Hecker will remain responsible for $767M debt

Denny Hecker
Denny Hecker and his legal representatives talk with media members after pleading not guilty to federal fraud charges at the federal courthouse in Minneapolis Thursday, Feb. 11, 2010.
MPR Photo/Jeffrey Thompson

Former Twin Cities auto mogul Denny Hecker has agreed not to contest more than three quarters of a billion dollars in debts he owes creditors in his bankruptcy. It's the latest twist in Hecker's increasingly complex legal woes.

When he filed for bankruptcy last June, Hecker reported about $20 million in assets and $767 million in debts.

Hecker had hoped to get most of his debts forgiven in bankruptcy. That won't happen if a judge approves the agreement Hecker has reached with the trustee overseeing Hecker's bankruptcy.

"If the judge were to approve this settlement, it would mean Mr. Hecker is still responsible for all of his debt," said Matthew Burton, attorney for the court-appointed trustee in the case. "And in terms of assets, this agreement does not have any direct effect on that at all. The trustee is still going to be pursuing the assets of Mr. Hecker."

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The only thing the trustee has said he won't go after is a dog Hecker gave his girlfriend. The receiver has accused Hecker of hiding hundred of thousands of dollars in assets.

Hecker's bankruptcy attorney was not available for comment.

Veteran bankruptcy attorney George Singer of Lindquist & Vennum figures a recent court ruling had to figure in Hecker's decision.

The judge overseeing the case ruled Hecker could not be forgiven an $80 million debt owed to Chrysler Financial.

With such a huge debt going unforgiven, Singer suspects Hecker decided it wasn't worth fighting to get forgiveness on the rest of his debt.

"The magnitude of that non-dischargeable liability renders subsequent liabilities not as much of an issue," Singer said.

Hecker has pleaded poverty to the courts before in his case. But now his two criminal attorneys have asked to withdraw from his defense because Hecker says he can't afford to pay them.

As his lawyers ask to quit, Hecker has a growing stack of legal problems to deal with, most notably federal charges that he committed fraud in auto financing deals and in his bankruptcy filing. And court documents unsealed this week indicate he could face more charges, if law enforcement authorities follow through on discoveries made by investigators.

The unsealed documents shed additional light on Hecker's alleged efforts to defraud Chrysler Financial, as well as apparent schemes to defraud other businesses and consumers. Hecker has pleaded not guilty to the federal charges.

An FBI agent says several witness have come forward with information about crimes allegedly committed by Hecker.

They include forging documents, falsifying auto insurance repair claims, and providing lenders with overstated values of vehicles Hecker had purchased.

The government revealed this week it has a witness who may really help prove charges that Hecker has tried to hide assets. That witness reported seeing $600,000 to $700,000 in cash in Hecker's safe at his corporate headquarters. This was at the same time last year that customers were calling to complain liens had not been paid off in their cars, even though they had given Hecker dealerships money to make those payments.

Investigators said one cooperating witness stated it appears Hecker inflated the value of a private plane by $3 million to get additional financing from GE Capital.

Law enforcement authorities also discovered State Farm Insurance alleges Hecker submitted inflated claims for collision repairs to rental cars, as well as for work on vehicles taken in trade. That started back in at least 2002, well before Hecker's auto empire began to crumble. State Farm says it paid at least $500,000 more than necessary to repair the vehicles.

A hearing is scheduled for Monday on Hecker's criminal defense attorneys' request to leave the case.