A Green Bay businessman is under criminal investigation for allegedly defrauding the state’s job creation agency of more than $1 million, according to search warrants obtained by the State Journal.
Ron Van Den Heuvel has not been charged with a crime, but he is suspected of committing theft and securities fraud against several parties, including the Wisconsin Economic Development Corp., according to six search warrants the Brown County Sheriff’s Office executed at Van Den Heuvel’s home and businesses in De Pere and Ashwaubenon in July.
The warrants state that WEDC, which is funded mostly with taxpayer dollars, “was a potential victim of fraudulent representation made by Van Den Heuvel.”
They provide the first confirmation that law enforcement officials are investigating a company for allegedly misrepresenting itself to WEDC.
WEDC loaned $1.12 million to Green Box NA on Oct. 21, 2011, according to agency records. The funds were supposed to help the company create 116 jobs by December 2014 as part of a more than $13 million project to turn fast food wrappers and other waste paper into synthetic fuel and paper products while producing zero waste.
Within days, according to the warrants, “a substantial portion” of the loan amount was transferred to bank accounts for other business entities and used to pay Van Den Heuvel’s personal and business debts unrelated to Green Box.
The warrants allege that Van Den Heuvel gave tours of a vacant building in Ashwaubenon that “was never for sale but was used as a prop” to induce commitments from investors.
He also gave demonstrations of his equipment, but it did not work as he represented, and he claimed to hold seven patents “when, in fact, he holds none,” according to the warrants.
One employee told investigators she was instructed to document financial entries on a balance sheet with numbers Van Den Heuvel quoted to her, but “she knew the numbers were not real because there was no actual business or product being produced by Green Box” at any time.
In an interview Wednesday, former WEDC CEO Paul Jadin, who signed off on a staff review recommending the loan and a later $95,000 training grant, recalled touring the Ashwaubenon facility and afterward warning WEDC staff to exercise caution in lending money to the company, including making sure there was a “significant security” agreement.
WEDC had secured a collateral agreement before it released funds in October 2011 that prohibited the company from using its property as collateral in other transactions, but Van Den Heuvel “pledged and re-pledged WEDC’s collateral to other creditors multiple times over,” the warrants allege.
WEDC agreed to release collateral liens on some of the company’s equipment in October 2013, three months after issuing the company its first default notice. WEDC spokesman Steven Michels said the change was “to assist the company in raising additional capital for their projects” given the agency’s financial stake.
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The company defaulted again in May 2014. Four months later, WEDC amended the contract again “to give the company six more months of interest-only payments to provide more cash flow for its operations,” Michels said. After a third default notice in March, WEDC sued in May and a judge ordered the company be placed in receivership.
“Throughout this entire process, WEDC has monitored and tracked this loan, and is pursuing litigation and reviewing all options to ensure full repayment of this loan,” Michels said.
The company also didn’t provide documentation to WEDC that it had obtained more than $6 million in additional capital as required under the loan’s terms.
The Green Box case bears similarities to a $500,000 loan to Building Committee Inc., which the State Journal first reported in May. In both cases, the companies didn’t disclose prior lawsuits to WEDC and defaulted on their loans, and yet WEDC continued working with them. WEDC officials have said policies have been put in place to ensure such cases don’t happen again.
Jadin previously told the State Journal that he faced pressure from Mike Huebsch, Gov. Scott Walker’s former top Cabinet secretary, to provide a WEDC loan to Building Committee Inc. But Jadin said he is not aware of any similar pressure from the Walker administration to fund Green Box.
The warrants draw information from documents provided by WEDC, testimony and documents from a Bellevue-based doctor who invested $600,000 in Green Box, and testimony from current and former Van Den Heuvel employees.
According to their testimony, Van Den Heuvel owed $115 million to the more than 40 family-owned companies he had some stake in, didn’t receive a paycheck from Green Box “because his wages would have been garnished by the IRS and other creditors” and would have employees cash checks made out to them and give him the money. He allegedly used money from investors for things like Green Bay Packers box seats, trips to Las Vegas and $2,000 weekly alimony payments to his ex-wife.
The search warrants were granted on July 2 and sealed by court order on July 6 for 90 days. Brown County Circuit Court released them Thursday in response to a State Journal request under the state Open Records Law.
They indicate the search was conducted July 7 and involved the collection of hundreds of boxes of documents, dozens of file cabinets and tote bags, and cellphones, computers and other electronic devices.
Van Den Heuvel and his lawyer John Petitjean did not respond to requests for comment.
Petitjean disclosed the Green Box warrants and criminal investigation during a court hearing for a related civil lawsuit in late July. The Milwaukee Journal Sentinel first reported on the WEDC loan to Green Box.
When Walker and the Republican Legislature created WEDC in 2011, they didn’t create specific criminal penalties for defrauding WEDC similar to laws against bank fraud, which carry stiffer penalties than the theft alleged in the warrants. Rep. Samantha Kerkman, R-Salem, has told the State Journal that she is considering a bill that would create such penalties, and Walker has said those might be worth considering.
Dane County District Attorney Ismael Ozanne, whose jurisdiction would include crimes committed against an organization based in Madison, declined to comment on the Green Box warrants. He said there can be multiple investigating authorities involved in such cases. Brown County District Attorney David Lasee and Attorney General Brad Schimel didn’t respond to a request for comment.