Hecker Employee Admits to Lying and Mail Fraud

A longtime Denny Hecker employee pleaded guilty on Sept. 27 to lying to federal investigators about an alleged scheme to defraud Chrysler Financial and that he committed mail fraud as part of a plan to hide a vehicle from Hecker's bankruptcy estate, according to the Pioneer Press.

The pleas of James Gustafson were part of an agreement to cooperate with prosecutors in the fraud case against Hecker — the Twin Cities auto dealership mogul — and another employee.

Gustafson worked for Hecker for 32 years, most recently as fleet manager for Hecker's Rosedale Leasing, which provided vehicles to rental car companies.

Earlier this month, Hecker reached a plea deal with prosecutors and pleaded guilty to one count of conspiracy and one count of bankruptcy fraud. He is expected to face up to 10 years in prison. Gustafson faces a maximum of four to 10 months in prison and up to $500,000 in fines, plus a period of supervised release.  

Gustafson's former boss, Hecker associate Steven Leach, who was president of Rosedale Leasing, was indicted with Hecker in February and currently faces one count of conspiracy and nine counts of wire fraud for allegedly doctoring purchase agreements for vehicles in order to defraud Chrysler Financial and other lenders of millions of dollars. Leach has pleaded not guilty.

At the Sept. 27 hearing, Gustafson admitted that Leach told him in November 2007 that Rosedale Leasing was buying "risk" vehicles from Hyundai Motor America, but that they were going to treat them as "repurchase" vehicles, leading lenders to believe that Hyundai would buy them back for a set price if they did not sell within a period of time. Risk vehicles do not have such a guarantee. Gustafson was charged with making a false statement, because he had told investigators in April that he didn't learn about the alleged scheme until late 2008.

Gustafson also admitted in court Monday that in April 2009, he submitted an application to the state of Minnesota to transfer the title of a Cadillac Escalade into the name of Northstate Financial, a "shell company" Hecker owned, to hide it from Hecker's bankruptcy estate.