Home Minneapolis Press Releases 2010 Hecker Co-Defendant, Former Leasing Company President Pleads Guilty to Conspiracy to Commit Wire Fraud...
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Hecker Co-Defendant, Former Leasing Company President Pleads Guilty to Conspiracy to Commit Wire Fraud

U.S. Attorney’s Office October 01, 2010
  • District of Minnesota (612) 664-5600

Earlier today, Steven Joseph Leach, the 55-year-old former president of Rosedale Dodge, d/b/a Rosedale Leasing and Walden Fleet Services II (“Rosedale/Walden”), the leasing company owned by auto mogul Denny Hecker that leased fleet cars to rental car companies, pleaded guilty in federal court in Minneapolis to participating in a scheme Hecker orchestrated to defraud financial lenders and others out of millions of dollars. Appearing before United States District Court Judge Joan N. Ericksen, Leach pleaded guilty to one count of conspiracy to commit wire fraud. He was indicted on February 10, 2010, but recently chose to waive the indictment and be charged by a single-count Information that largely mirrors Count 1 of the Indictment.

In his plea agreement, Leach admitted that from November of 2006 through June of 2009, he conspired with Hecker to defraud Chrysler Financial Services, from which the Hecker organization borrowed money to purchase vehicles for its leasing business. The purpose of the overall fraud scheme, at least in part, was to obtain millions of dollars in incentive money from automobile manufacturers without having to provide that money to Chrysler Financial.

According to court documents, in the fall of 2007, Leach conspired with Hecker to present fraudulent paperwork to Chrysler Financial in an effort to obtain $80 million in financing for the purchase of 5,000 vehicles from Hyundai Motor America. Among the documents submitted to Chrysler Financial was a letter from Hyundai Motor America that Hecker, in the presence of Leach, fraudulently altered by making handwritten changes. The fraudulent alterations made it appear as if Hyundai Motor America was offering to sell Rosedale/Walden 4,855 “repurchase” Hyundai vehicles. However, both Leach and Hecker knew Hyundai had made no such offer. Hecker instructed Leach to have a Rosedale/Walden employee incorporate Hecker’s handwritten changes onto an actual Hyundai Motor America letter, and ultimately, Leach faxed the fraudulent letter to Hecker in Michigan, where he was meeting with Chrysler Financial representatives.

In connection with the same scheme, Leach admitted that in November of 2007, at Hecker’s direction, he instructed his employees to order the Hyundai vehicles from Hyundai Motor America as risk but treat them in internal records as repurchase vehicles. When the vehicles were entered as “repurchase” into Rosedale’s computer system, it set in motion processes that contributed to Chrysler Financial’s funding of the vehicles under the false notion that they were repurchase.

Based on those misrepresentations, including the faxed altered document and otherwise, Chyrsler Financial loaned Hecker and the Hecker organization more than $80 million and, in the end, lost approximately $13 million.

According to the plea agreement, Leach also admittedly misled Chrysler Financial into financing Suzuki vehicles. Again, Leach failed to inform the lender that the Hecker organization had received significant incentives from American Suzuki Motor Corporation. That particular fraud was accomplished by removing a material portion of each year’s Suzuki purchase contract before providing the contract to Chrysler Financial.

For his crime, Leach faces a potential maximum penalty of five years in prison. Judge Ericksen will determine his sentence at a future hearing, yet to be scheduled.

Earlier this month, Hecker pleaded guilty to one count of conspiracy to commit wire fraud and one count of bankruptcy fraud in connection with the scheme to defraud Chrysler Financial Services and other lenders. Moreover, James Carl Gustafson, a 49-year-old former employee of Hecker, pleaded guilty earlier this week to lying to government investigators about Hecker’s fraud scheme as well as assisting Hecker in hiding a Cadillac Escalade from creditors. In addition, Christi Rowan pleaded guilty in April to bank fraud with respect to defrauding a credit union in the purchase of a Land Rover intended for Hecker and bankruptcy fraud with respect to lying under oath in connection with Hecker’s bankruptcy case.

This case is the result of an investigation by the Minnesota State Patrol, the IRS-Criminal Investigation Division, and the FBI. It is being prosecuted by Assistant U.S. Attorneys Nicole A. Engisch, Nancy E. Brasel, and David M. Genrich.

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