Evidence against uMayor Jim Schmitt showed “intent to deceive” the public and authorities about illegal contributions to his re-election campaign, a judge said Monday while sentencing Schmitt.
Schmitt will pay a $4,000 fine and serve 40 hours of community service for violating state campaign finance laws, Judge Mitchell J. Metropulos ordered.
The 58-year-old mayor pleaded guilty to misdemeanor charges of making false statements on campaign finance reports, attempting to accept funds from someone other than the reported contributor and attempting to accept funds in excess of the individual contribution limit. …
In addition to the fines and community service, Schmitt’s plea bargain required him to shut down his campaign committee anddonate the $23,198 remaining in his campaign account to the Common School Fund. Court records indicate those were completed Sept. 7. …
“You decided you wanted this money, and deposited a number of checks that were over the limit that you shouldn’t have taken in and you reallocated them so you could keep them. Those are serious allegations,” [Judge] Metropulos said. “It shows there was intent to deceive the campaign finance observers and collectors of the records.”
Schmitt accepted more than $11,175 in illegal campaign contributions that exceeded the $1,040 individual limit, according to court records. He also took donations from businesses, which is prohibited under state law. Schmitt then relabeled some of the illegal contributions as coming from the original donors’ family members after some city aldermen complained to the Brown County District Attorney’s Office in January 2015. In one instance, Schmitt wrote that the donation came from an individual who doesn’t exist.
“The crime was the cover-up,” Special Prosecutor Bruce Landgraf said. “Nothing really that I examined was so serious as to warrant criminal charges (except for) Mr. Schmitt’s efforts to hide donations in excess (of the limit) or otherwise illegal contributions from the public by reporting them in the names of noncontributors.” …
“Until those who flagrantly violate our state’s campaign finance laws get hit with some serious jail time, the incentive to break the law and mess with our elections will only persist. That’s not good for our democracy,” Rothschild wrote in a statement.
Alderman Guy Zima, who hascalled for Schmitt’s resignation, said he was frustrated that the judge didn’t read 37 additional violations cited by prosecutors into the record during sentencing.
A Green Bay resident filed a verified petition Thursday afternoon to have Mayor Jim Schmitt removed from office.
Scott Vanidestine filed the petition with the city clerk. Vanidestine is the President of the Wilder Park Neighborhood Association on Green Bay’s east side. …
Wisconsin State Statute 12.60 2 (a), the statute Vanidestine points to in the petition reads ‘if a successful candidate for public office, other than a candidate for the legislature or a candidate for national office, is adjudged guilty in a criminal action of any violation of this chapter under sub, (1) (a) committed during his or her candidacy, the court shall after entering judgement enter a supplemental judgement declaring a forfeiture of the candidate’s right to office.
Lying to an election official is one of the criminal acts listed, which Schmitt was found guilty of on Monday.
The federal indictment alleges that Piikkila, a loan officer at Horicon Bank in Appleton, approved a series of loans totaling more than $1 million. The indictment says Horicon Bank had told Piikkila not to loan any money to Van Den Heuvel, so none of the loans mentioned in the indictment were written to him by name. The couple has pleaded not guilty.
Here are the latest updates and documents from PACER regarding U.S. District Court, Eastern Wisconsin, Docket No. 16-CR-64, United States of America v. Ronald H. Van Den Heuvel, Paul J. Piikkila, and Kelly Y. Van Den Heuvel:
TELEPHONE STATUS CONFERENCE (COUNSEL ONLY) set for December 21, 2016 at 10:00 A.M. before Magistrate Judge David E. Jones.
– client is interested in clearing her name as soon as possible
– first hearing about setting of a trial date – had other discussions with Govt but this did not come up
– encourage parties discuss dates – if his client is going to trial, will be serious motions filed and already have a very busy March/April calendar so don’t know these dates will be realistic
– want enough time to be prepared
– strongly object to setting trial date at this time
– feel case has been in hands of Govt for some time
– easy to simplify things, but different from defense perspective
– his client’s situation, need to use program – would require [Criminal Justice Act] approval, which takes time and the cost, need for firewall etc – haven’t had physical ability to review materials – not because haven’t had time
– would also object to setting a trial date at this point – also anticipate serious motions will need to be filed
– suggest parties discuss and come up with proposal instead of just setting dates
– feel June date is not realistic and asks this court to reiterate to Judge Griesbach the extra time needed for CJA approval etc
– understand what parties are saying so suggest June date for motions and possible August date for trial
– encourage parties to discuss right now if August will work and will go back on the record in 5 minutes
– defense has suggested some dates and Govt does not object
– suggest 6/5/17 date for motions; 30 days for response; 14 days for replies; trial date on or after 9/11/17 (2 wks)
– suggest status conference week of 12/19 to confirm balance of discovery has been done and to resolve any remaining issues in regards to Atty LeBell’s appointment
– will talk to Judge Griesbach about proposed dates and then will issue an order with motions dates
NOTICE OF HEARING as to Ronald H. Van Den Heuvel, Kelly Yessman Van Den Heuvel. Final Pretrial Conference set for 7/21/2017 10:30 AM and Jury Trial set for 7/31/2017 08:30 AM, both to be held in Courtroom 201, 125 S. Jefferson St., Green Bay, WI 54301 before Chief Judge William C. Griesbach. All plea negotiations are expected to be completed and written plea agreements filed by the time of the final pretrial conference. Due to the inconvenience to jurors and the unnecessary work for the court and its staff resulting from last minute settlements, the court reserves its right to deny any reduction in the offense level for acceptance of responsibility with respect to any plea agreements entered after that time.
TEXT ONLY ORDER signed by Magistrate Judge David E. Jones on 11/17/16. Judge Griesbach has scheduled this matter for trial on 7/31/17, with a final pretrial conference on 7/21/17. The parties are ORDERED to meet and confer and to submit a proposed pretrial motions schedule. The proposed schedule shall be submitted to the Court on or before 11/30/16.
UPDATE: Two additional hearings are now scheduled for the Green Box NA Green Bay LLC Chapter 11 Bankruptcy Case, Docket No. 16-24179-beh, U. S. Bankruptcy Court, Wisconsin Eastern District:
December 1, 2016 Telephone Hearing at 2 P.M. regarding Jairo Huilar’s Application for Administrative Expenses (related to Brown Co. Case No. 2016SC4089)
December 22, 2016 Hearing for 1 P.M. in Milwaukee, WI, U.S. Courthouse, Rm 149, regarding Approval of Green Box NA Green Bay LLC’s 2nd Amended Disclosure Statement and Plan (due December 5, 2016)
Here are the latest documents from PACER regarding U.S. Bankruptcy Court, Wisconsin Eastern District Docket No. 16-24179-beh, Chapter 11, Green Box NA Green Bay LLC:
The Debtor’s Plan is no plan at all but a wish, and its greatest wish is that the SEC and other governmental agencies would go away. The Plan purports to discharge the Debtor in contravention of Section 1141(d)(3)(A) and enjoin actions against the Debtor and non-debtors that would impermissibly restrict the SEC from pursuing actions for violations of the federal securities laws.
