Hecker's money was a puzzlement

A somber, thinner Denny Hecker appeared in a packed courtroom Wednesday, marking his first court appearance since filing for personal bankruptcy and claiming that he has just $18.5 million in assets.

He reportedly owes $767 million to scores of creditors around the country, including Chrysler Financial, Hyundai Motor Finance, U.S. Bank and the IRS, all of which were represented at the U.S. Bankruptcy Court hearing in Minneapolis.

During the three-hour hearing, the once flamboyant and now resigned Hecker said that he was unemployed but that he had started a new auto consulting business, secured a $100,000 loan from a friend, lost his Bentley, condos, townhomes, boats and other property to U.S. Bank, TCF Bank, Bremer Bank, and other foreclosing entities.

Flanked by two attorneys and wearing an oversized blue suit, Hecker answered scores of detailed questions from bankruptcy trustee Randy Seaver about how he paid bills, when he paid stock margin calls, bought or sold or lost certain property, and whether he had deposited funds in offshore accounts or with friends or family members.

Hecker frequently told Seaver, "I have no idea" and "I don't know" or to check with the previously filed bankruptcy schedule when asked about certain investments. At one point, Hecker said: "Mr. Seaver, we had 100 bank accounts," noting that he could not be expected to instantly remember all details about which account had received certain security or lease deposits.

Hecker testified that a staffer used to make his personal rent, mortgage, utilities and credit card payments. The staffer, one of only three remaining, quit three days ago.

Hecker also claimed he had no offshore accounts, no longer owns credit cards and suffered a $28 million tax loss in 2007. He also said that he uses the $100,000 recently lent to him by friend Steve McDaniels and money from his wife, Tamitha, to pay for daily living expenses, some bills and for his new business.

When asked why Hecker put the bulk of his assets under the names of roughly 100 LLCs, Hecker told Seaver that a prenuptial agreement he signed had led him to put property in company names instead of his own.

Hecker and Tamitha are currently separated, he said. In an interview this week, Tamitha Hecker said she is getting a divorce.

Seaver asked for whom Hecker had purchased $48,000 worth of jewelry in March 2008, but Hecker said he did not know. He said it could have been gifts for several people.

Seaver also learned that Hecker is not receiving rent from his father-in-law, Bill Prohofsky, who is living in a $1.4 million home on Hecker's lakeshore compound in Crosslake, Minn., which is owned by Hecker's Jacob Holdings of Crosslake LLC. (Hecker now officially lives next door in a $8.9 million Crosslake home he claims is worth only $4.4 million. A third home in the compound is valued at $1.4 million by the county.)

Gifts to a girlfriend

In a bankruptcy schedule submitted July 1, Hecker was to have listed all property owned and all gifts issued in the past year. Hecker listed $450,000 of gifts to family members, business associates and politicians, and noted that he gave "CM Rowan" $65,000 in cash and gifts and "Christi M. Rowen" $35,000. In court Wednesday, he explained that the two names were the same individual.

Seaver noted that Hecker filed additional bank records and other information with the court Wednesday and turned over jewelry that had not been previously listed among his assets. On Monday, Seaver sued Hecker for failing to list at least four Rolex watches, a diamond bracelet and a gold-and-diamond ring. Seaver, who learned of the additional jewelry by examining a recently canceled insurance policy, said he will withdraw his lawsuit because Hecker has turned over all of the requested jewelry and more.

The IRS' Clifton also questioned Hecker about various properties in Scottsdale, Ariz., and Los Cabos, Mexico, and about personal property co-owned by the owner of Royal Jewelers. The IRS has filed liens on Hecker properties across the county.

Two dogs, $30,000 each

Clifton also asked about Hecker's 54 percent stake in Transcend Communications, his IRA funds, his repossessed Hatteras yacht and whether Hecker owned any pets. Hecker said he paid $30,000 for each of his two German shepherds. The dogs were not reported on the bankruptcy property schedule, because the dogs now belong to Tamitha Hecker and their two youngest children, he said.

Mohrman and Seaver butted heads during the hearing as Mohrman repeatedly instructed Hecker not to answer Seaver's questions about certain documents from Hyundai Motor America. Chrysler Financial alleged that Hecker had doctored and forged the documents to get $83 million in loan advances and cash incentives from Chrysler Financial. Chrysler Financial sued Hecker over the matter on July 8 and Seaver wanted to know whether the signature on the papers was indeed Hecker's. Mohrman, who previously denied Chrysler's allegations, insisted that case law showed that such questions could not be asked during these proceedings as ongoing discovery was still taking place. "The debtor is at a serious disadvantage," Mohrman said.

A clearly displeased Seaver said he would take the matter up with U.S. Bankruptcy Judge Robert Kressel.