The legal problems of Denny Hecker continued to mount Thursday, as a U.S. bankruptcy trustee filed a civil complaint accusing the auto mogul of civil conspiracy, theft and unjust enrichment in the operations of several auto leasing businesses.
The complaint alleges that Hecker created a complicated scheme to funnel over $110 million from his Advantage Rent A Car and Southwest-Tex auto leasing businesses into his other businesses.
"The payments were made with the actual intent to hinder, delay or defraud creditors of the debtors," the complaint says.
The complaint, filed by U.S. Trustee Brian Leonard, claims that Hecker and several affiliates forced Southwest-Tex and other companies to pay inflated lease rates. The money, the complaint alleges, was then funneled into Hecker's other businesses.
As a result, Advantage Rent A Car and Southwest-Tex did not have enough money to cover their expenses, the complaint claims. Both companies filed for bankruptcy protection in December.
Hecker's attorney, Bill Mohrman, said that such claims are routine in bankruptcy. He said that the rental companies couldn't purchase vehicles from car makers, and bought them instead from Hecker dealers.
"It is neither surprising or unusual that Advantage paid these companies millions of dollars in the one year prior to Advantage filing bankruptcy," he said. "In fact, Advantage still owes these companies more than $60 million in missed lease payments."
The Minnesota State Patrol announced last week that it has begun a criminal investigation against Hecker, alleging that he failed to pay state sales tax on license plates, registrations, titles and other fees.
Hecker responded by filing a lawsuit against GMAC, arguing that the auto lender, not the individual dealerships, bore responsibility for making payments to the state.
In May, the IRS placed a lien on all property owned by Hecker and his wife, charging that the couple owe at least $2.6 million in income taxes from 2003 and 2005. The lien ensures that the IRS will receive payment if Hecker sells any real estate.
Hecker filed for Chapter 7 bankruptcy this month, saying he owed up to $1 billion to as many as 1,000 creditors, including automakers, lenders, business partners and former employees.