The SEC is aware that some of these issues may constitute objections to confirmation of the Plan. To avoid the potential waste of time and resources involved in distribution and solicitation with respect to an unconfirmable plan, it is appropriate to raise these objections to the Plan at the disclosure stage of the case. A court may disapprove a disclosure statement if the plan, on its face, does not meet the confirmation standards of Chapter 11. …
The Commission objects to approval of the Disclosure Statement because it describes a Plan that cannot be confirmed because it includes a provision that would permanently enjoin actions against the Debtor and non-debtor third parties in contravention of Section 524(e) of the Bankruptcy Code and the controlling law of the Seventh Circuit. Section 524(e) of the Bankruptcy Code provides that only debts of the debtor are affected by the Chapter 11 discharge provisions. Yet, the Plan includes a broad injunction that would benefit non-debtors from the Debtor’s bankruptcy by effectively obtaining their own discharges with respect to claims arising from past wrongdoing or negligence and estop the SEC from pursuing actions for violations of the federal securities laws. In addition, the Plan purports to discharge the Debtor in contravention of Sections 1141 of the Bankruptcy Code. Since the Debtor has proposed a liquidating plan, under Section 1141(d)(3)(A), [GBNAGB] is not entitled to a discharge. …
I. The SEC is Investigating Whether Ronald Van Den Heuvel or the Green Box-related Entities Violated the Federal Securities Laws.
The SEC is currently investigating whether Ronald Van Den Heuvel, entities he founded or operated, or their officers, directors, owners, or employees, violated the antifraud provisions of the federal securities laws. The Commission is examining, among other things, whether Van Den Heuvel or others, including RTS and [GBNAGB], made misrepresentations to investors in the course of securities offerings, and whether money raised through offerings was misused. Part of this inquiry focuses on whether Van Den Heuvel and his companies, including RTS and [GBNAGB], followed corporate formalities, or if they commingled the assets and liabilities of the various entities. …
II. The Plan Impermissibly Discharges the Debtor and Releases Non-Debtors.
Article VII of the Plan contains a broad plan injunction that is tantamount to a third party release and a discharge of the liquidating Debtor. Article VII provides that all actions and claims against not only the Debtor but also the non-debtor, RTS, will be permanently enjoined. Since Van Den Heuvel indirectly owns the majority of RTS, the Plan purports to shield RTS and Van Den Heuvel from the SEC’s police and regulatory power. …
The SEC alerted the Debtor that this provision runs afoul of the Bankruptcy Code and the law of this Circuit and requested that appropriate carve-out language be included in the Plan. Debtor’s counsel assured the SEC that he would include carve-out language and represented to the same to this Court at the original disclosure hearing held on October 19, 2016. However, the SEC was deeply disturbed when the Amended Plan failed to include the negotiated carve-out language. It is clear from representations from Debtor’s counsel that the Debtor intends to use the Plan to impermissibly shield [GBNAGB] and RTS from the SEC’s police and regulatory powers. Email from Paul Swanson to Angela Dodd, dated November 10, 2016. (“We don’t want to see that thwarted mid-stream by problems that RVDH may be embroiled in.”). Attached hereto as Exhibit 1. The Disclosure Statement further makes clear that the Debtor intends to curtail the rightful powers of governmental entities. Disclosure Statement, pp. 24. (The Plan is intended to “provide for a clear and level playing field without external threats due to the prior actions of management of the Debtor or any of its related companies.”) (emphasis added). …
Section 1141(d)(3) of the Bankruptcy Code provides that a corporate debtor cannot obtain a discharge if it has liquidated all or substantially all of its assets and does not engage in business after confirmation. The Debtor cannot secure a discharge through the injunction provision in Article VII to which it is not entitled under the Bankruptcy Code. …
Moreover, it is impermissible to restrict governmental actions through injunctive or release provisions in a Chapter 11 plan. The Seventh Circuit has limited plan provisions that seek to release non-debtors to truly unusual circumstances… The proposed injunction does not grow out of extraordinary circumstances. Despite this clear precedent, however, the Debtor seeks approval of Plan provisions which permanently enjoin and release claims of creditors against non-debtor third parties. …
On its face, the injunction is contrary to controlling law and constitutes an impermissible violation of Section 524(e) that renders the Plan unconfirmable. Accordingly, it is not allowable in the Seventh Circuit and renders the Plan unconfirmable and therefore the Debtor cannot meet the requirements of Section 1125 with respect to any disclosure statement submitted in connection with the Plan.
…[W]hat the 1st Amended [Disclosure Statement] fails to mention is that a Superceding Indictment in the [federal bank fraud] action was filed on September 20, 2016, specifically identifying transactions involving both assets and employees other than Ronald Van Den Heuvel of EARTH [Environmental Advanced Reclamation Technology HQ LLC, now known as Reclamation Technology Systems LLC (RTS LLC), which is Green Box NA Green Bay LLC’s] parent company upon whom the Debtor’s First Amended Chapter 11 Plan is wholly dependent, in Counts 14 through 19. …
8. The Disclosure Statement states that NewCo has negotiated for warehouse space [at 821 Parkview Road in Ashwaubenon, WI] with Little Rapids to address contiued occupancy. … This is misleading. [Little Rapids Corp.] reached a tentative agreement with representatitves of [Green Box NA Green Bay LLC], but discussions stalled when it became clear that [GBNAGB] would not have funds to pay past due post-petition rent and there have been no further discussions. …
14. [Little Rapids Corp.] objects to the approval of the Disclosure Statement and would show that the Plan contains such fatal defects that the costs and delays associated with solicitation of the Plan is not in the best interests of the estate. …
18. [GBNAGB]’s Plan on its face fails to meet the best interests test for the following reasons: it fails to demonstrate that the treatment of creditors under the Plan is at least as favorable as Chapter 7 liquidation, and it is devoid of any reference to independent appraisals or extrinsic evidence to support the values that are placed on certain assets.
19. Relatedly, the fact that [GBNAGB] is proposing to utilize the Project Funding to pay adminstrative expense claims against the estate strongly suggests that this Plan is simply not feasible.
