Excellent reporting this weekend from the Wisconsin State Journal digging into one particularly jaw-dropping $500k loan made by Scott Walker's Wisconsin Economic Development Corporation (WEDC). The loan ended up being a total loss for the state, and serious questions are being raised about why Secretary of Administration (and former Assembly Speaker) Mike Huebsch personally lobbied so hard for Building Committee, Inc. (BCI) to get a loan (he was actually pushing for a $4.3M forgivable loan!) despite its history of not paying its taxes, vendors, or employees. Could well-timed donations to Walker and other Republicans have had something to do with it?
I highly recommend that your read both of these articles in their entirety:
Using these two articles and publicly available court and campaign finance records, I put together a little timeline of this ill-fated loan and its well-connected deadbeat recipient (see below the orange thing).
UPDATE 5/18/15 10:20pm - As Jake Formerly of the LP points out in the comments, be sure to check out this new article from the Journal-Sentinel that reveals a letter written on Walker's behalf (and CC'd to Walker) by WEDC CEO Paul Jadin just 10 days before the loan to BCI was finalized:
Jadin said in his letter of intent that he was writing "on behalf of Governor Scott Walker" and noted "cc: Scott Walker, Governor" at the bottom....
"In closing Governor Walker and I are firmly committed to doing everything possible to expedite the processing and awarding of this incentive award," Jadin wrote in the letter.
Before we dive into yet another sordid chapter of miserable failure at WEDC, let's not forget about
Kestrel Aircraft playing WEDC against its counterpart in Maine,
Plexus and Eaton Corporation both taking WEDC money and then
shipping jobs overseas, Ashley Furniture being awarded tax credits
allowing it to cut 1,900 jobs, and WEDC funds
disproportionately going towards GOP legislative districts. And then there was that time when WEDC
just kind of forgot about their loan portfolio for over a year.
Timeline of WEDC $500k loan to Building Committee, Inc (BCI):
Searchable WI Court Records available here. (I made an editorial decision not to link to individual case records, mostly for the sake of privacy for the plaintiffs that BCI stiffed over the years, but they're all easy enough to find... and certainly would have been something one should have noticed before extending a six-figure line of credit.)
Searchable WI Campaign Donations available here.
The Players:
William S. Minahan - Owner/President of BCI
David Jaeckels - COO of BCI
Timothy Allen - VP of Strategic Planning for BCI
Kevin Theissen - BCI employee (title unclear), co-defendant with Minahan in some lawsuits
Mike Huebsch - Secretary of WI Dept of Administration (automatically a WEDC Board Member)
Feb 2008 - Minahan makes $1,000 donation to State Sen. Alberta Darling (R-River Hills)
Feb 2008 - David Jaeckels makes $1,000 donation to Alberta Darling
Feb 2008 - Kevin Theissen makes $1,000 donation to Alberta Darling
Feb 2009 - Minahan makes $100 donation to Randy Koshnick for WI Supreme Court (running against Chief Justice Shirley Abrahamson)
Jun 2009 - Minahan makes $10k donation to Jim Doyle (D) for Governor (FYI- Doyle did not run again in 2010)
Jun 2009 - David Jaeckels makes $10k donation to Doyle for Governor
Jun 2009 - Timothy Allen makes $5k donation to Doyle for Governor
Jun 2009 - Kevin Theissen makes $5k donation to Doyle for Governor
Early 2010 - BCI puts all employees on "half-pay"
May 2010 - Minahan sued for $16k in back taxes by WI Dept of Revenue (DOR)
May 2010 - Superior Safe Security gets $14k judgement against BCI
Aug 2010 - BCI sued by an Oshkosh supplier, no money judgement entered
Nov 2010 - Minahan makes $10k donation to Scott Walker
Dec 2010 - Minahan pays his $16k in back taxes
Mar 2011 - Minahan makes $2,500 donation to State Sen. Alberta Darling
May 2011 - Huebsch tries and fails to get BCI funding from WI Energy Efficiency incentive programs
Jun 2011 - Huebsch and Keith Gilkes (Walker's chief of staff) meet with Minahan and his lobbyist to discuss a $4.3M forgivable loan from WEDC; Minahan promises 155 new jobs; Huebsch also introduces Minahan to soon-to-be WEDC CEO Paul Jadin
Jun 2011 - Minahan makes $1,000 donation to Alberta Darling
"Mid-2011" - BCI stiffs subcontractors working on Tulsa Teachers Credit Union; The Credit Union pays the contractors $131k to prevent liens on the building and begins attempts to recoup the money from BCI and Minahan
Jul 2011 - WEDC officially formed
Sept 3, 2011 - Huebsch to WEDC: "we are on a tight time frame" for BCI
Sept 19, 2011 - WEDC awards BCI $500k loan; BCI's application affirms that neither the company nor its officers have been sued in the last 5 yrs. Obviously, this is a false claim and WEDC either (1) didn't undertake the necessary 30 seconds of due diligence to discover this, or (2) knew Minahan lied on his application and looked the other way. No good options here.
