SANBORNVILLE, N.H. — Gov. Scott Walker said Monday that he would consider a proposal to create criminal penalties for defrauding the Wisconsin Economic Development Corp.
“That’s something we’d certainly look at if there’s holes in the current law,” Walker said. “The bottom line is we want absolute accountability to the taxpayer, so any way we can do that is worth looking at.”
Walker made the comments during a presidential campaign motorcycle tour of New Hampshire.
Walker also defended his choice of Mark R. Hogan as the next CEO of the troubled job-creation agency. Hogan is a retired banking executive and chairman of the Wisconsin Housing and Economic Development Authority, but also a longtime campaign donor to Walker. He gave about $25,000 to Walker’s state campaigns and $10,000 to the Super PAC supporting his presidential campaign.
“What we want is performance,” Walker said. “What he did in the private sector got wide praise. When he was the head of the WHEDA board … there was no scrutiny there with the work he did. There was nothing but praise that he received. Which is why we thought he was a good person to put in that position.”
State Rep. Samantha Kerkman, R-Salem, told the State Journal last week she is considering legislation that would create a criminal penalty for defrauding WEDC. She said it could be part of a bill she is working on that would criminalize fraud in other public assistance programs, such as unemployment and food stamps, or introduced as a standalone bill.
Kerkman is co-chairwoman of the Joint Legislative Audit Committee, which meets Wednesday to discuss another scathing audit of WEDC released in May.
Wisconsin’s criminal code makes bank fraud a Class E felony, punishable by up to $50,000 or 15 years in prison, but WEDC isn’t a bank.
When the Legislature created WEDC in 2011, it specified that the agency could impose a financial penalty on award recipients who provide false or misleading information, but didn’t include criminal penalties.
Jim Kroner, a criminal defense lawyer from La Crosse, said the state could prosecute fraudulent applications to WEDC under the state’s laws against theft, which carry a maximum penalty of $15,000 and 10 years in prison, a class G felony.
The State Journal reported in May that WEDC gave a $500,000 loan to Building Committee Inc., a now defunct Milwaukee construction company, at the urging of top Walker officials. The loan has yet to be repaid, even after the state sued the company last year and received a monetary judgment. The company included false information on its loan application, and there’s evidence the company’s owner was promising creditors to repay them with money from the state.
WEDC also loaned $1.2 million to De Pere-based Green Box LLC but has yet to recover the funds. Like BCI, the company failed to mention prior lawsuits on its loan application. Police have served a search warrant on the company’s headquarters, but it’s unclear whether the investigation is related to the WEDC loan application.
Kroner said, based on information reported on BCI and Green Box, he could see there being a strong case for criminal prosecution. He said he wouldn’t be surprised if lawmakers created tougher penalties for defrauding WEDC, even though they wouldn’t apply to past loans.
“Republican legislators want to do something to prove they are not tolerating the malfeasance and criminality that has been going on, and Democrats see passing the law as a way to emphasize the corruption of a Republican administration needs cleaning up,” Kroner said. “Since passing such a bill benefits both parties’ interests, pass it will.”
He added that more stringent penalties might not make a big difference. “I doubt people who get convicted would push the incarceration maximum anyway,” Kroner said. “White-collar crime rarely does.”