Green Bay businessman allegedly defrauded Scott Walker’s WEDC to the tune of $1.12 million

http://host.madison.com/news/local/govt-and-politics/warrants-allege-green-bay-businessman-defrauded-wedc-for-more-than/article_be226c3c-a30c-5d5a-b801-702d70b16199.html target=_blank>This is very definitely Scott Walker’s Wisconsin…

A Green Bay businessman is under criminal investigation for allegedly defrauding the state’s job creation agency of more than $1 million, according to search warrants obtained by the State Journal.

Ron Van Den Heuvel has not been charged with a crime, but he is suspected of committing theft and securities fraud against several parties, including the Wisconsin Economic Development Corp., according to six search warrants the Brown County Sheriff’s Office executed at Van Den Heuvel’s home and businesses in De Pere and Ashwaubenon in July.

The warrants state that WEDC, which is funded mostly with taxpayer dollars, “was a potential victim of fraudulent representation made by Van Den Heuvel.” They provide the first confirmation that law enforcement officials are investigating a company for allegedly misrepresenting itself to WEDC.

WEDC loaned $1.12 million to Green Box NA on Oct. 21, 2011, according to agency records. The funds were supposed to help the company create 116 jobs by December 2014 as part of a more than $13 million project to turn fast food wrappers and other waste paper into synthetic fuel and paper products while producing zero waste.

Within days, according to the warrants, “a substantial portion” of the loan amount was transferred to bank accounts for other business entities and used to pay Van Den Heuvel’s personal and business debts unrelated to Green Box.

Scott Walker appoints major campaign contributor as head of his job creation agency

According to reports Gov. Scott Walker has named banking executive Mark Hogan as the new CEO of the Wisconsin Economic Development Corporation (WEDC), Gov. Walker’s troubled “job creation” agency.

Governor Scott Walker on Thursday, September 3rd announced the appointment of banking executive Mark Hogan as CEO of the Wisconsin Economic Development Corporation (WEDC). Hogan replaces Reed Hall, who announced his retirement last month.

Notably, Hogan has contributed over $24,000 to Scott Walker’s campaigns dating back to 2005, according to the Wisconsin Democracy Campaign’s Campaign Finance Database.

Sen. Kathleen Vinehout: Should Tax Dollars Go to Companies Just to “Create Jobs”?

From my email inbox comes the latest newsletter from Democratic State Senator Kathleen Vinehout.

Imagine how private firms do business with the State of Wisconsin. The companies provide something of value for taxpayers and, in return, receive state money.

This happens all the time in state government: private companies build roads, computer systems, pay Medicaid bills, and even educate children.

What if the sole reason tax dollars went to a company was to create jobs?

Recognizing that taxpayers would want to know companies were actually creating jobs, lawmakers wrote state law requiring verification of information sent by businesses applying for tax dollars. Not really a whole lot different than making sure road builders actually poured the required amount of concrete on our roads.

But the public accountability is a lot less when it comes to job creation.

In 2011, Governor Walker established the Wisconsin Economic Development Corporation (WEDC), which administers 29 economic development programs funded almost entirely with state money.

WEDC’s name is misleading – it is not a corporation. It is a state ‘authority’ and is – or should be – accountable to taxpayers for dollars it spends. That’s why the nonpartisan Legislative Audit Bureau (LAB) has been auditing WEDC since its creation.

Findings from the LAB May 2015 audit revealed that WEDC awarded grants and loans to companies to create or retain jobs, but WEDC staff did not require those companies to submit payroll or other records showing that jobs were actually created or retained.

WEDC staff wrote off some loans not collected, deferred payments due and forgave loans. Program reports did not contain clear, accurate or complete information on outcomes. In some cases, the WEDC Board actually created policies in direct conflict with state law.

Evidence in several audits show WEDC broke state and federal laws. Illegal action in approving Community Development Block Grants led to fines that are still being paid by taxpayers.

During its first three and one half years, WEDC staff didn’t independently verify the job creation or retention information by annually reviewing a sample of grant and loan recipients, as required by state law. They allocated tax credits to projects that started before the company actually contracted with WEDC to start the project. WEDC staff did not consistently collect companies’ verified financial statements for recipients of certain grants and loans.

So, what is the answer to questions about job creation or if the 29 programs were successful? The answer is “We don’t know.” Early in WEDC’s existence, zero jobs were independently verified – which was in direct conflict with state law.

The May 2015 audit is the fourth in two years reporting similar findings.

