Boardwalk Enterprises fraud cover-up underway

EGF City Council allowed City Attorney unfettered access to files even after they observed possible “conflict of interest”

by Timothy Charles Holmseth

Brad Sinclair, the Fargo-based attorney hired by the City of East Grand Forks to represent the City’s interests in the ‘Boardwalk Enterprises’ unpaid loan scandal, says he is not going to disclose the name of the attorney that represented Boardwalk at the May 7, 2014, closed-door session, which was held at the law office of (Ronald) Galstad, Jensen, and McCann.

Sinclair deferred the question to Jon Iverson, the Bloomington-based attorney representing EGF in the civil rights lawsuit ‘Holmseth v. City of East Grand Forks et al.’

Sinclair was hired to represent the interests of the City of EGF. However, it appears he is actually representing the individual interests of only a few officials that are seeking to avoid criminal prosecution.

On May 7, 2014, David Murphy, administrator, City of EGF, told WDAZ that city officials met with “representatives” of “Boardwalk Enterprises” and their “attorney”.

Murphy clearly stated that city officials met with an “attorney” representing ‘Boardwalk’ at the meeting. However, Sinclair now refuses to identify who that attorney was.

Timeline

On April 30, 2014, the Herald reported ‘$510,000 loan to EGF goes unpaid for 10 years’.

On May 2, WDAZ reported that records with Polk County linked Dan Stauss, the brother of EGF Mayor Lynn Stauss, to Boardwalk Enterprises.

On May 7, city officials met with representatives of Boardwalk Enterprises at the private office of EGF City Attorney Ronald Galstad in a closed door meeting. Murphy told WDAZ that ‘Boardwalk’s’ attorney was present – but did not name the attorney.

On May 21, James Richter, the director of EHDA that signed the loan in question, retired.

On May 27, Boardwalk Enterprises requested all documents the City of EGF possessed regarding the un-paid $510,000 loan.

On May 27, Galstad gave a presentation to the EGF EDHA board during a public meeting. He gave a summary rundown of what his internal investigation had determined thus far regarding the un-paid loan. The fact-pattern exposed through Galstad’s presentation created enormous questions, because files showed crucial documentation regarding the loan simply did not exist – as if all traces of the loan had simply disappeared.

On June 3, WDAZ reported the City Council voted to hire Sinclair to represent EGF regarding the unpaid loan. Sinclair replaced Galstad for purposes of the ‘Boardwalk’ issue. “This is just for removing any questions of conflict of interest or just to get a neutral third party to look at it.” Murphy said.

Murphy has never expanded upon why Galstad might have a “conflict of interest” or may not be “neutral” regarding the issue. It is also not readily clear why the May 7, 2014 meeting was held at the private office of Galstad.

It is notable that Murphy and the City Council allowed Galstad to represent the City on the ‘Boardwalk’ issue in the beginning – and despite believing there was a conflict of interest – Galstad continued to represent the City through approximately June 3.

On June 11, 2014, the Herald reported “[Brad] Sinclair, an attorney at Kaler-Doeling who the City Council voted to hire last week, will also serve Boardwalk Enterprises with a request for a response. That will include a request for information on who the partners in the company are, and who is their legal representation.”

An announcement to the media that Sinclair would be asking ‘Boardwalk Enterprises’ the name of their legal representation creates questions, because EGF city officials met with the ‘Boardwalk’ attorney on May 7, 2014.

Why Sinclair would believe ‘Boardwalk’s’ attorney had changed between May 7, 2014, and June 11, 2014, is not clear.

But perhaps Sinclair had reason to believe that.

On August 1, the Herald reported that Boardwalk Enterprises had been served with a loan default notice. The report noted the Herald had been provided a letter from Murphy that indicated Boardwalk’s attorney was Vogel Law Firm, Fargo.

However – when Sinclair was asked on August 8, 2014, to clarify the name of the attorney that Murphy was referring to during the May 7 interview with WDAZ, he refused to answer the question and deferred it to Jon Iverson.

Why would Sinclair defer such a simple question to a lawyer representing the City in a civil rights lawsuit?

Questions are mounting for why the City of EGF and their attorney (Sinclair) would readily release on August 1, 2014, that Vogel Law Firm is representing ‘Boardwalk Enterprises’ – but – refuse to clarify the name of the attorney that was representing ‘Boardwalk Enterprises’ on May 7, 2014.

Clues to a Shell Game

The EGF City Council’s decision to replace Ronald Galstad with Brad Sinclair to avoid “conflict of interest” issues and obtain a “neutral third party” is a strong indicator that city officials knew/know exactly what is going on.

The un-politically correct interpretation of the Council’s decision to replace Galstad is that he has a conflict of interest and is not neutral in the un-paid loan issue surrounding ‘Boardwalk’.

However – if Galstad had/has a conflict of interest – that conflict of interest existed at the May 7, 2014, meeting between the City of EGF and ‘Boardwalk’. Yet – Galstad was subsequently allowed complete and unfettered access to all the files; conducted an investigation; and provided the EDHA Board a presentation of the known facts on May 27; until he was finally replaced on June 3, 2014.

