by Timothy Charles Holmseth
EGF City Attorney Ronald Galstad reported to the EDHA Board on May 27, 2014 that he had been reviewing the files associated with the $510,000 loan to Boardwalk Enterprises (BE).
“With staff’s help I’ve been kind of trying to piece together a scenario of what ended up happening,” Galstad said.
Galstad was faced with the daunting task of explaining why BE had not made a single payment on the 1999 loan. In addition to the loan issue – the Mortgage had never been filed.
The basic facts and circumstances of the loan issue are very suspicious and have ignited a firestorm of emotions throughout the community. EDHA board members and city council members report on record they have been approached by angry citizens that believe the local politicians are thieves and crooks and should be fired.
Close analysis of Galstad’s verbal narrative and timeline now raises yet another question about the loan scandal. Was Galstad – himself – involved in the loan scandal – and is he trying to cover it up?
Galstad’s entire timeline and narrative may have been a self-incriminating statement, because it indicates he attempted to obfuscate the facts and circumstances surrounding his own knowledge of the massive fraud that was occurring since 1999.
Galstad reported that on August 11, 2008, BE contacted EDHA Director Jim Richter claiming cost overruns. BE asserted the City hadn’t paid $72,000 in taxes that were the City’s responsibility per the Development Agreement. Galstad said BE claimed it was owed a total of $190,000 from the City between taxes and offsets.
Of course – disputes and entanglements of this nature are not entirely unusual.
The problem is – the ‘tax’ dispute between BE and the City in 2008 had already surfaced twice before – once in 2002-2003 – and again in 2006 – and Galstad knew about it. In fact he was directly involved in solving the first dispute.
2002/2003 TAX DISPUTE
In 2002, BE received a tax delinquent notice. BE quickly protested because according to the Development Agreement, the City was supposed to pay the taxes from 2001 to 2005.
Galstad, who has read and understands the Development Agreement, was asked about the tax obligation by a Board member at the May 27, 2014 meeting. “The City would be responsible for the taxes from 2001 to 2005,” Galstad replied.
In 2002, when BE received the tax delinquency notice, Galstad was involved in trying to solve the dispute.
Here’s how that is known.
On June 3, 2003, Galstad sent a letter to City officials, as well as Grant Shaft, attorney for Opp Construction. Galstad’s letter was regarding a $4,000 un-paid bill for a paving project on the boardwalk that was supposed to be paid by BE.
“I’m not exactly sure of the timing on it but it seems that a lot of it had been prompted by me sending a letter – or me sending out a letter that said there is this $4,000 bill sitting out there for this paving project … that’s what triggered this discussion,” Galstad said.
Indeed – six days later Galstad’s June 3, 2003 letter was attached to a list of cost overruns submitted to Richter by BE.
“June 9 of 2003 Mr. Stauss itemized – uhh – sent a letter to Mr. Richter itemizing what he’s characterizing as cost overruns and in that letter he attached – and itemization – he attached an itemization of what he believed the cost overruns were – he provided documentation of the tax – the tax statements – he provided itemization of – uhh – well – of uhh – the – uhh – my letter – and also what he did at that point in time – he also attached a copy of that Development Agreement in June of 2003 which outlined everything in this loan,” Galstad said.
2006 TAX DISPUTE
Galstad advised the EDHA Board that in April of 2006 the tax dispute between BE and the City re-surfaced when Polk County sent out a tax delinquency notice. He added that at that time, in May of 2006, EDHA Director Jim Richter (retired) became involved and appeared before the Polk County commissioners to request the taxes be forgiven based upon a “miscommunication” regarding the taxes; the Commission subsequently granted the request.
However – there is a serious problem with this.
According to Galstad, the Development Agreement dictates the City will pay the taxes between 2001 and 2005. So why is Galstad reporting to the EDHA Board that the taxes were forgiven by the Polk County Commission based upon a “miscommunication”?
Even if that fact is technically true – anybody going into the Polk County Commission and suggesting the taxes were not paid based upon a “miscommunication” would be lying if the Development Agreement clearly states the City shall pay the taxes from 2001 to 2005.
Nonetheless – Galstad reported this “miscommunication” theory to the EDHA Board on May 27, 2014 – and in doing so – he may have committed a felony.
Galstad is obligated to properly advise the EDHA Board that Richter’s song and dance about a “miscommunication” was simply not true, because the governing document was the Development Agreement – which stated the City was obligated to pay the taxes.
Essentially – Galstad covered for somebody – possibly himself.
It is not known why Galstad chose to mislead the EDHA Board but he may need to explain it to federal investigators.
There were tax disputes regarding BE and the City in 2002/03, 2006, and 2008, and Galstad was aware of them.
Upon a call for an audit in 2014, Galstad was not forthcoming with his knowledge.
He still isn’t.