Bank accuses high-profile auctioneer of loan misdeeds

AUBURN, Ind. – A Kansas bank has asked a judge to hold auto auctioneer Dean Kruse in contempt of court, alleging he violated terms of a loan on which he still owes $6.5 million.

Hillcrest Bank of Overland Park, Kan., says Kruse did not own three Nazi command vehicles when he used them as collateral for the loan, which is now in default.

The lawsuit, which is scheduled for a hearing Monday in DeKalb County, caps a trouble-filled year for Kruse and Kruse International. After months of complaints, the Auburn-based auction house now has the lowest possible Better Business Bureau rating.

A message seeking comment on the suit was left Thursday with Kruse’s Auburn office.

The auctioneer told The Journal Gazette in Fort Wayne in August that the recession has hurt his sales and caused him to fall behind on some payments.

The pending challenges facing Kruse and his companies include a federal judge’s move last month to order the seizure of Kruse’s 1985 Cessna jet after Kruse defaulted on the loan.

And in June, Kruse, whose primary residence is in Auburn, lost to foreclosure a Phoenix home on which he owed nearly $3.2 million, according to documents filed with the Maricopa County, Ariz., recorder’s office.

Kruse International also owes more than $52,000 in back taxes to the state of Arizona and nearly $37,000 to the city of Phoenix, according to documents from that state and city.

Arizona officials have also suspended Kruse’s license to operate in that state, where the company has held auctions for more than 30 years, following complaints from sellers.

Hillcrest Bank’s lawsuit was filed in August against Kruse, his wife, his auction company and several limited-liability companies he owns. It claims he defaulted on a 2007 loan originally for $13.6 million.

In addition to the Nazi command cars — three 1939 Mercedes-Benzes that Kruse failed to sell during a Labor Day auction — that loan’s collateral includes American Heritage Village, a site adjoining Kruse Auction Park that Kruse has hoped for years to develop.

Hillcrest asked last month that Kruse be held in contempt because an Arizona man, Tim Hurst, claims in an Internet advertisement that he owns the three Nazi command vehicles.

Kruse has argued in court documents that he still owns the vehicles.

Hurst’s attorney, E.J. Peskind, told The Journal Gazette that Hurst received a bill of sale for the vehicles in 2006 before the date when Kruse took out the loan from Hillcrest Bank in exchange for property in Arizona.

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