1. Crossgate [Partners LLC] and [Advanced Resource Materials, LLC / ARM]’s claims against the estate arise from the extention of $700,000 in credit to [Green Box NA Green Bay LLC] or its affiliates. [GBNAGB] granted Crossgate security interests in a Kool unit on Septemeber 2, 2014, when Crossgate provided Green Box NA Green Bay, LLC, the Debtor, Ronald Van Den Heuvel, the Debtor’s principal, and Environmental Advanced Reclamation Technology HQ, LLC (“EARTH”) a loan for $200,000. [GBNAGB], Ronald Van Den Heuvel and EARTH were co-borrowers on that loan. Crossgate perfected its security interests in the Kool unit by filing a UCC financing statement with the Wisconsin Department of Financial Institutions on September 3, 2014. Crossgate agreed to extend credit on these terms after an attorney representing [GBNAGB] at that time provided an opinion to Crossgate on August 29, 2014, that the Kool unit was the property of Green Box NA Green Bay, LLC, the Debtor, and was free and clear of all liens.
2. On March 18, 2015, ARM wired $500,000 to [GBNAGB] under the terms of an Operating Agreement for GB-ARM, LLC, an entity in which Crossgate’s affiliate, ARM, and [GBNAGB] had an interest.
3. The Disclosure Statement refers to certain “intellectual property related to the process” in which [GBNAGB] contemplated the Kool units would be operated. … The Disclosure Statement fails to identify the nature of these intellectual property rights, and, more importantly, the owner of such rights.
4. Elsewhere in the Disclosure Statement, the Debtor states that it “can supply certain proprietary information on the configuration and operation of both of the units.” [GBNAGB] also claims that it can “cause the proprietary information to be licensed with any purchaser of such unit, at no charge, but only to be used with the unit sold and no others.” The value of this “proprietary processes” is apparently considerable, as [GBNAGB] avers that the Kool units are likely to be sold at a lower price without it as “any purchasers would have to engage in significant trial and error in order to utilize” the Kool units “in any effective manner.” [GBNAGB] warns, “The intellectual property does not travel with those units and belongs to a related third party.” …But who owns this intellectual property? What form does the intellectual property take? Is it a patent, a software license, or a trade secret? The reader is left guessing.
5. The Disclosure Statement leaves too much play in the joints concerning just what intellectual property rights are required to operate the Kool units, and who holds such rights. The purpose of a disclosure statement is to provide a party with sufficient information to determine whether to vote for the plan. A disclosure statement that is confusing is not adequate. If [GBNAGB] does not own the intellectual property rights associated with the operation of the Kool units, how can it cause a third party to provide such intellectual property rights to the purchaser of a Kool unit, should one be sold as contemplated by the Disclosure Statement? What consideration would be provided to the third party for the transfer of these rights? The Disclosure Stament fails to say. Given the apparent reliance on a third party to provide the intellectual property associated with the Kool units, one wonders why the Debtor, in the latest iteration of the Disclosure Statement and Plan, now proposes to sell the Kool units instead of surrendering them, as was contemplated in [GBNAGB]’s prior filings.
6. The Disclosure Statement’s statement that intellectual property rights must be obtained from third parties to operate the Kool units is at odds with [GBNAGB]’s prior undertakings with [Crossgate and ARM]. [GBNAGB] and EARTH executed a Security Agreement in favor of Crossgate on September 2, 2014, which states that the collateral includes all general intangibles relating to or arising from the Kool unit. Further, [GBNAGB], with ARM, is party to the Limited Liability Company Operating Agreement of GB-ARM, LLC, which requires [GBNAGB] to deliver to GB-ARM, LLC, all intellectual property necessary for the operation of each of the Kool units purchased and installed by GB-ARM, LLC. For the reasons stated above, Crossgate and ARM object to the Disclosure Statement.
A.What access does “NewCo” realistically have to the funding and/or cash flow necessary to pay the creditors?
Debtor admits it has no income, and that all expenses related to this case are being funded by Glen Arbor (a non-debtor). (Doc. 116, p. 14). The Amended Disclosure Statement is void of any suggestion that Glen Arbor (or any other party) is committed and able to fund this case through confirmation. Accordingly, Debtor’s life-line continues to be dependent on the grace of third parties.
The Amended Disclosure Statement now makes clear that payment to creditors will come from two sources: (1) an initial payment from new money funded by new investors, and (2) subsequent payments from the future cash flow of NewCo. Each of those payment sources are discussed below.
1. Funding from Investors. Debtor boasts that it has engaged a “nationally recognized investment bank” to assist it in soliciting new investors for the “project.” However, Debtor concedes that it has not fully complied with all conditions required to proceed with a public offering (Doc. 116, p. 14 states that Debtor has satisfied “many” prerequisites, but does not itemize what other prerequisites are left open). The open issue expressly identified in the Amended Disclosure Statement is Debtor’s need to raise $2.5 million in capital to complete certain due diligence items required by the investment bank to proceed with the offering. To date, that initial capital is uncommitted. (Doc. p. 14).
This is where Debtor’s momentum stagnates: Debtor admits that this Court cannot address feasibility until the due diligence is completed to the satisfaction of the investment bank (Doc. p. 25); however, the due diligence cannot be completed without a $2.5 million investment of capital (Doc. p. 40); however, the $2.5 million cannot logically be raised without confirmation of this Court that the plan can move forward; however, the court cannot confirm the plan without addressing feasibility.
Without evidence of a firm commitment to fund (or, in this case, invest), a plan whose success depends on such financing does not satisfy “feasibility” requirement for confirmation. … Debtor has provided nothing to assure creditors that the investment bank will be able to move forward with the initial financing of the Project (for example, an engagement letter, terms sheet, etc.) or that investors are willing to invest, leaving creditors to guess about whether months of continued waiting could result in any payment at all.
2. Projected Cash Flow. This Court should not lose sight of the fact that NewCo is a new operating entity, embarking on a new reclamation process, using new technology, in new markets, with essentially no historical market or financial statistics. Despite the lack of historical data, Debtor now provides financial projections suggesting that NewCo will not only have sufficient cash flow to pay creditors over the next seven 7 years, but that the operating cash flow of NewCo will increase 4 fold in the first 3 years. (Doc. 116, page 64). While creditors would like nothing more than to be paid from such a healthy stream of cash, Debtor provides little by way of support for its projections.
Debtor does not disclose the author of the projections, nor does Debtor provide any information regarding the assumptions made by the author to buttress the projections. Among other things, the Disclosure Statement should clearly identify all assumptions made in calculating pro forma information and should set forth those facts supporting all estimates; information regarding accounting and valuation methods used in preparation of statement’s financial exhibits must also be included. …
B. Is the “roll up” fair and equitable to creditors?
1. Jurisdiction of Court to alter non-debtor property rights. Debtor states that RVDH has been removed from all management activities, and that his continued ownership interest in Debtor is now “held” by an unidentified trust. (Doc. 116, pp. 12, 24, 38). The Amended Disclosure statement purports to strip RVDH (and only RVDH) of his right to receive dividends from the Debtor, the payments instead being held in a trust for the benefit of Class 8 creditors. Because RVDH is a non-debtor, Ability questions whether this Court has jurisdiction to affect RVDH’s property rights in this manner. In any event, Debtor has offered no evidence regarding this alleged trust or the entity(ies) who are control of such trusts. Accordingly, even if this Court does have jurisdiction to affect the property rights of RVDH, individually, the Amended Disclosure Statement provides no information on how (or against whom) that provision will be enforced.