If a program in any other part of state government failed to follow state laws and failed to deliver goods and services bought with state tax dollars, the public and the press would hound lawmakers until they shut down the program or made massive changes.

It is not so with WEDC. Only recently, after pressure from legislators did the Joint Legislative Audit Committee Co-Chairs schedule a public hearing on the May audit. During this public hearing, scheduled for September 9th, I expect WEDC officials to try to discredit the stellar work of the nonpartisan LAB.

Two concepts are important to remember in reading any news account of the upcoming hearing. What does it mean to verify or make sure jobs were actually created? Is WEDC required to follow state law on when and how to award state tax dollars?

WEDC officials claim that asking a company to sign a “progress report” form is measure enough the company has created the jobs. They also argue laws were not broken even though auditors reported numerous instances when contracts were written or amended and even board policies were created in violation of state law.

In any other part of state government executives would be fired and programs eliminated with the type of negative results found in just one audit – not four audits in two years.

WEDC officials claim they created a ‘business friendly’ environment and placing too many restrictions on businesses receiving state money might discourage the business from applying for grants or tax credits in the first place.

But, if we can’t ensure taxpayer dollars are well spent, why do we have these programs?

Let’s examine Gov. Scott Walker’s record of “government reform”

One of the “accomplishments” Gov. Scott Walker has been touting as he’s traveled the country promoting himself for president is that he is a government reformer.

In the case of the Wisconsin Economic Development Corporation (WEDC), the job creation agency Gov. Walker created in place of the Department of Commerce, let’s look at what Gov. Walker’s reforms got Wisconsin.

In the four years since the creation of WEDC, that agency has had:

2 (soon to be three) spokespersons
2 two chief executive officers
3 chief operating officers
5 chief financial officers
$12 million in untracked loans
$126 million in loans that were not properly underwritten/vetted

If that’s the Republican idea of “government reform,” then I’ll pass.

Scott Walker’s WEDC acted politically instead of prudently? Say it ain’t so!

According to a recent report in the Wisconsin State Journal by Matthew DeFour, WEDC, the public-private hybrid job creation agency created by Gov. Scott Walker in 2011, in many cases acted irresponsibly in doling out taxpayer monies in order to benefit supporters of Gov. Walkers.

Of course, this should surprise absolutely no one who’s been paying attention to the cronyism that’s taken root in our state since Gov. Walker and his Republican rubber-stamp majorities in the State Senate and State Assembly started running things in 2011.

Even as it developed new systems and overcame early hurdles, WEDC and other top Walker officials pushed for employees to move quickly to approve economic incentives, which sometimes led to costly shortcuts.

In September 2011, just months after WEDC was formed, Department of Administration officials at the direction of Secretary Mike Huebsch pushed the agency to assist a Milwaukee construction company whose owner had made a maximum $10,000 donation to Walker’s campaign. Within a week, WEDC awarded a $500,000 loan but failed to perform a thorough financial review, which should have revealed the firm erroneously reported that it had not been sued in the previous five years.

Emails and records obtained by the State Journal under the state open records law show Brenda Hicks-Sorensen, then WEDC’s vice president for economic and community development, hustled to get the loan out the door, expediting the normal timeline for cutting a check at the urging of a DOA administrator.

Months later, after Huebsch urged Jadin to have WEDC give the company more money to no avail, Hicks-Sorensen was informed by another employee that the company’s owner planned to repay debt to a luxury car-leasing company with state funds. Yet the agency continued for the next year to seek additional public assistance for the company.

The loan, which has not been repaid even after a successful lawsuit against the defunct company, was one of 28 awards totaling $126 million in the agency’s first two years for which there is no record underwriters wrote up a formal financial review, according to an internal report.

Just to sum up, Scott Walker’s “job creation” agency doled out $126 million in taxpayer funds to companies ostensibly to create jobs but with little or no assessment of the risk associated with doling out funds to those companies.

That certainly doesn’t sound very fiscally responsible to me, but maybe Wisconsin’s conservatives have a different definition of fiscally responsible than I do.

Why Is The Media Giving Attorney General Brad Schimel No Respect

I mean really…the lead law enforcement agent in the State Of Wisconsin, Attorney General Brad Schimel…is also one of the leading Republican electeds in Madison. And although he dramatically came out in opposition to the curtailment of state open records as introduced to the state biennial budget, he barely gets mentioned in press coverage! I mean, WTF?

Today’s JSOnline for instance:

Attorney General Brad Schimel, a Republican, also spoke out against the changes.

