Conflict of Interest existed between EGF City Attorney Ronald Galstad and Boardwalk Enterprises
by Timothy Charles Holmseth on September 13, 2016, 8:51 A.M. CST
Timothy Charles Holmseth
320 17th Street N.W.
East Grand Forks, MN
In Re: Complaint /Ronald Galstad
September 12, 2016
Office of Lawyer’s Professional Responsibility
1500 Landmark Towers 345 St. Peter Street
St. Paul, MN
I am in receipt of your letter dated August 31, 2016.
Please accept this response as an AMENDMENT with clarifications to my complaint filed against Ronald I. Galstad on August 15, 2016.
I am amending my complaint as it pertains to Attorney Galstad providing ‘legal representation’ to Boardwalk Enterprises (hereby referred to as BOARDWALK).
While I still maintain GALSTAD provided legal advice to BOARDWALK, I stipulate it is very possible GALSTAD did not actually submit an actual bill to BOARDWALK for the legal services.
GALSTAD would not have submitted a bill for any services or advice provided because GALSTAD was aware he enjoyed a business and financial relationship with BOARDWALK that precluded him from acting as BOARDWALK’S attorney against the City of EGF.
Whether or not GALSTAD was the official attorney for BOARDWALK is wholly irrelevant because Conflict of Interest existed to the great detriment of GALSTAD’s client – the City of EGF.
As a licensed attorney in the State of Minnesota, governed by code and rule, GALSTAD automatically represented and advanced the legal interests of BOARDWALK during the May 7, 2014 meeting, and again at later times, because GALSTAD himself held/holds an existing legal relationship with BOARDWALK and its owners.
In fact – facts and circumstances show GALSTAD was actually a member of the BOARDWALK group at the time the unpaid loan was discovered.
GALSTAD should have, and was obligated to, recuse himself from any and all legal matters between BOARDWALK and the City of EGF; but he didn’t do it; he knowingly and deceptively proceeded onward despite Conflict of Interest.
GALSTAD remained involved in the legal affairs and on-going disputes between BOARDWALK and the City of EGF, which included a court case regarding the City Council’s legal ability to suspend BOARDWALK’S liquor license at the Boardwalk Complex if an agreement was not reached regarding the unpaid loan; a court case that went to the Minnesota Supreme Court.
The Boardwalk Entertainment Complex is a riverside business located in East Grand Forks, Minnesota. The complex was built with monies from an EDHA loan that became the center of the Boardwalk Enterprises, LLC scandal. In 2014 an audit discovered that not a single payment had ever been made on the $510,000 loan which was made a decade prior.
After the scandal broke in the news on April 30, 2014, the Grand Forks Herald reported “modification of mortgage and security agreement’ documents revealed that on March 1, 2002, East Grand Forks Mayor Lynn Stauss’ brother, Dan Stauss, was listed as a partner in the Boardwalk Enterprises business.
GALSTAD was the attorney for the City of East Grand Forks for most of the time this fraud against the city was perpetuated.
GALSTAD was the city attorney when the unpaid loan was discovered. The players in the scheme managed to avoid making the $30,000 monthly payments on the loan by neglecting to file a mortgage at the courthouse and making the paper trail of the loan disappear so payments would not be expected during internal audits.
The fraud translated to massive profits by all involved parties because while reaping in monthly profits at the Boardwalk Complex – no $30,000 monthly payments were required on the loan.
GALSTAD was part of BOARDWALK.
Additionally – when the story regarding the loan fraud scandal broke in the news on April 30, 2014, the specific unit in the Boardwalk Complex that presently houses Galstad, Jensen, and McCann P.A., was occupied by Altru Hospital in the photo published by the Herald. SEE ATTACHED
If the Herald photo was taken at that time; it would mean GALSTAD moved in to the Boardwalk Complex AFTER the load fraud scandal became known.
- GALSTAD’S EXISTING LEGAL RELATIONSHIP WITH BOARDWALK AT THE MAY 7, 2014 MEETING
At the time of the May 7, 2014 meeting, and at other times, GALSTAD held legal, business, and financial interests in BOARDWALK’s enterprises.