2. Continued Violation of the Absolute Priority Rule. The Absolute Priority Rule states that junior classes of creditors cannot receive any property on their claims until senior classes of creditors are paid in full. … That is not the structure that the Disclosure Statement proposes. Instead, presuming that cash dividends are made from NewCo to Debtor, all current equity owners will receive their prorate share of the dividend. While Class 8 claims would get the RVDH’s share of the dividend, the Class 8 claims are not given priority over other current equity holders. For example, if NewCo is wildly successful in year 2 and makes a distribution to Debtor of $100,000, approximately $21,000 of that amount will be paid to non-RVDH equity owners at the same time that Class 8 claims are paid the reaming $79,000. This is a clear violation of the Absolute Priority Rule. To be clear, the debt owed to Ability is not a debt of RVDH – it is a debt of Debtor. Therefore, Ability must be paid in full before any property of this estate falls to any equity owners.
3. Lack of Competitive Bidding. The Amended Disclosure Statement purports to sell Ability’s collateral to NewCo in exchange for $7.6 million, with Ability retaining those sale proceeds in full satisfaction of its secured claim. The Amended Disclosure Statement evades any competitive bidding process wherein Ability could make a credit bid for the amount Debtor owns, or wherein other bidders could submit a bid for more than $7.6 million. This structure is contrary to established law in this Circuit, which requires competitive bidding to “prevent the funneling of value from lenders to insiders…” … It is not fair or equitable for Ability to be stripped of its collateral without first testing the market and without giving Ability the opportunity to credit bid.
4. Lack of consideration for certain “related” assets. It does not appear that NewCo is paying any money to Patriot Tissue for its transfer of the converting line portion of the Project, or is there any valuation for that transfer. NewCo should be required to pay Patriot the value of its assets which should, in turn, use those proceeds to pay creditors (including an undisputed $1,000,000 account payable due to the Debtor). Instead, Debtor simply writes Patriot off as being “uncollectible.”
C. Who is paying the outstanding real estate taxes?
The Amended Disclosure Statement is silent on the treatment of a significant real estate tax claim – nearly $500,000.00 – made by the Brown County Treasurer stemming from multiple years of unpaid taxes. This claim is secured by a tax lien on the real estate in which Ability has a mortgage, and the Debtor must provide for its full payment.
D. Why is an injunction necessary?
The Disclosure Statement creates an injunction against collection against the Debtor and non-debtor insiders (i.e. RTS). (Doc. 116, p. 24). That release includes the guaranty executed by RTS in favor of Ability. Debtor fails to detail why creditors should agree to such a release (other than Debtor’s claim that it is “crucial to maintain the timeline” of the roll up), or whether the non-debtor insiders will contribute any consideration to support such a release. Absent a release, Debtor may be able to collect some or all of its debt from RTS.
Debtor’s Amended Disclosure Statement fails to provide “adequate information” that would enable Ability to make an informed judgment whether to accept or reject Debtor’s proposed Plan, as required by 11 U.S.C. § 1125(a)(1). Ability respectfully requests that the Court deny Debtor’s request for approval of the Disclosure Statement.
As a threshold matter, it should be noted that the Debtor has significantly delayed progress in this case, particularly with respect to Cliffton’s collateral and disclosure in general. Cliffton’s requests for Debtor to honor its stated intention to surrender Kool Units has been ignored. Creditors’ requests for specific information related to financing, appraisals, projections, and documents have been ignored. In addition to being generally nonresponsive, the Debtor’s Initial Disclosure Statement required that, in order for the creditors to have access to the Debtor’s financial information – ostensibly due to its sensitive nature – any interested party was required to execute a Non-Disclosure Agreement (“NDA”). However, after going through the time and expense of negotiating the NDA, the Debtor has still not provided Cliffton with most of the information requested. It is plain that the Debtor cannot legitimately reorganize its financial affairs.
Similar to its Initial Disclosure Statement, the Debtor’s Amended Disclosure Statement should not be approved because it lacks sufficient and necessary information. As more fully set forth below, the lack of necessary information in the Amended Disclosure Statement relates to fundamental disclosures, including basic financial information such as sources of funding, financial projections, and information related to intellectual property, among others. In spite of Cliffton’s requests for more information in these areas, the Amended Disclosure Statement does not provide any additional useful or adequate information. While Debtor did provide some additional information in the Amended Disclosure Statement, and notwithstanding the fact that the Debtor’s liquidating plan has been revised to a plan of reorganization, the result is the same as the Initial Disclosure Statement: the lack of information available to creditors, including Cliffton, prevents them from making an informed voting decision regarding the 1st Amended Plan of Reorganization Dated November 9, 2016 (the “Amended Plan”).
Debtor’s Amended Disclosure Statement fails to provide any concrete or specific information related to confirmation of its Chapter 11 Amended Plan. Accordingly, the Amended Disclosure Statement should not be approved. …
i. Claimed Intellectual Property Rights
Debtor’s Amended Disclosure Statement continues to emphasize that the Debtor has intellectual property rights in the processes that have “significant value” (See Amended Disclosure Statement, p. 20, ¶ 1.), but there is no real explanation about such issues as whether the intellectual property is actually vested and owned by the Debtor, whether it has any value, and if it is transferrable.
The Debtor vaguely alludes to processes that are “proprietary to the debtor and held by a related entity” (See Amended Disclosure Statement, p. 8, ¶ 1.) but fails to fully meaningfully identify anything about these processes. Although the Debtor claims ownership in intellectual property rights, it simultaneously provides that it has been “secured in an entity…PC Fibre Technology, LLC” with which it has a “license agreement” (See Amended Disclosure Statement, p. 13, ¶ 3.) The Debtor includes an attachment in the Amended Disclosure Statement labeled “Intellectual Property Rights” which states that it has a Process Patent, FDA Approval for Use with Food Handing (sic) Tissue Products, and Industry Leading Manufacturing Technologies. However, the short, bullet-point descriptions do nothing to clarify the extent of the Debtor’s intellectual property rights, if any.
First, the Debtor states that it has a pending patent, serial number 13/385,218 which was filed in February 2011. This appears to be the application for which [Ron Van Den Heuvel] had applied. (See Amended Disclosure Statement, p. 7, ¶ 2.) However, the Debtor cannot have intellectual property rights in an application; only a granted patent vests such rights. Indeed, the Amended Disclosure Statement conjectures that “it is expected that the final process patent will be issued sometime in 2017.” (See Amended Disclosure Statement, p. 7, ¶ 3.) Thus, the Debtor does not actually have any intellectual property rights and it cannot assert any corresponding value to the estate, as there is no value in an application for a patent.
