Thursday, October 18, 2012

This week in WisGOP corruption pt. 3- WEDC

The ongoing disaster that is the Scott Walker-created Wisconsin Economic Development Corporation (WEDC) continues to get worse. It was revealed this week that WEDC has lost track of 1/6th of the loans the gave to businesses since it started in June 2011 - approximately $8 million in taxpayer dollars. They just can't find where these loans were or how much taxpayers are owed for it, and WEDC's Chief Operating Officer (you know, the 30-year-old whose entire career has been as a GOP hack with no private sector job experience?) told a legislative panel that they just found out about these missing loans THIS WEEK - 16 months after they started.
The failure was discovered as the agency prepared materials for an ongoing legislative audit, [COO Ryan] Murray said, adding that the agency is still investigating how the mistakes were made, why it took so long to discover them and what will happen to those employees who failed to keep tabs on the taxpayer-funded loans.

"Clearly, a ball was dropped here a year ago but the system worked in uncovering it," said Murray, who went on to clarify what he meant. "The system to detect this worked but the system to collect on loans obviously did not."....

Murray said that he had informed Walker, who is also the chairman of the WEDC, late last week about the loan problems and that on Wednesday he had informed the WEDC's board members about it. A spokeswoman for Walker did not respond to a request for comment....

Murray said the WEDC had sent out a letter Wednesday to some of the businesses with past-due loans and would start making more contacts with all of the businesses in the coming days. He said the agency would likely ask the state Department of Justice to sue some of the businesses to recover the money. The state has also retained a law firm specializing in debt collections to assist in the process, he said.
Hmmm, and I'm sure that law firm doing the collections is getting a nice bunch of taxpayer money for that work. Not a bad gig if you got the right connections, eh? Wonder how they landed it.

And this isn't the first time WEDC money has gone missing. Last month we foud out about $8.6 million in WEDC money that was transferred into another account in December 2011 without WEDC Board approval. And who can forget the horrendous misuse of funds from the U.S. Department of Housing and Urban Development (HUD). Not only did WEDC improperly use HUD and CDBG funds, which led to HUD ordering WEDC to take its hands off of CDBG funds and leaving millions of dollars in aid in doubt, WEDC also was exposed of playing favorites when it came to handing out forgivable loans and tax credits. Remember this statement in HUD's letter?
Certain jobs were considered more valuable to the state, so limits were exceeded, projects received forgivable loans.
Makes you wonder if some of the $8 million in missing loans were from some of those places whose jobs "were considered more valuable to the state," doesn't it?

Scott Wittkopf has been all over this story, and he continues his excellent series on WEDC by showing the pattern of Scott Walker appointees misusing HUD and CDBG funds. It goes all the way back to Walker's days in Milwaukee, and Walkergate crook Tim Russell plays a big role in it. (I'll add emphasis to key places where the WEDC fail pattern repeats)
On March 15 2012, just one month prior to HUD suspending WEDC from administering the block grant program, HUD sent a letter to the new Milwaukee County Director of Health and Human Services Hector Colon (Full March 15 2012 letter here). The letter informed DHHS Director Colon that after a HUD review of additional information supplied by the County, 23 of 29 block grant awards failed to meet federal requirements, and the County could face repayment of over $500,000 in grants. An additional 3 programs required further documentation.

The Milwaukee County program was being administered during that time period by Timothy Russell, at the time Walker’s housing director now facing trial in the John Doe investigation. Another key Milwaukee Walker Administration person in the block grant program was Lisa Jo Marks, director of DHHS under Walker. Marks is now the DOA Housing director in the current Walker Administration.

Lisa Jo Marks was Walker’s Child Support Enforcement Director from 2007 – 2009 before being named interim director of DHHS. Marks replaced Corey Hoze as DHHS director when Hoze left for a job as Associated Bank Vice President of Government Affairs. Hoze also now serves on the WEDC Board of Directors....Marks and Hoze undoubtedly work together in their capacities in DOA and WEDC (respectively) grant programs. Marks has also appeared as a presenter at the ultra-conservative think tank American Enterprise Institute during her Walker Administration tenure.

Badger Democracy has obtained a 2009 HUD spreadsheet from the CDBG program demonstrating continuing administration problems with accountability in the program. The spreadsheet lists 2008 programs for “LMJ and LMH” (low-mid income housing and jobs) which failed to document accomplishments as required under federal law. HUD analysts informed Badger Democracy that two of the three had eventually fulfilled the reporting requirements. One had not. Program number 3254 in the amount of $12,258.52 was made to Wisconsin Community Services in 2008. WCS has received no block grant money since 2008, and to this day has not fulfilled the reporting requirement....

Milwaukee County Community Business Development Partners (CBDP) is a county agency that administers the Disadvantaged Business program, and is a public/private partnership. The CBDP received over $27,000 in federal block grant money in 2011 for “micro-enterprise development.” HUD has determined that this violates the program guidelines, as all clients are in the city of Milwaukee, not the County (non-city). On July 19, 2012, then director of CBDP, Frieda Webb, was arrested by the Milwaukee County Sheriff’s Department. Webb stands accused of defrauding the County through falsifying contracts for services not fulfilled and double-billing the county for some classes and services rendered. The FBI has been involved in the investigation. Webb was hired by Scott Walker to serve as the agency’s director.
The article goes on to mention people that Walker appointed to WHEDA also have received CDBG funds and nice contracts on work related to government handouts under Walker. The pattern of cronyism and corruption under Walker and at WEDC is obvious.

Which makes a sign I saw on I-94 all the more absurd. It instructed people to vote Romney/Ryan to "end crony capitalism." It's laughable on many levels, especially given that Romney made millions off of the auto industry bailouts got $1.3 billion in government help for the Salt Lake City Olympics, and worked to get the FDIC to bail out Bain Capital in the early '90s.

But even more silly is that the person (or more likely, the person who rented the land to a Koch outfit who put up the sign) should look closer to home if he or she wants to end corrupt crony capitalism that funnels taxpayer dollars to corporations. Because there is no better example of this abuse than what we've seen in Wisconsin at WEDC in the 16 months since Scott Walker and WisGOP voted to create it.

(LATE EDIT) Should be a fun WEDC Board meeting tomorrow, especially now that Walker is promising to bring up some "dramatic moves" to take care of this misuse of taxpayer funds. Hey moron, most of us would have recognized the potential for problems BEFORE they happened, and not be left reacting to them after the inevitable screw-ups. But when you're an incompetent, corrupt leader like Scott Walker, that's the way things do happen.


  1. Maybe the dramatic move will be Walker's resignation? (Lame joke, I know.)

    It's interesting that Murray says "the system worked in uncovering [the missing loan payments]" -- because it only worked when the agency was preparing for the LEGISLATIVE AUDIT pushed by Democrats who now have equal standing in state senate. Without the audit, the fact of the missing payments would still be unrevealed to the WEDC. I thought there was a "CPA caucus" among the Republican legislative group. Where are they on this issue?

    1. Great point that the Dems taking over the Senate is a big reason we're getting hearings on issues like this and Logisticare. Scott Fitzgerald was bitching yesterday that this WEDC discussion was 'just politics,' and it tells you he'd never allow a hearing if the GOPs were in control.

      And it turns out the dramatic move Walker promised was....getting the CFO to fall on his sword for the team, despite the fact that he wasn't at the job when WEDC was formed and these dopes decided to just forget about tracking these loans. Amazingly, the Walker boys look even worse today, and now taxpayers are out another $40,000 as QTI grabs a contract (no-bid?) to find a new WEDC CEO