GALSTAD’s private law office, Galstad, Jensen, and McCann P.A., is physically located at the address of 411 2nd Street N.W, STE D, P.O. Box 386, East Grand Forks, Minnesota (The Boardwalk Complex).
Boardwalk Entertainment Group (Executive Director Jane Moss) is located at 415 2nd Street N.W., East Grand Forks, Minnesota, which is another suite in the Boardwalk Entertainment Complex where GALSTAD’S law office is located.
GALSTAD had a legal and business relationship with Dan Stauss (the mayor’s brother) and Jane Moss (and the other unidentified partners).
- CITY of EAST GRAND FORKS WAS A LEGAL ADVESARY OF BOARDWALK
GALSTAD had/has a legal relationship with BOARDWALK and its shadowy group of owners and actors that were simultaneously and deeply entangled in two legal disputes with the City of EGF:
- The unpaid EDHA loan to BOARDWALK
- The liquor license dispute with BOARDWALK BAR & GRILL
- OPEN MEETING LAW VIOLATION
Evidence shows GALSTAD arranged, presided over, and/or participated in secret and/or illegal meetings following the uncovering of the unpaid EDHA loan.
On May 7, 2014, GALSTAD broke from pattern and practice of City meetings being held at 600 Demers Avenue (City Hall) and arranged for a closed meeting to be held at GALSTAD’s private office in the Boardwalk Complex at 411 2nd Street with unidentified persons.
EGF City Administrator David Murphy, during a televised interview with WDAZ-TV said, “We met with representatives of Boardwalk Enterprises and their attorney.”
However – BOARDWALK did not even have an attorney yet. GALSTAD was the only attorney known to be at the meeting.
- EVIDENCE AND RECORDS SHOW BOARDWALK ENTERPRISES HAD NOT YET RETAINED AN ATTORNEY AS OF MAY 7, 2014
Following the May 7, 2014, meeting, EGF City Administrator David Murphy told news reporters “We met with representatives of Boardwalk Enterprises and their attorney.”
However, evidence and records show BOARDWALK did not retain an attorney until June 14, 2014.
On June 11, 2014, Prairie Business Magazine (and many other news outlets) reported, “The city of East Grand Forks is waiting for a recommendation from an attorney it hired to work on an unpaid $510,000 public loan, but it may have to act soon. “ [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, Murphy said.
As the EGF City Attorney, GALSTAD should have already taken the legal actions (e.g. served a Request for Response upon BOARDWALK) that Attorney Sinclair took on June 11, 2014; but he didn’t.
GALSTAD’S dereliction of duties and failures as the City’s attorney is without a doubt connected to the conflict of interest.
- BOARDWALK MEMBERS IDENTITIES UNKNOWN
In addition to Boardwalk having no official lawyer on May 7, 2014, evidence and records show the City of EGF did not even know the actual identity of the members of the BOARDWALK group at the time of the meeting (which appears to be a conundrum of logic considering city officials met with members of BOARDWALK).
Despite City of EGF’s professed lack of information regarding the identity of BOARDWALK’s members, and the fact BOARDWALK had no lawyer, GALSTAD, nonetheless, was able to arrange a closed meeting at his private office with un-identified persons.
At this meeting – GALSTAD and City officials, according to Murphy, “met with representatives of Boardwalk Enterprises and their attorney”.
Responding to a public records request, Murphy advised me in writing on July 27, 2016, “Representatives from the City Council and Staff met with officials from Boardwalk Enterprises on an informal basis to discuss the recently discovered Boardwalk loan. Therefore, no minutes or records were required or taken.”
Murphy referred to the May 7, 2014 meeting as a “closed session meeting”.
I assert that meeting was an illegal meeting overseen by GALSTAD for illegal purposes to the great disadvantage of his client – the citizens of East Grand Forks, Minnesota.