Second, this particular application appears to have been rejected several times. There is no specific information listed in the Debtor’s bankruptcy about which steps it has taken to renew its application in this patent and why this time it is likely to be granted a patent.
The Debtor also lists Patent Number 6,174,412 B1, which refers to processes related to tissue manufacturing and the conversion of cotton. The Debtor’s information related to alleged intellectual property rights is insufficient and paints a thoroughly incomplete picture about the Debtor’s intellectual property. …
The Debtor admits that it has actually reviewed very little financial information, casting serious doubt on the credibility of the details of the Amended Plan and any assumptions upon which the Debtor relies. The Debtor provides that financial projections are not yet complete. Additionally, the valuable intellectual property that the Debtor touts and appears to rely on for its processes is exaggerated, poorly described, likely valueless, and not likely owned by the Debtor in the first place.
In this case, in spite of its duty to provide full and transparent information to its creditors, the Debtor has continued to muddy the waters. The Debtor has failed to file complete and accurate schedules disclosing any insider transactions that have taken place, including the potential ownership of intellectual property by an insider. The Debtor has obfuscated the disclosure process by purporting to require creditors to enter into non-disclosure agreements before permitting creditors to view the Debtor’s financial projections, then providing only the disclosed information already included in this Amended Disclosure Statement.
The United States Trustee, by Attorney Amy J. Ginsberg, objects to the approval of the Debtor’s First Amended Disclosure Statement (“Disclosure Statement”) because it fails to provide adequate information including: (1) facts supporting its pro forma financial projections; (2) information related to the $2.5 million necessary to perform the due diligence before equity investment can be sought on the capital market; (3) information about unpaid real estate taxes in excess of $450,000; (4) the absolute priority rule; and (5) transactions with insiders.
Ms. Dodd expressly reserved the SEC’s right to maintain its objection to plan confirmation on the basis that the debtor is actually liquidating its assets and therefore should not receive a discharge. See 11 U.S.C. § 1141(d)(3)(A).
On September 14. 2016, the murdered bodies of Oneida Nation of Wisconsin (ONW) member Harry Brown Bear (previously known as Harold Leo Homer, age 77) and his wife Lorraine Brown Bear (nicknamed ‘Cookie,’ age 67) were discovered in their Oneida Housing Authority-managed duplex home in the Site 2 housing community on the ONW Reservation, having been deceased for seven days in what authorities have called an incredibly violent, bloody, and gruesome murder scene.
Harry Brown Bear / Lorraine Brown Bear
19-year-old Oneida Nation of Wisconsin member Vance D. Reed was arrested at his home nearby the murder scene and booked in the Outagamie County Jail on Friday, October 14, one month after the killings.
Vance D. Reed (Outagamie Co. Jail booking photo)
Multiple reports are that several Oneida Nation in Wisconsin members, including Oneida Nation High School Principal Artley Skenandore, have made repeated – sometimes daily – requests to the Oneida Business Committee, the Oneida Housing Authority, and the Oneida Police Dept. (where Artley’s wife OPD Lieutenant Lisa Drew-Skenandore works) to gain access to the murder scene in order to take possession of Harry & Lorriane Brown Bears’ belongings, claiming that they had been ‘promised’ certain items by the Brown Bears.
Officers who were sent to check on the welfare of an elderly couple in mid-September found a “gruesome” scene inside their Town of Oneida home, a prosecutor said Monday as a 19-year-old Oneida man was charged in the double homicide.
Vance Reed was charged in Outagamie County court with two counts of first-degree intentional homicide in the September deaths of Harry Brown Bear, 77, and his wife, Lorraine Brown Bear, 67. The charge carries a mandatory life sentence in the state prison system. [Outagamie Co. Case No. 2016CF889, State of Wisconsin v. Vance D. Reed] …
“Upon entering the residence to check on both of the victims, they were found to be deceased,” Outagamie County Deputy District Attorney Melinda Tempelis said at the hearing. “It was an incredibly gruesome, bloody scene. It was an extremely violent scene.”
She said the couple was known in the community and their home was a place where people would often visit.
Both victims had been stabbed “multiple” times, she said.
The State Crime Lab found DNA of a male that wasn’t from Harry Brown Bear on a knife next to his body and on blood stains near an empty gun holster found on a bed.
Investigators talked to “several” neighbors and collected DNA samples from some of them — including Reed.
Reed was interviewed on Oct. 14 about his “interactions and contact with” the couple. He said he had been at the house about six weeks earlier and was drinking alcohol with them starting around 3 p.m. He stayed for dinner with the couple and was there until about midnight or 1 a.m., when Lorraine Brown Bear had gone to bed.
He told the officer he then continued to drink with Harry Brown Bear and thinks he blacked out. Reed remembered arguing with the older man, getting upset, grabbing a knife and cutting his throat.
He said Lorraine Brown Bear then came down the hall and he stabbed her multiple times.
19-year-old Vance Reed of Oneida is charged with two counts of first-degree intentional homicide in the deaths of 77-year-old Harry Brown Bear and 67-year-old Lorraine Brown Bear.
Prosecutors say that Reed was drinking with the Brown Bear’s the day of the murder and got into an argument with the couple.
According to the criminal complaint, Reed said he was very drunk and blacked out that night. However, he admitted to remembering slashing Harry Brown Bear’s throat, then stabbing and also killing Lorraine.
The revised complaint said Van Den Heuvel had an office assistant [with the initials “P.H.” for Patrick Hoffman, who is Ron’s son-in-law and owner of The Creamery Cafe and Registered Agent of PRH Enterprises LLC] making $12-per-hour inflate his annual income and claim he was a sales director with one of Van Den Heuvel’s companies in order to secure four loans ranging from $25,000 to $60,000 from Community First Credit Union, Nicolet National Bank and Pioneer Credit Union in 2013. The complaint also alleges the straw borrower offered two vehicles as loan collateral that were owned by Van Den Heuvel-controlled companies.
The charges are similar to [the previous thirteen criminal charges] federal authorities filed against Van Den Heuvel, his wife Kelly [Yessman Van Den Heuvel] and an Appleton banker, Paul Piikkila, in spring.
Federal prosecutors allege [Paul] Piikkila, a Horicon Bank loan officer [and the Interim Controllerof the Green Detroit Regional Center EB-5 Immigrant Investor Program that promoted Ron Van Den Heuvel’s Green Box NA Detroit LLC scheme], used his position to fraudulently provide more than $1 million in loans to the Van Den Heuvels under the names of Ron Van Den Heuvel’s employees and a former relative between Jan. 17, 2008, and Sept. 25, 2009. Piikkila and Van Den Heuvel turned to using straw borrowers after Horicon Bank management refused to lend money to Van Den Heuvel after a credit review.
Court documents state the employees and relatives who served as straw borrowers who did not receive the money and were not expected to repay it.
