hecker's criminal defense attorney Marsh Halberg said he had not seen the filings, which were unsealed Tuesday in U.S. District Court. He said he wasn't surprised by them since "this was a broad investigation based upon the types of documents we were aware they were seeking to look at, and the number of agents involved and the amount of time and resources they committed."
Halberg would not comment further. He has asked to withdraw as defense counsel because of Hecker's lack of funds. A hearing on his request and a similar one by defense attorney Bill Mauzy is scheduled for Monday in federal court.
It is not clear whether the information revealed this week could lead to additional charges against Hecker on top of the 25 counts of bankruptcy fraud, wire fraud, conspiracy and money laundering previously filed against him. Hecker has denied wrongdoing.
Jeanne Cooney, a spokeswoman for the U.S. attorney's office, would only say that the Hecker investigation continues.
Scope of investigation
In the past eight months, federal investigators have interviewed scores of Hecker's employees, witnesses and customers and seized thousands of boxes, file cabinets, electronic data and e-mails from his homes and businesses across the state, the court papers say.
Investigators have sought evidence about Hecker's purchase of used Mitsubishi vehicles from 2000 to 2002 allegedly using inflated purchase prices to obtain financing. Hecker bought the cars for $1,200 each, but allegedly provided loan documentation to Chrysler Financial showing he paid $8,000 to $12,000 each, the affidavits said.
Another deal under investigation involved a private airplane appraised at $9 million for which Hecker allegedly secured a $12.8 million loan in August 2007 from GE Capital/Gelco Corp. using "fraudulent financial statements," court papers said.
Authorities have also sought information about the contention made by State Farm that Hecker submitted $500,000 in false auto-repair claims to the insurer from 2002 to 2008. The repairs were reportedly for vehicles owned by his Advantage Rent A Car company. Hecker allegedly used inflated invoices and estimates from a body shop in which he had a financial interest, the affidavits said.
Yet another leg of the investigation examined $44 million Hecker borrowed from Hyundai Motor Finance Co. in February 2008 and $59 million he borrowed from Hyundai in August 2008. Investigators said they had "reason to believe" that the loans "will be relevant to the scheme to defraud Chrysler Financial."
In an indictment made public last month, Hecker and one of his executives, Steve Leach, were accused of altering vehicle sales documents from Hyundai in 2007 and providing them to Chrysler Financial. In a second indictment this week, the two men were accused of altering a document on other loan deals in 2007 and 2008 to purchase Suzuki vehicles.
Investigators said in affidavits that many witnesses provided information, including two former Hecker employees who described large amounts of cash they saw inside Hecker's safe at his St. Louis Park headquarters. The safe "contained approximately $600,000 to $700,000 in cash at the same time that customers were calling and reporting that their car liens had not been paid per their agreement with Hecker," court documents said.
Another employee in October 2008 "counted approximately $364,000 in the safe, and that as of July 2009, the cash was still accumulating," the affidavit said.
FBI Agent Patricia Weber said in an affidavit "it is unusual for businesses to keep large sums of cash on hand for legitimate purposes. Based on information received to date, it is [my] belief that large sums of cash are likely to be evidence of money laundering, bankruptcy fraud or other unlawful purposes."
Hecker filed for personal bankruptcy in June claiming $767 million in debt and $18.5 million in assets. Last month, a bankruptcy judge refused to forgive $83 million of his debt to Chrysler Financial after deciding that Hecker had lied to the court. A bankruptcy trustee has accused Hecker of concealing assets and asked the court not to forgive the rest of his debt.
Dee DePass • 612-673-7725