Wisconsin State Journal: nada

Wisconsin State Journal July 3: nada

JSOnline July 3: a bit more effusive but still:

Attorney General Brad Schimel, a Republican, also spoke out against the changes.

“Transparency is the cornerstone of democracy and the provisions in the Budget Bill limiting access to public records move Wisconsin in the wrong direction,” he said in a statement. Schimel is the state’s lead elected official responsible for handling open records issues.

I would actually like to see an interview with the attorney general…and have someone ask him about these shenanigans and why no one at WEDC is be prosecuted for their whole snake pit?

Scott Walker’s WEDC backed firm after learning firm wanted state money to pay for luxury cars

This is just obscene…

Officials at Wisconsin’s top jobs agency sought federal tax incentives for a failing Milwaukee business for a year after being told that the owner was seeking the money to pay off business debts such as the leases on luxury cars.

Officials at the Wisconsin Economic Development Corp. worked to get that federal help for Building Committee Inc. even though a $500,000 loan it had given to the company had gone sour within months and the owner of the firm had provided false information to the state.

Top officials in Gov. Scott Walker’s administration pushed to get Building Committee the initial loan and worked to get more for the company. But the jobs agency had to pass on giving the company more funding from state taxpayers after finding numerous problems with the firm and being told that owner Bill Minahan was promising some of this second proposed loan to pay a leasing debt on cars such as a 2010 Maserati and a 2011 Nissan 370Z luxury sports car.

Information about state officials’ long-running attempts to find help for the troubled company are coming to light just as the Republican governor prepares to announce his bid for the presidency next month. Walker said he didn’t think his jobs agency had cut any corners.

Help review 1,200 pages of WEDC documents!

Over at DailyKos, regular Blogging Blue reader/commenter lufthase has posted an excellent piece about the 1,200 pages of documents obtained from the Wisconsin Economic Development Corporation (WEDC) related to the unsecured $500k loan from WEDC to Building Committee Inc (BCI), as well as the contracts for the 27 awards that were handed out without any underwriting/eligibility review.

Given the sheer number of documents obtained by lufthase, help is needed to review the documents. If you’d like to help crowdsource a review of the documents, please feel free to click the links below to start reviewing, then post your findings here.

Once we’ve reviewed the documents and shared our findings, I’ll compile the findings into a more comprehensive post.

Scott Walker’s jobs agency writes off $7.6 million in taxpayer-funded loans

According to a new report by Jason Stein and Mary Spicuzza of the Milwaukee Journal Sentinel, the Wisconsin Economic Development Corporation (WEDC), the jobs agency created by Gov. Scott Walker just about four years ago, has written off just over $7.6 million in taxpayer-funded loans since its creation.

The write-offs include 28 different loans removed from the balance sheets of the Wisconsin Economic Development Corp., with some companies receiving multiple loans. The majority of those loans, which officials typically write off after determining the likelihood of collecting the debt is small, were awarded by the former state Department of Commerce, the predecessor to the WEDC.

One of those loans, which was awarded by the WEDC to Building Committee Inc., set off a firestorm of criticism in recent weeks after it was revealed that some of Walker’s top aides and a powerful lobbyist pushed for a $500,000 unsecured loan to the now-defunct company, which was owned by Walker campaign contributor William Minahan. That loan was written off by the WEDC last year.

The $500,000 given to BCI amounts to about 7% of the loans — totaling $7,607,013 as of early June — that the agency has written off since it was created in 2011.

But remember…Republicans are supposed to be responsible stewards of taxpayer dollars!

This is yet another example of a concrete example of how the notion of Gov. Scott Walker as a fiscal conservative is nothing more than a myth – a fabrication created by Walker and his supporters in order to further his own ambitions.

Governor Scott Walker Is A Quitter

The Wisconsin Economic Development Corporation (WEDC) was supposed to be the crown jewel among Governor Scott Walker’s first term accomplishments. It was part of his agenda to downsize government and privatize government functions in one fell swoop…as well as serve as a lynch pin in his promised job development in Wisconsin.

Well since then WEDC has failed two state audits. The audits essentially found that the agency didn’t follow state law and didn’t even follow their own internal rules on loans and verification of results from the firms receiving loans.

So what does the governor do when faced with issues surrounding the business loans his organization is making? Does he replace anyone in authority? Does he question why WEDC goes through financial officers like water? Does he call a board meeting (as governor he is board chairman) and get everyone in line like a chair of a business would? Does he hold a public forum and discuss the aims and goals of WEDC…it’s fit in the economy of Wisconsin…and the value and purpose of the loans? NO, he just throws up his hands and says that WEDC shouldn’t be making business loans.