If a subsequent investigation reveals that Galstad had a ‘conflict of interest’ – that fact implicates every member of the EGF City Council, EDHA Board, and/or city staff that was aware of the conflict, because leaving Galstad in place may have been an illegal effort to allow Galstad enough time to sanitize the files; before his replacement was forced by public outcry.

Keeping the Facts Fluid – Sanitization

The Herald reported on April 30, 2014, that Galstad said he wasn’t sure of the current make-up of the ownership group, but had been in contact with “Dan Stauss”. Dan Stauss is an owner of the Boardwalk building, and is the brother of EGF Mayor Lynn Stauss.

The fact that Galstad made a point to tell the news reporter he did not know the ‘current make-up of the ownership group’ is a clue that indicates the ‘ownership group’ is a fluid concept to those involved – always subject to change – based upon whatever evidence exists against the group.

That’s why ‘Boardwalk Enterprises’ requested the entire file on record with the City regarding the loan.

It is very significant that ‘Boardwalk Enterprises’ had an “attorney” on May 7, yet the mystery attorney did not request all the documents in the possession of the City until May 27, which was the exact same day Galstad completed his entire scouring of the files in preparation for his official presentation.

During Galstad’s presentation at the May 27, 2014, EDHA meeting, he made sure to point out that many changes took place along the way.

“In the original discussions it was always DJ Parker Inc. Then it would have been on June 16, 1999, when they were negotiating the Construction Agreement, and the Development Agreement, Mr. Parker at that time, it appears, formed a new company Boardwalk Enterprises LLP – and that company was inserted into the agreement and he signed off on it as the managing partner in October of 1999,” Galstad said.

The Herald reported on April 30, 2014, that Galstad said the management of the company has changed since the loan was originally made in 1999.

The objective of a shell game is to confuse the observer to the point they can no longer remember what shell the peanut is under.

However – to the experienced eye – Galstad may have actually explained how the scheme worked. It was simply a shell game of changes until the $510,000 loan vanished from record and memory.

Consider the following: “In fact [the mortgage] did not get filed – and, and so there are – there is some – you know – so when it was re-financed – so when Boardwalk re-financed through the number of years – because the mortgage wasn’t filed – the loan didn’t get picked up by anybody else – so if I was the Title Examiner I would have picked it up if there would have been a mortgage attached to it – since it wasn’t filed it just didn’t get picked up when it was re-financed through a couple of different times through,” Galstad said.

An EDHA board member asked the obvious question. “Wouldn’t that be caught in an audit? In the handy old deal by the accounting firm that does the City annual (audit)?”

Murphy answered the question. “Yes, if there is a record of it. However it didn’t show up on any – it wasn’t showing in any of our loan reports – didn’t show in any of the minutes. Unless they had some specific knowledge of it they wouldn’t have noticed anything to catch that,” he said.

May 7, 2014 meeting / shell game

Remember, the objective of a shell game is to confuse the observer to the point they can no longer remember what shell the peanut is under.

The same logic applies with the fact Murphy told WDAZ that city officials met with ‘Boardwalks’ attorney on May 7, 2014.

Following that ‘closed’ meeting – the City Council voted to bring a new attorney on board. They then announced, through the media, that the new attorney would be asking ‘Boardwalk’ who their attorney is.

After several months passed – the City announced that ‘Boardwalk’s’ attorney is Vogel Law Firm.

By this time the public has forgotten about Murphy’s statement on May 7 and will simply associate ‘Boardwalk’ with Vogel Law Firm.

It’s a parlor trick.

But – the parlor trick is not being performed by ‘Boardwalk Enterprises’ – it is being done by Sinclair and the City of EGF to the express benefit of ‘Boardwalk Enterprises’.

If a crime has taken place – Sinclair and select city officials are becoming involved.

Criminal fraud

It is not possible the EGF City Council, EDHA board, city staff, Administrator Murphy, or Attorney Sinclair did not believe they had witnessed a crime when they encountered the $510,000 loan fraud scandal.

However – as of August 1, 2014, the only indication of legal action being initiated by the City or Sinclair is the service of a loan default notice.

Evidence of cover-up by City Administrator

There is evidence that David Murphy actively attempted to cover for the illegal conduct of James Richter.

At a time somewhere between January – April, 2014, James Richter instructed Kim Nelson, a housing specialist for HUD, to ignore an address verification request she received from the United States Department of Commerce regarding an employment background check being done on Timothy Charles Holmseth for a job he had working in a federal facility.

Richter instructed Nelson to “shred” the document without responding to it.

Holmseth is an investigative reporter and author that had reported city officials and other members of the 9th judicial district to authorities for corrupt practices.

In December of 2013, Holmseth reported the City of EGF to the Minnesota State Auditor and requested an audit.

Holmseth filed a formal complaint regarding Richter’s targeted act against him regarding his federal background check for employment. Murphy subsequently conducted interviews and in June, 2014, concluded that Richter did in fact instruct Nelson to shred the federal document.

Nelson said Richter was nervous because the letter involving ‘Timothy Holmseth’ came from a federal agency.

However, Murphy concluded that the document was shredded in “error”. The assertion that an intentional and directed malicious act was an “error” is preposterous and shows Richter was being protected by the City even after he retired.

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