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Last updated: Thu. Oct. 08, 2009 - 10:41 am EDT

Bad check puts Dean Kruse in Tennessee investigation

But auction house president denies that consignors haven't been paid.

Police in Sevierville, Tenn., say they're investigating the Kruse International auction company because a check from the company for facilities rental in that city bounced, and some consignors in a June 20 collector-car auction say they haven't been paid.

Dean Kruse, president of Kruse International, admits to the bounced check, but said all consignors have been paid and that their claim was instigated by a disgruntled customer with a friend among Sevierville police.

“If there's any consignor down there not paid, I'd like to have his name,” Kruse said Wednesday.

Kruse said his problems with Sevierville police began after his company attempted to repossess a $97,000 car in that city.

The car's owner has a friend among detectives on the Sevierville department, Kruse said, and police there blocked the repossession.

“This is just a sham to give me bad press,” Kruse said about the consignors' complaint.

Sevierville police spokesman Bob Stahlke said the investigation began after the city itself was stiffed by the Auburn-based auction company. Stahlke said a check for $8,500, paid to rent the Sevierville Events Center, was returned because of insufficient funds in the Kruse account.

“That happened,” Kruse said of the bounced check. “That was a deal where the check beat our money back from Tennessee.”

Stahlke said police in the small Tennessee city near Gatlinburg expanded their investigation after “several other victims” said they had sold cars in the June 20 Great Smoky Mountain Collector Car Auction but had not been paid.

Stahlke also said several other law-enforcement agencies are involved in what he called a “fraud investigation,” including the U.S. Secret Service.

The Secret Service is best known for protecting the president and vice president and their families, presidential candidates and visiting heads of state, as well as investigating counterfeiting.

However, the agency also has authority to investigate certain other financial crimes, which are specified on the Secret Service Web site.

Officials from the Knoxville, Tenn., field office of the Secret Service were not available to discuss the agency's involvement in the Kruse investigation.

This year, Kruse has been beset by allegations from consignors who say they haven't been paid.

The BBB gives Kruse International an F rating because it has not responded to 21 complaints, generally from customers who say they have not been paid.

Kruse said his customers stiffing him - to the tune of $6.5 million in unpaid bills - has, in turn, put him behind in paying his creditors.

Kruse said the Auburn sale completed last month was the best-attended auction the company has ever staged, with 130,000-135,000 people visiting the event.

“Over 51,000 people came to the Saturday (Sept. 5) sale. That's the largest crowd ever to attend an auction sale,” he said.

However, he said the depressed market in collector cars meant sale proceeds were lower than in good years, too - though he wasn't specific about money netted or grossed in the sale.

Before the Labor Day auction, Kruse said he was counting on proceeds from the company's biggest sale each year to enable him to pay all remaining bills the company owes.

Evidently, the sale fell short of his hopes.

“I made a lot of gain, but I didn't go as far as I wanted,” he said. “I may have to use some of my own money.”

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