- GALSTAD’S COMPLETE ACCESS TO THE FILES
On May 27, 2014 Galstad gave a presentation to the EGF EDHA board during a public meeting. The presentation was a report of his internal investigation regarding the files connected to the BOARDWALK unpaid EDHA loan.
GALSTAD should not have had such access to the EDHA loan files and should not have conducted any investigation because he had a conflict of interest.
- CONFLICT OF INTEREST
Evidence exists and clearly shows there was a conflict of interest because the EGF city council took formal action regarding it.
On June 3, 2014, the Grand Forks Herald reported the City of East Grand Forks hired an attorney to handle matters regarding the outstanding Boardwalk loan. “This is just for removing any questions of conflict of interest or just to get a neutral third party to look at it,” [City Administrator David] Murphy said.
Administrator Murphy publically admitted/stated the EGF City Council knew there was a question of “conflict of interest” regarding GALSTAD and a “neutral third party” was needed.
GALSTAD’s misconduct was again in plain view because he should have advised his client, the City of EGF, immediately about the conflict. GALSTAD failed to do that and the City simply acted regarding the conflict of interest on its own.
- CONTINUED CONFLICT OF INTEREST
The following is re-stated in part from my original complaint.
Evidence shows the hiring of Attorney Sinclair to represent City of EGF regarding Boardwalk did not keep GALSTAD from being involved.
Two years later, on June 7, 2016, the Grand Forks Herald reported BOARDWALK filed a lawsuit against the City of EGF regarding Boardwalk Enterprises, which included allegations of “civil conspiracy”.
On Jun 7, 2016 GALSTAD (acting as EGF City Attorney) declined to turn a copy of the lawsuit over to the media upon request.
It should be noted that it appears the City of EGF no longer had an outside attorney representing the BOARDWALK matters, because GALSTAD told the Herald the lawsuit documents had been submitted to the League of Minnesota Cities for insurance purposes.
“And then the league, we’re anticipating, will assign it to an attorney to represent us,” Galstad told the Herald.
The Herald further reported on June 7, 2016 that Mark Anfinson, the attorney for the Minnesota Newspaper Association, said the city is “definitely required to provide a copy of the summons and complaint upon receipt, regardless of whether they’ve been filed with the court.” He cited a section of Minnesota’s Government Data Practices Act.
Therefore, GALSTAD, having received an official document/communication on behalf of the City of EGF from Boardwalk and their attorney, willfully refused to turn it over to the media.
Thus, GALSTAD was again engaging in blatant obstruction YEARS AFTER the City of EGF had replaced him (with Attorney Sinclair) due to CONFLICT OF INTEREST issues.
Galstad was clearly involved in negotiations regarding a pending settlement between BOARDWALK and the City of EGF.
On June 28, 2016, the Herald reported “City Attorney Ron Galstad cited a “short timeframe to draft up all the settlement documents to get approval.” The City Council met in a closed-door meeting Monday evening to discuss a possible settlement.
“We just weren’t able to do it, to finalize it today,” Galstad added. “There is a settlement agreement being drafted right now.”
On June 29, 2016 the Herald reported, “The council approved a settlement agreement that stipulates Boardwalk Enterprises, the entity that owns the commercial building at 415 Second St. N.W., and Boardwalk Bar and Grill pay $250,000 in cash. City staff members first said in April 2014 a $510,000 loan to Boardwalk Enterprises went unpaid for more than a decade.”
The Herald further reported, “In a joint news release, the city, the EDA, Boardwalk Enterprises and Boardwalk Bar and Grill said they were “pleased to announce that they have resolved all disputes between them.”
“The settlement is based on all parties recognizing the expense and risks of not bringing their disagreements to a close,” the brief statement added.
- CONCLUSION – GALSTAD SHOUD BE ORDERED TO PAY CITY OF EGF BACK ALL FEES BILLED REGARDING BOARDWALK
Ronald Galstad owes the City of EGF all the fees he acquired while knowingly violating conflict of interest codes and other forms of misconduct and crimes during his improper involvement in the Boardwalk Enterprises loan fraud scheme.
Timothy Charles Holmseth