Nov 2011 - Minahan promises to pay Tulsa Teachers CU out of a "$4.3M grant" from the state of WI
Nov 2011 - Minahan cited for driving without proof of insurance. (I only include this because the vehicle in question was a leased 2010 Maserati Quattroporte, which comes up later.)
Dec 2011 - Tulsa Teachers CU contacts FBI; Minahan still hasn't paid
Jan 2012 - BCI stops paying its employees entirely
Feb 2012 - WEDC offers to loan BCI another $500k, but would require a personal guarantee from Minahan this time. He rejects the offer.
Feb 2012 - Giraffe Electric Inc gets $5k judgement against BCI
Feb 2012 - Minahan cited for driving 85mph in a 55 zone; pleads to having a "defective speedometer" (again, only noted because of the relatively new Maserati)
Mar 2012 - BCI's Cessna 421 airplane seized by creditors
Apr 2012 - BCI evicted from downtown Milwaukee offices; $171k in unpaid rent
Apr 2012 - Diebold Inc gets $67k judgement against BCI
May 2012 - Hunter Building of Tulsa gets $13k judgement against BCI
May 2012 - An individual (relationship unclear) sues BCI for $10k
Jul 2012 - Moving company sues BCI for $1,600
Jul 2012 - Enterprise Credit Union gets $9k judgement against Minahan
Aug 2012 - Hallease sues BCI and Minahan for $220k in delinquent vehicle leases, including Minahan's Maserati
Aug 2012 - Zeppos & Associates gets $5k judgement against BCI
Sept 2012 - WI Dept of Revenue (DOR) files second delinquent tax warrant in 3 yrs against BCI for $3,739; Paid in June 2013
Oct 2012 - South TX Wood Mill gets $61k judgement against BCI
Oct 1, 2012 - $500k WEDC loan comes due (for the first time)
Oct 18, 2012 - WEDC realizes that it hasn't been tracking any of its loans since July 2011.
Nov 2012 - WEDC CEO Paul Jadin, quoted as saying BCI loan was "fairly risky," resigns.
Dec 2012 - BCI to WEDC: "we've run out of money for the project;" loan extended to Aug 1, 2013; WEDC Spokesman Mark Maley: "we wanted to give the company every chance to succeed before defaulting." Extension supposedly went thru WEDC underwriting. Note that at this point when WEDC is granting and allegedly "underwriting" the extension, BCI has about $565k in outstanding judgements --including delinquent state taxes-- plus another $131k owed to Tulsa Teachers Credit Union, and hasn't met payroll in almost a year.
Mar 2013 - TX subcontractor gets $40k judgement against BCI
Mar 2013 - Capital One sues Minahan for $10k
May 2013 - City of Milwaukee gets $19k judgement against BCI
May 2013 - Red Hawk Fire & Security gets $123k judgement against BCI
Jul 2013 - Minahan sued by American Express for $5k
Jul 2013 - BCI has failed to file an annual report with WI Dept of Financial Institutions (DFI) for several years and they are put on "delinquent" status
Aug 1, 2013 - $500k WEDC loan comes due for a second time (extension is up)
Sept 2013 - Feb 2014 - WEDC sends BCI 6 default notices; meanwhile Huebsch continues to lobby (unsuccessfully) for $4.5M in federal energy conservation bonding for BCI
Nov 2013 - Collections Agency (unclear on whose behalf) gets $26k judgement against Minahan personally
Jul 2014 - WEDC files suit against BCI. State of WI is last in line to collect.
Jul 2014 - DFI attempts to contact BCI and mail is returned undeliverable.
Nov 4, 2014 - WEDC gets judgement against BCI for $542k
Jan 2015 - In the state budget Walker proposes merging WEDC with WI Housing & Economic Development Authority (WHEDA), removing legislators from the merged authority's board, relaxing reporting requirements, and removing the legislature's authority to perform further fiscal audits(!)
Feb 2015 - WI DFI administratively dissolves BCI
Feb 2015 - Walker moves Secretary Mike Huebsch from Dept of Administration (and a seat on WEDC Board) to Public Service Commission
May 8, 2015 - Legislative Audit Bureau releases their third damning audit of WEDC; Walker immediately drops plans to merge WEDC with WHEDA
May 15, 2015 - Walker's office releases records regarding the BCI loan to the Wisconsin State Journal; Walker tries to get ahead of the story by calling for an end to WEDC lending before the story even gets published. (Kinda suggests he knew how rotten this all was before he let on, eh?)
One last note on WEDC's record-keeping:
If you look up the BCI loan on WEDC's searchable database, it sure looks like the $500k was awarded in 2014 and that (at some point) there were plans to award $4 Million. The promised 155 jobs are conspicuously absent from the "performance milestone" section as well.
This is just one of over a thousand awards handed out by WEDC since 2011, and their track record does nothing to suggest this is an outlier. One wonders what other shoes may drop soon.
