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Denny Hecker pleads guilty to fraud charges

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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

Minnesota auto mogul Denny Hecker, accused of defrauding lenders and others of millions of dollars, has pleaded guilty to two federal charges.

      Hecker faces up to 10 years in prison under his plea agreement entered Tuesday before U.S. District Judge Joan Ericksen in Minneapolis, and prosecutors say they'll seek the maximum. The judge has not set a sentencing date.       

Hecker had pleaded not guilty earlier this year to 26 counts of bankruptcy, conspiracy and wire fraud. In the end, he pleaded guilty to one county of conspiracy to commit wire fraud and one count of bankruptcy fraud. 

Prosecutors say Hecker's fraud cost his lenders more than $20 million in losses, and that the purpose of the scheme was to support his lavish lifestyle. 

Hecker, 59, once was one of Minnesota's largest car dealers, but his empire started falling apart in 2008, and he filed for bankruptcy last year.

      Hecker didn't speak in court, but his attorney Brian Toder said after the hearing that Hecker is relieved to have the plea done with.

Toder said the plea deal was Hecker's best option. 

"The risk of what could have happened if we went to trial and there was not an acquittal is potentially worse than what we ended up with," he said. "Right now Denny is looking at a sentence of potentially five to 10 years."

Toder says plea negotiations got underway after prosecutors accused Hecker of violating the terms of his release and asked a judge to lock him up. 

"Certainly the idea that he was looking at potential incarceration with a hearing that was scheduled for Wednesday, that got the ball rolling," Toder said. "That put pressure on us to do something. And of course the government, they certainly wanted to settle this thing."

Toder said it will be up to Ericksen to determine exactly how much prison time Hecker serves, but he said Hecker was facing as much as 50 years if he went to trial and was convicted. 

Hecker will be under house arrest, but not incarcerated while he awaits sentencing, which is expected within the next few months. 

 Hecker was one of Minnesota's largest car dealers, and as recently as 2008 he owned 26 dealerships and numerous other holdings. His face was a fixture in newspaper, TV and bus ads for his dealerships, and in 2004 he joined with a group of investors that publicly expressed interest in buying the Minnesota Vikings.

      In late 2008 he lost credit lines and sold off or closed his dealerships, and in June 2009 he filed for bankruptcy. In court filings, bankruptcy trustees and lenders accused him of fraud, forgery, embezzlement, concealing assets and other wrongdoing.

      Federal prosecutors say Hecker also was running schemes to defraud lenders, including Chrysler Financial, of hundreds of millions of dollars.

      Among other things, prosecutors alleged that in the fall of 2007, Hecker and a former executive gave fraudulent documents to Chrysler Financial Services Americas to obtain $80 million in financing to purchase vehicles from Hyundai Motor America. Chrysler Financial issued the loan and lost more than $10 million.

      Last week, prosecutors asked the court to send Hecker back to jail for concealing more than $150,000 in insurance checks and allegedly using the money to maintain a lavish lifestyle even while claiming he was broke. That was after a court-appointed bankruptcy receiver sought documentation of how Hecker paid for a Cadillac Escalade, a meal at an expensive steakhouse and three country club memberships.

      Another Hecker attorney, Barbara May, told the AP on Tuesday that he planned to say at the plea hearing that his downfall was the result of "a business deal that's gone south."

      "It's a business conflict that got out of control, got out of hand," May said. "He kept the business going as long as he could, wanting to make sure he provided for the Minnesota families. He just tried to keep it going."       

      (The Associated Press contributed to this report.)