Already facing the possibility that his millions in debt might dog him for the rest of his life, Denny Hecker now faces the threat of decades in prison.

A federal grand jury Wednesday indicted the auto dealer and one of his former lieutenants, Steve Leach, accusing them of scheming to defraud lenders out of millions of dollars.

The criminal charges come as the judge presiding over Hecker's bankruptcy considers motions by lenders and the trustee in the case that Hecker's $767 million in debts not be forgiven on the grounds that he has not been honest in those proceedings.

Hecker's defense attorney, Marsh Halberg, said he has been in conversations with the U.S. attorney's office and previously turned over documents the investigators requested. Hecker, 57, is "maintaining his innocence to all charges," Halberg said, adding that "we can't address the individual allegations at this time."

Leach's attorney could not be reached for comment.

The criminal indictment filed in U.S. District Court had been expected for months and follows the collapse of Hecker's auto empire 14 months ago. It charges both men with one count of conspiracy to commit wire fraud and five counts of wire fraud. Hecker was also charged with one count of money laundering.

If convicted, Hecker and Leach each face up to 20 years in prison for the conspiracy charges, and 20 years on each count of wire fraud. Hecker also faces up to 10 years for the money laundering charge.

Hecker and Leach are scheduled to make their first appearance in court on the charges at 3 p.m. Thursday in Minneapolis.

"I am not expecting him to be taken into custody," Halberg said. "We have fully cooperated and they are allowing us just to turn ourselves in. There is no flight risk here or anything else. So I assume it will be a relatively uneventful appearance. Just hi and goodbye." Halberg said Hecker will hold a press conference following the court appearance.

The government's case is centered on documents Hecker submitted to Chrysler Financial to obtain about $80 million in financing to buy Hyundai cars for use as rentals.

According to the complaint, Hecker and Leach altered the documents to make it look like there was less risk involved in the deal than was actually the case. The government also alleges that Hecker sought the Chrysler loan not just for business purposes but to help pay for his "extravagant lifestyle." Prosecutors also accuse him of keeping some of the payments his customers made for tax, title and license fees instead of promptly turning them over to the state.

Leach was the president of Hecker's Rosedale Leasing operation until he resigned in December 2007 "in an attempt to distance himself from the fraud," according to the indictment. It accuses the two men of scheming between September 2007 and June 2009 to defraud Chrysler Financial -- Hecker's longtime financier -- as well as other commercial lenders.

Hecker is being sued for fraud by eight lenders. Those suits make similar allegations that Hecker provided false information, altered and forged documents and engaged in other schemes designed to get larger and larger loans.

Hecker approached Chrysler Financial in the fall of 2007, seeking an $80 million loan to buy more than 5,000 vehicles from Hyundai Motor America for use in his rental operations. Among the supporting loan documents Hecker gave to Chrysler was a letter from Hyundai about the deal.

The Hyundai letter agreed to sell Hecker "605 repurchase vehicles," meaning Hyundai would repurchase them if Hecker was unable to sell them.

According to the indictment, Leach had an employee cover the original text with "a taped-on insert" that said Hyundai was agreeing to sell Hecker 4,855 repurchase vehicles, not 605. On Nov. 15, 2007, Leach faxed the altered letter from Hecker's headquarters in St. Louis Park to Hecker, who was at the Detroit airport, the indictment said. Hecker then presented the letter to Chrysler Financial, "knowing it was fraudulent," the complaint said.

Taking the letter at face value, Chrysler lent Hecker the money to buy all 5,460 vehicles.

The result was that Chrysler's collateral was "substantially and materially less" than what Hecker represented it to be, the indictment says. "Namely, the majority of the Hyundai vehicles were not subject to any guarantee from Hyundai that it would repurchase the vehicles.''

Chrysler lost $10 million of the $80 million loan when it later sold the vehicles.

Hecker and Leach also concealed from Chrysler Financial "material" information that Hyundai had sent the Hecker organization incentive payments worth $17.2 million in connection with the purchase, court documents said.

"To prevent the fraud from coming to light or being reported to the authorities, the defendants and others engaged in cover up and lulling communications with various individuals and entities," the complaint said. Leach admitted the fraud to undisclosed persons and then resigned in 2007, the indictment says.

Leach has become entangled in Hecker's bankruptcy case as well. In December, Leach filed a motion seeking to prevent himself from being deposed by Hecker's lawyer. The request was denied by bankruptcy Judge Robert Kressel. Leach's civil attorney, Robert Hennessey, said at the time that Leach's alleged liability in the matter was estimated at $13 million.

The criminal charges are just the latest of the problems facing Hecker.

His Denny Hecker Auto Group, Advantage Rent-A-Car and other leasing, fleet and dealerships once boasted an estimated $6.8 billion in annual revenues. But slowing auto sales, mounting debt and excessive spending cratered his operations in less than a year and a half.

Personal bankruptcy

As Chrysler pulled Hecker's credit line in October 2008, workers across Hecker's 26-dealership franchise complained that paychecks failed to arrive and that the company health insurance policies were allowed to lapse. Auto supply vendors complained they were left with Hecker cars in their garages and no cash for repairs.

Several Hecker customers also claimed they were secretly sold warranties they had tried to refuse, while others complained that they failed to get titles for which they had paid.

Hecker filed for personal bankruptcy in June claiming $767 million in debt and $18.5 million in assets, then spent the remainder of the year engaged in a bitter divorce and increasingly testy bankruptcy proceedings.

Randy Seaver, the bankruptcy trustee in charge of liquidating Hecker's assets, has asked the court not to discharge Hecker's debts, accusing Hecker of withholding documents, concealing assets and engaging in elaborate schemes, sometimes with girlfriend Christi Rowan, to secure expensive cars, credit cards and other assets despite his pleas that he cannot pay his debts. Hecker has denied wrongdoing.

Seaver's attorney, Matthew Burton, said Wednesday that "the trustee's job is unchanged by today's events and the trustee will continue to administer the bankruptcy estate." A hearing is scheduled for Feb. 17 on the trustee's motion to find Hecker in contempt of court for failing to turn over documents. It is not known if the judge will also rule at that time on Seaver's request not to discharge Hecker's debt.

Despite the sea of litigation, Hecker was upbeat in an interview with the Star Tribune last week.

"It will all be over soon," he said of his legal troubles.

Dee DePass • 612-673-7725