The Van Den Heuvels have pleaded not guilty to the charges against them. A status conference is scheduled in federal court on [November 16, 2016].
“In the end, I will prevail. I didn’t do anything illegal,” he said. “We’ll get to the bottom of this. I don’t know who’s after me for a witch hunt. We’ll figure out who it is.”
He said all of the people identified by investigators as straw borrowers were, in fact, business partners who were entitled to seek financing for the shared businesses. He also said giving collateral (the vehicles) to a business partner is not illegal.
“Every one has signed on as a business partner,” Van Den Heuvel said. “They’ve signed agreements where he may be called upon to borrow money for the company … every single straw borrower they have listed has been a partner of mine in a business and still is. Every one.”
At least five agencies are investigating Van Den Heuvel over claims he defrauded investors — including the Wisconsin Economic Development Corp.[/WEDC]— through a series of companies that he claimed would be able to convert food-contaminated paper and other difficult to recycle waste into new products and energy in a process that created no pollution.
PC Fibre Technology LLC, for which the current Registered Agent is Ronald H. Van Den Heuvel, about which the October 19, 2016 Court Minutes in U.S. Bankruptcy Court, Eastern WI District Case 16-24179-beh, Green Box NA Green Bay LLC, state: “the entity that is in possession of the intellectual property, Pcfiber, should be identified“
Green Box NA Macon Georgia Ethanol LLC, for which the Registered Agent is listed as Environmental Advanced Reclamation Technology HQ LLC [E.A.R.T.H. / EARTH / currently known as Reclamation Technology Systems LLC / RTS]
TISSUE DEPOT & PURELY COTTON DISTRIBUTION CENTERS:
NOTICE OF HEARING as to Ronald H. Van Den Heuvel re: Request for Waiver Hearing set for 10/26/2016 10:00 AM in Courtroom 201, 125 S. Jefferson St., Green Bay, WI 54301 before Chief Judge William C Griesbach. The government need not appear. Probation, however, should be present.
TEXT ONLY ORDER signed by Magistrate Judge David E. Jones on 10/11/2016. The Motion for Leave to Withdraw filed by Attorney Kristen D. T. Viglione, ECF No. 61 , is GRANTED. Ms. Viglione is permitted to withdraw as counsel for Kelly Yessman Van Den Heuvel.
The United States Trustee, by Attorney Amy J. Ginsberg, objects to approval of the Debtor’s Disclosure Statement because it requires creditors, other parties in interest, and the United States Trustee to sign a non-disclosure agreement in order to obtain its financial projections. In addition, the Disclosure Statement fails to address fundamental financial information such as: (1) the conditions precedent for obtaining financing for NewCo; (2) a timetable for completing tax returns; (3) conditions necessary to obtain new capital; and (4) the absolute priority rule. …
6. According to the Disclosure Statement, the FDA approved the paper recycling process. However, although the process may be feasible, the Debtor has not provided any evidence that the process is profitable.
7. The Disclosure Statement provides that the patent for the technology needed to process food-contaminated waste was filed in 2011 but has not yet been approved. The Debtor states that approval of the process patent is not expected until 2017. …
14. The Debtor admitted that it failed to provide financial projections in its Disclosure Statement and justifies the omission arguing that such projections are (1) not available yet; and (2) only for creditors who will sign off on a non-disclosure agreement.
15. Next, the Bankruptcy Code requires debtors to provide adequate financial information to all creditors, not just some creditors. 11 U.S.C. § 1125. According to the Disclosure Statement, detailed financial projections are only offered to “creditors on the basis of enforceable non-disclosure agreements being signed once such financial projections are finalized and approved by the Investment Bank.” Docket Entry #81, p. 23. The Debtor also claims that financial projections are proprietary and therefore cannot be disclosed. Docket Entry #81, p. 22.
16. The Debtor’s requirement for a non-disclosure agreement in order for creditors to receive financial projections flies in the face of the requirement for a debtor to provide adequate disclosure of its finances and is contrary to law. 11 U.S.C. §§ 107(a) and 1125(b). The Disclosure Statement needs to contain financial projections and hard financial data. This Court should not allow the Debtor to shield its true financial prospects from creditors. …
17. In addition, not only creditors, but the public is also entitled to information about the Debtor’s financial projections. …
19. According to the Disclosure Statement, Ron Van Den Heuvel has been trying to fund this food-contaminated paper reclamation project since 2012. Docket Entry #81, p. 8. …
26. The Debtors’ Disclosure Statement violates the absolute priority rule in that it allows the equity holders to retain property without paying unsecured creditors in full. 11 U.S.C. § 1129(b)(2)(B).
27. Although the Disclosure Statement provides that equity holders’ interests will be canceled, the equity holders will receive at least a 60% ownership in NewCo. The Debtor’s equity holders receive their new share in NewCo from their interest in the Debtor. See Docket Entry #81, p. 22. As such, the Debtor has not satisfied the requirements of section 1129(b)(2)(B)(i) and therefore cannot receive or retain an interest in property of the estates. …
28. According to the Disclosure Statement, “the intellectual property has been previously evaluated by independent consultants, which [sic] have placed significant value on it.” Docket Entry #81, p. 19.
29. The Disclosure Statement should itemize this intellectual property, identify the owner of the intellectual property, the valuation of the intellectual property and if anyone holds an exclusive license to use it.
The Disclosure Statement provides that the Debtor “has managed to contractually secure a nationally recognized Investment Bank who has been engaged in taking the entire project forward.” See Disclosure Statement, p. 13, ¶ 1. However, when prompted to identify which bank is providing services at the United States’ Trustee’s Hearing on its Motion to Dismiss conducted on September 30, 2016 (the “Hearing”), Stephen Smith (“Smith”), an investor and individual with various ties to the Debtor and related entities, stated that he would “rather not disclose.” (See Hearing Transcript, p. 67, Ln. 11.) Although Smith provided some limited information about this financing, the Disclosure Statement fails to include any pertinent information about how the Debtor will move forward.