A week after an audit documenting failures by the state’s top jobs agency, Gov. Scott Walker is seeking to end the authority’s $19 million a year in lending, shifting his plans for the agency for the second time in as many weeks.

The Republican governor Friday proposed phasing out the Wisconsin Economic Development Corp.’s $74 million loan portfolio — one of the problem areas identified by nonpartisan auditors but not the only one. Within hours of the release of the Legislative Audit Bureau report last week, Walker dropped his proposed merger of WEDC with another state agency that deals with the economy.

And then apparently at his own behest (and that Zach mentioned yesterday), the legislature is removing the governor from his role as WEDC board chair:

GOP legislators voted along with Walker (emphasis mine) to remove him as chairman of the Wisconsin Economic Development Corp. but chose to keep their legislative representatives on the board of the embattled jobs agency.

WEDC has been plagued by lax oversight…

When the going gets tough…the tough bail out? That’s leadership?

I imagine Gov. Walker’s continued leadership of a failing state jobs agency would totally play against the image he is trying to portray on the presidential campaign trail. Time to bail before there is too much national media scrutiny on his major policy failure.

But let’s roll back to the lax oversight statement. Very recently there has been a lot of scrutiny of a loan WEDC made to a now defunct business owned by a contributor to the governor’s campaign.

Gov. Scott Walker’s top aides pressed for a taxpayer-funded $500,000 loan to a now-defunct Milwaukee construction company that was collapsing and created no jobs, according to a newspaper investigation.

Walker’s economic development agency, the Wisconsin Economic Development Corporation, awarded an unsecured loan to Building Committee Inc., owned by William Minahan, according to records the Wisconsin State Journal obtained through an open records request.

The 2011 loan was for a proposed project to retrofit bank and credit union buildings for energy efficiency. The WEDC sued BCI last year in an attempt to get the money back.

It is among several WEDC loans recently questioned by state auditors in a report that led Walker on Friday to ask lawmakers to scrap the loan program.

Paul Jadin, the former head of WEDC, said Minahan and then-Administration Secretary Mike Huebsch pushed for a $4.3 million loan, but the agency couldn’t justify more than $500,000 — which Jadin said he considered “fairly risky.”

Minahan had given Walker’s 2010 gubernatorial campaign a last-minute $10,000 donation on election day — the maximum individual contribution.

A loan that Gov. Walker claims he was not aware of.

State records say that Gov. Scott Walker received a copy of a 2011 letter pledging a $500,000 taxpayer loan to a now-defunct Milwaukee construction company headed by a Walker donor, seemingly contradicting statements by the governor and his aides that he was not aware of the award.

A spokeswoman for Walker said that, in spite of the records, a copy of the letter from the Wisconsin Economic Development Corp. was never delivered to the governor’s office.

So let’s see: the governor’s top aides pushed for a WEDC loan, the governor was copied on the letter regarding the loan, the governor is the board chairman of the loaning organization…and no idea about the loan? That is the definition of lax oversight and typical of Gov. Walker’s organizational style both in the governor’s office and his year’s as county executive in Milwaukee.

What should be happening at WEDC?
1: The governor should be holding up his hand and saying the buck stops here.
2: Attorney General Schimel should be called in to investigate potential violations of state law.
3: The officers of WEDC should make some major changes in the organization to meet state law and internal controls.
4: There should be a public discussion on the value of the WEDC and it’s role in Wisconsin.

And the people of Wisconsin should realize that this is a glaring example of Gov. Walker’s lack of governance in this state as he looks toward his campaign for president. None of us, left or right, are getting any leadership out of the governor’s office.

It is also interesting to examine the sideshow related to all of this:

A week ago when it looked like WEDC might be salvageable, Reed Hall, the secretary and CEO of WEDC, wrote a glowing op ed piece for the Milwaukee Journal Sentinel supporting the bold approach to economic development taken by the agency.

And then four days later as things around WEDC continued to unravel Christian Schneider, the in house GOP mouthpiece at the Milwaukee Journal Sentinel, suggested that we don’t need a business loan state organization and that WEDC should be dismantled.

How quickly fickle the Madison GOP shows itself to be these days. You’d think being in control would be more fun (sarcasm)!

BTW: how’s the jobs thing coming? At the end of his first term the governor was 121,000 jobs short of his announced goal of 250,000 jobs.