Hecker co-defendant gets 27 months

Surrounded by a throng of family members, the man central to Denny Hecker's 2007 cut-and-paste loan document scheme was sentenced to 27 months in prison Tuesday for his role in the fraud that cost auto lenders millions of dollars.

Steven Leach, 55, had faced up to 57 months in jail. Last month prosecutors recommended a sentence of 37 months, while Leach's attorney, Robert Sicoli, requested his client get five months' probation.

Leach also was ordered to pay restitution of $14.2 million. The court has recommended he serve his sentence at the federal prison camp in Duluth. With good behavior and participation in a prisoner alcohol abuse rehab program, Leach could end up serving just 17 months in jail, his attorney said.

With 28 family members and friends in court to support him, a red-faced Leach told U.S. District Judge Joan Ericksen: "How sorry and remorseful I am for my actions while working for Denny Hecker. ... There is not a day, an hour or a minute where I do not regret my actions."

Leach grew up in Bloomington working as a paper boy and Twins and Vikings souvenir salesman before he went to work for Hecker's auto dealerships and leasing firms at the age of 32. Leach stayed with Hecker for 20 years, becoming the president of Rosedale Leasing and the highest-paid confidant within the Hecker empire that once boasted $6 billion in annual sales.

Leach's attorney, Sicoli, argued for probation in a speech that lasted for nearly 30 minutes. He told the judge how his client was a model citizen, noted the 105 character letters that friends and family sent the judge and explained how Leach had even quietly paid for the funeral of an employee's family member.

Sicoli argued that Leach never profited from the Hecker fraud and yet was facing prison time when "other unindicted co-conspirators" were left untouched.

But lead prosecutor Nicole Engisch argued that Leach never disclosed the fraud or attempted to cooperate with authorities. Leach should serve at least 37 months in jail, Engisch said.

Judge Ericksen agreed that jail time was necessary. "That kind of fraudulent conduct is going to be punished," the judge told Leach, who stood head down, hands folded. "A period of imprisonment will follow almost as [surely] as night does day that sort of criminal activity. ... You will re-enter the world as a convicted felon."

Cutting and pasting

Leach's father held his head in his hands and stared at the floor as the 27-month sentence was rendered. Leach's wife, Debbie, clenched the hands of two of her three children. Sniffles could be heard throughout the packed room as Leach's five siblings, parents and other relatives broke down.

Leach pleaded guilty to conspiracy on Oct. 1. He admitted that he had followed Hecker's orders in 2007, when he told an assistant to cut and paste false wording into a Hyundai fleet financing document. The change falsely made it appear as though Hyundai had guaranteed to buy back nearly all of the vehicles in the fleet if Hecker failed to sell them off the dealer lot.

A similar scheme of altered documents was first carried out against Chrysler Financial earlier in 2007, with regard to financing a fleet of Suzuki vehicles. In that case, a key page that outlined incentives to Hecker was intentionally omitted. That fraud was replicated with other lenders who also lost money to Hecker.

The total amount lost in both the Hyundai and Suzuki schemes was $14.2 million. Ericksen ruled that's how much Leach would pay in restitution. Sicoli said his client does not have $14 million to repay anyone. Sicoli said Leach will forfeit his 401(k) money and a trust fund, which combined have more than $1 million. Sicoli previously argued that Leach's 401(k) money should be exempt from forfeiture because it was money honestly earned from other jobs. That argument went nowhere.

Ericksen ordered Leach to pay $2,500 a month in restitution, to serve 27 months in jail and another three years on probation. Leach was allowed to leave the courtroom but must surrender to jail or to U.S. marshals at the courthouse on March 22 to begin his prison sentence.

Hecker, who is currently held in the Sherburne County jail, faces up to 10 years in federal prison for his role in the fraud. He is scheduled to be sentenced Friday morning.

Hecker's girlfriend, Christi Rowan, pleaded guilty to bankruptcy fraud and bank fraud and faces up to six months in prison. She is expected to be sentenced this month.