Among other things, the Debtor fails to identify in the Disclosure Statement a commitment letter, lending terms, the amount of any funds that have been secured, or the party providing the funds. Also, it doesn’t appear that the Debtor has any assets which are not fully encumbered, underscoring the question of how such capital can be secured. The Disclosure Statement provides that the Debtor will have funding by the end of the first quarter in 2017, but fails to specifically set forth how this will be accomplished. …
Conspicuously absent from the Disclosure Statement are such details as, among other things, what is the intellectual property, who owns it, why it is necessary to the plan, the assignability of such intellectual property, and information supporting the basis for the “significant value” attributed to such intellectual property. Although this intellectual property is ostensibly critical to the Debtor, creditors have next to no information by which they can evaluate it within the context of the plan. This valuable intellectual property is an asset of the Debtor which must be specifically identified and described in the Disclosure Statement. …
A debtor “is required to make a full, clear, and complete disclosure of all underlying assumptions” with respect to its projections. See Malek, 35 B.R. at 444. Notwithstanding Debtor’s failure to provide any information to creditors with which they may assess the viability of the Debtor based on its own projections, Debtor nonetheless offers that “[d]etailed financial projections concerning the Project will be shared with creditors on the basis of enforceable non- disclosure agreements being signed once such financial projections are finalized and approved by the Investment Bank.” (See Disclosure Statement, p. 23, ¶ 4 (emphasis added).) Setting aside that this statement is an admission that the Debtor does not currently have any financial projections, Debtor nonetheless attempts to pacify creditors with an empty offer to provide these prospective projections subject to non-disclosure agreements. When prompted at the Hearing whether the Debtor would provide the Trustee without their assent to sign a non-disclosure agreement, Smith replied “No. I want a nondisclosure agreement. Why would I?” (See Hearing Transcript, p. 50, Ln. 10.) Providing financial projections and other necessary financial information is not a conditional requirement; creditors must be permitted access to these documents without any strings attached. Debtor’s failure to provide these projections through the Disclosure Statement is inexcusable. See Hirt, 97 B.R. at 982 (Finding that the debtor’s disclosure statement could not be approved due in part to “gross inaccuracies in cash flow projections.”) Debtor also fails to point out which assets will be rolled up into the NewCo in order to support the feasibility of its projections. …
Debtor’s Disclosure Statement casually mentions that releases will be necessary from certain of the Debtor’s creditors to confirm the plan. (See Disclosure Statement, p. 23, ¶ 3.) Debtor fails to address such releases including who will be released, why they will be released, and whether there will be any consideration to support such releases. Debtor offers no details about the necessity for such releases. …
Debtor’s Disclosure Statement provides that GlenArbor, through Smith, has “entered into agreements with various entities” and “continues to negotiate contracts for both products generated from the process as well as inputs which are necessary to fuel the process.” See Disclosure Statement, p. 12, ¶ 5. The agreements and contracts, aside from this casual mention of them, are completely omitted from the Disclosure Statement. Again, while the Debtor stresses the importance of these actions to bolster confirmation on the one hand, it undercuts its credibility by failing to provide concrete and specific information about such efforts. …
The Debtor’s Disclosure Statement does not provide adequate information. Without adequate information, creditors have no idea what is going on in a debtor’s bankruptcy case and, under such circumstances, are not in a position to accept any proposed plan. In the event that the Debtor provides creditors with the requisite information, it can amend and resubmit its Disclosure Statement – accompanied by a confirmable plan – for consideration. However, given the near total lack of information from the Debtor and the speculative prospects for confirmation of its plan, approval of the Disclosure Statement is not appropriate at this time.
B. Where will payment to creditors come from? There is no dispute that Debtor has no cash and no ability to get cash. (Disclosure Stm., Doc. 81, P. 13). Therefore, any payments made to creditors must necessarily come from either capital contributions from existing members, cash flow of the “rolled-up” entity (“NewCo”), or financing arrangements made by NewCo. Debtor has not disclosed adequate information regarding any source of cash that will be used for payment to creditors.
First, Debtor admits that it is surviving on funds received from Glen Arbor, which is being provided on an “as needed basis.” (Disclosure Stm., Doc. 81, P. 13). Even the minimal1 adequate protection payments to Ability of approximately $10,000 per month are being advanced by Glen Arbor. (Disclosure Stm., Doc. 81, P. 13). The Plan is void of any suggestion that Glen Arbor or other members are committed and able to make future contributions as may be needed to fund the Plan. Accordingly, Debtor’s life-line is dependent on the will of third parties.
Second, with respect to NewCo’s future cash flow, Debtor provides no projections to suggest that NewCo will have sufficient cash flow to pay creditors under Debtor’s Plan. Debtor has conditioned further disclosures of information (the adequacy of which cannot be determined, in part, because the financial information is not even complete yet)2 upon the execution of a non- disclosure agreement. (Disclosure Stm., Doc. 81, P. 23). In addition to the fact that the financial projections admittedly do not exist, Debtor’s unilateral limitations on providing even basic financial information should not be allowed by this Court.
Finally, with respect to NewCo’s financing arrangements, Debtor claims that it has “managed to contractually secure a nationally recognized Investment Bank who has been engaged in taking the entire project forward.” See Disclosure Statement, P. 13, ¶ 1. Debtor then summarily states that “Glen Arbor has managed to put in place many of the prerequisites for the Investment Bank to go to the capital markets to privately place the debt…” Id. Debtor, however, has refused to disclose the identity of this investment bank, nor has Debtor been able to produce any commitment from any investment bank or investor identifying any of the prerequisites that Glen Arbor has allegedly satisfied (or what prerequisites may remain outstanding). If Debtor has identified an investment bank willing to invest its time and resources in Debtor’s future, all creditors should know and understand the extent of the bank’s involvement. …
D. Would a vote against the Plan possibly yield more payment to creditors? Debtor has an incestuous relationship with numerous insiders, each of whom will benefit from the Plan. Creditors are entitled to information regarding the possibility of recovery from these related entities outside a reorganization plan.
First, Debtor’s largest account receivable (more than $1 million) is due from Patriot Tissue, LLC (“Patriot Tissue”), a related entity. The Disclosure Statement incorrectly states that Patriot Tissue has ceased operations when, in fact, Steve Smith testified that it is still operating. Debtor says that the account is “deemed uncollectible” but provides no information or analysis for that conclusion. (Disclosure Stm., Doc. 81, P. 15). If this account receivable can be collected by a party that has an incentive to collect it (i.e. an unrelated party), that recovery would go far to pay unsecured creditors’ claims.
Second, Debtor makes no attempt to identify or quantify transfers to related entities that could be recovered for the benefit of creditors. For example, Debtor’s SOFA states that Ron Van Den Heuvel took various payments from Debtor during the one year before filing the Petition, but summarily states the value as “unknown.” If money or assets were in fact transferred to Ron Van Den Heuvel (or other related parties) during the preference period, the value of those assets could be recoverable for the benefit of creditors. This missing information is relevant to Ability’s decision to vote for the Plan.
Third, Debtor’s analysis of why this Plan is in the best interest of non-related creditors is perfunctory, at best. …
Finally, the Disclosure Statement states that it will be necessary for certain non-debtor insiders (i.e. RTS [Reclamation Technology Systems LLC]) to be released form any direct payment obligation to creditors. That release includes the guaranty executed by RTS in favor of Ability. Debtor fails to detail why creditors should agree to such a release (other than Debtor’s claim that it is “crucial to maintain the timeline” of the roll up), or whether the non-debtor insiders will contribute any consideration to support such a release. Absent a release, Debtor may be able to collect some or all of its debt from RTS.
