The IRS elbowed its way through a crowd of creditors last month looking for cash from the now-bankrupt auto mogul Denny Hecker.
In a May 11 filing in Phoenix that likely will be duplicated in other jurisdictions around the country, the Internal Revenue Service put liens on "all property" Hecker and his wife own, claiming that they owe at least $2.6 million in income taxes for the years 2003 and 2005. The move should ensure that Uncle Sam gets paid in the event that Hecker sells any real estate, said IRS spokesman Dan Boone.
Attorneys for Hecker could not be reached for comment.
Hecker, the fallen Twin Cities auto tycoon, filed for personal bankruptcy earlier this month, claiming that he owes up to 1,000 creditors possibly as much as $1 billion. Last week the Minnesota State Patrol raided Hecker's St. Louis Park business, two dealerships and his $12 million Crosslake home, $6.6 million Medina mansion and another Medina home that was recently on the market for $1.69 million.
State officials said they were seeking evidence that Hecker had failed to pay state sales taxes and transfer fees on scores of vehicles sold to customers from his various dealerships. Investigators also sought evidence that Hecker failed to process title transfers and failed to pay off the loans on customer trade-ins. More than 500 customers called a state hotline (800-593-5000) to complain that they were left in limbo after buying a vehicle from Hecker.
Customers said they expected to receive car titles and license plates 10 days after the transaction closed, but that they were still waiting.
Hecker's attorneys tried to deflect the blame to GMAC Financial for allegedly failing to pay sales taxes and process titles, but the giant auto financier categorically denied such claims.
"Their conduct is inexcusable and these statements are ridiculous," GMAC spokesman Mike Stoller said Monday. GMAC took possession of vehicle inventories at three Hecker dealerships March 23 after Hecker defaulted on loans. GMAC conducted audits and delivered a check to each of the three dealerships so that Hecker could pay all of the state taxes and title fees owed on vehicles recently sold to customers. All of the checks were cashed, Stoller said, adding that it is not GMAC's responsibility to pay a dealer's taxes.
The bankruptcy, property searches, GMAC schism and IRS tax liens come months after Hecker's rapidly spiraling business failure.
Chrysler pulled his credit line last fall, unleashing a domino effect that wiped out the overleveraged Hecker Automotive Group. He has shut or sold 25 of 26 dealerships, laid off hundreds of workers and put his Advantage Rent A Car business in bankruptcy. Some of those assets went to Hertz for $30 million. The rest are being liquidated.
In May, Chrysler won a court judgment against Hecker for $477 million. Ford Motor won a $3.15 million judgment. G.E. Fleet and Gelco have sued Hecker for $7 million in defaulted loans; Hyundai Motor Financial sued for $104 million in defaulted loans. Toyota Financial has joined the list of Hecker creditors, seeking an undisclosed amount.
Other creditors listed include Las Vegas casinos, the Minnesota Department of Revenue, the St. Croix Yacht Club, jewelers, property caretakers, his attorneys and nearly four dozen banks and finance companies.
Hecker was supposed to file a list of schedules and statement of financial affairs with the bankruptcy judge Monday, but he requested an extension until July 1, noting that his financial affairs are complicated. He said he "holds equity interests in approximately 245 corporations and limited liability companies," many of whose obligations he had personally guaranteed. He also noted that investigators seized his financial records in the raids last week.
Dee DePass • 612-673-7725