1. The Debtor’s Plan does not acknowledge or provide for the payment of rent for Debtor’s ongoing use of warehouse space at 821 Parkview Road in Ashwaubenon, Wisconsin, subsequent to the termination of the lease. Objector has not received any administrative rent payments during these proceedings.
2. The Disclosure Statement inaccurately provides that Objector obtained relief from stay in these proceedings to terminate a lease for the warehouse located at 821 Parkview Road in Ashwaubenon, Wisconsin (the “Parkview Lease”). Disclosure Statement, ¶ 8, p. 28. This is untrue because the Parkview Lease was terminated by agreement of the Receiver and Objector prior to the Petition Date.
3. The Disclosure Statement and testimony presented at the recent hearing on the United States Trustee’s Motion to Dismiss suggest that Debtor and/or Reclamation Technology Solutions, LLC (“RTS”) has reached an agreement with Little Rapids for extended lease terms. This is untrue. Objector reached a tentative agreement with Debtor, but discussions stalled when it became clear that Debtor would not have funds to pay past due post-petition rent.
4. Moreover, the Disclosure Statement provides a vague disclosure of an asset sale of multiple entities to one purchaser as part of a financing and “roll up” of assets. The Disclosure Statement fails to provide adequate information regarding the Plan, including but not limited to, details surrounding the viability of the RTS financing, the sale of assets, and the financial projections of RTS, which must support the RTS financing.
5. For the reasons stated herein, Objector respectfully objects to the Court’s approval of the Debtor’s Disclosure Statement.
Crossgate Partners, LLC (“Crossgate”) and Advanced Resource Materials, LLC (“ARM”), as creditors and parties in interest, by and through their counsel, Godfrey & Kahn, S.C., hereby object to the entry of an order approving the disclosure statement dated September 26, 2016 [Dkt. No. 81] (the “Disclosure Statement”) filed by Debtor Green Box NA Green Bay, LLC (the “Debtor”). To the extent that the objections, in whole or in part, contained herein are deemed to be an objection to confirmation of the Plan of Liquidation dated September 26, 2016 [Dkt. No. 82] (the “Plan”) rather than, or in addition to, an objection to the adequacy of the Disclosure Statement, Crossgate and ARM reserve the right to assert such objection, as well as any other objections, to confirmation of the Plan. …
6. Here, the Disclosure Statement fails to adequately disclose information regarding claims by Crossgate and ARM against the estate. These claims arise from the extension of $700,000 in credit to the Debtor or its affiliates. The Debtor granted Crossgate security interests in a Kool unit on September 2, 2014, when Crossgate provided Green Box NA Green Bay, LLC, the Debtor, and Ronald Van Den Heuvel, the Debtor’s principal, a loan for $200,000. Crossgate perfected its security interest in the Kool unit by filing a UCC financing statement with the Wisconsin Department of Financial Institutions on September 3, 2014. Crossgate agreed to extend credit on these terms after an attorney representing the Debtor at that time provided an opinion to Crossgate on August 29, 2014 that the Kool unit was the property of Green Box NA Green Bay, LLC, the Debtor, and was free and clear of all liens.
7. On March 18, 2015, ARM wired $500,000 to the Debtor under the terms of an Operating Agreement for GB-ARM, LLC, an entity in which Crossgate’s affiliate, ARM, and the Debtor had an interest.
8. The Disclosure Statement and Plan note the existence of two Kool units, and allege that creditor Cliffton Equities, Inc.’s (“Cliffton”) claim is secured in part by these two units. While it appears that Cliffton did file a financing statement on June 19, 2014 covering “any tire or pellet liquefaction thermal degradation units purchased from Kool Manufacturing Company using Loan proceeds,” Cliffton did not advance funds to the Debtor for the purchase of any Kool unit until November 13, 2014, after the recording of Crossgate’s interest. The actual amount of the funds Cliffton advanced to the Debtor for purchase of the Kool units in which Cliffton claims a security interest was $300,000. Thus, the Disclosure Statement contains an apparent misstatement concerning the extent of Cliffton’s interest in the Kool units.
9. The Disclosure Statement and Plan ignores the Debtor’s obligations to Crossgate and Crossgate’s security interest in the Kool units. Crossgate therefore objects to the Disclosure Statement for failing to provide necessary information concerning the claims against the estate.
A worker hired to track donations to Mayor Jim Schmitt’s re-election campaign said he quit because the campaign manager was “stonewalling” use of the campaign’s finance management system.
Brian Lueth said he was hired by Schmitt in September 2015 to set up NationBuilder, a campaign finance tracking system, but quit after about two months because other staff didn’t follow protocol for entering contributions data. One staff member also wanted to disable a feature that automatically rejected donations over the legal limit, Lueth said.
“I started questioning the accuracy of the database, and that’s ultimately why I left, because I couldn’t stand behind the database and recordkeeping,” Lueth told the Green Bay Press-Gazette this week.
Lueth was among those interviewed in a 20-month investigation that resulted in Schmitt being charged with three misdemeanor campaign finance violations: Making false statements on his finance reports, attempting to accept funds from someone other than the reported contributor and attempting to accept funds in excess of the allowable individual contribution limit.
Schmitt has agreed to plead guilty to the charges [in Brown Co. Case 2016CM1239, State of Wisconsin v. James J. Schmitt; Election Fraud–Fraud/Registration; Unlawful Political Contributions; Int. Personal Campaign $/Candidate(<=$100)], which carry a maximum sentence of nine months in prison and a $10,000 fine. Milwaukee County Assistant District Attorney Bruce Landgraf, the special prosecutor who led the investigation, agreed not to recommend jail time or probation as part of the plea.
Lueth shared his recordkeeping concerns with investigators in December 2015. He was one of 24 witnesses interviewed by the Brown County Sheriff’s Office, which assisted Landgraf with the case, according to the Sheriff’s Office investigative report. …
Lueth told investigators Schmitt was supposed to give him copies of contribution checks to input into the system. He said he received about three pages of copied checks, after which campaign manager Chris Rand stopped providing copies. He told invesitgators he quit the campaign because of “a lot of stonewalling,” that affected his ability to accurately input data.
Lueth this week said he was supposed to be the only person entering data in order to ensure its accuracy, but Rand started uploading spreadsheets with contributor data into the system. This caused duplicate records for individual donors, preventing the system from correctly totalling their contributions. …
Investigators interviewed Lueth and other witnesses between May 2015 and May 2016.
They also examined hundreds of pages of campaign finance and bank records to verify the origin of donations to Schmitt’s campaign, according to the Sheriff’s Office report.
The report provides many of the same details as other court records documenting Schmitt’s acceptance of thousands of dollars in illegal donations while campaigning for his 2015 re-election. After political opponents pointed out the donations, Schmitt turned in amended campaign finance reports that falsified the source of the money.