Licenses pulled after property tax check bounces: SIST representative said loan would pay taxes

The Shawano Leader/July 16, 2006
By Tim Ryan

A check for more than $200,000 that city officials say bounced twice led to the shutting down Friday of beer and liquor, cigarette, and soda sales at six properties owned by subsidiaries of the Samanta Roy Institute of Science and Technology.

Accompanied by a Shawano Police officer, city clerk Marlene Brath went to each of the businesses affected and pulled licenses that were issued by the city less than two weeks ago.

Earlier Friday, each of the businesses had been hand-delivered a letter from city attorney Tim Schmid informing them that the licenses were void and would be taken back.

There were initially eight businesses that would have lost their licenses Friday, but the owners of two restaurants came in to City Hall Friday afternoon and paid the property taxes on their buildings on behalf of their landlords, allowing them to retain their licenses.

Mayor Lorna Marquardt said she was outraged over the check.

“It’s unconscionable that they would give the City of Shawano a check knowing they were writing a check with insufficient funds to cover it,” she said. “Not only is it unconscionable, it’s illegal.”

Marquardt said the matter would be referred to the Shawano County district attorney’s office.

According to the city, a check in the amount of $204,262.34 from Midwest Properties of Shawano, LLC, to cover delinquent property and motel room taxes twice failed to clear the bank due to insufficient funds.

The check was delivered to the city on June 30, the day before beer and liquor and other licenses were due to expire.

Five businesses owned by SIST subsidiaries and three that lease property from SIST subsidiaries had been granted licenses for 2006-2007 that were set to go into effect on July 1.

However, under city ordinances, those licenses could not be issued until all property and motel room taxes were paid.

Brath said she wanted to verify the check would be covered and was told by Midwest to call a Michael Karnitz at Aspen Financial Services in New Port, Minn.

According to Brath, Karnitz said that Midwest was getting a $250,000 loan and would be transferring that amount to Vermillion State Bank in Vermillion, Minn.

The check was accepted and the licenses were issued.

On June 10, according to the city, Brath received a call from Associated Bank stating that the check did not clear the first time. It was sent back through, and Midwest Properties was called.

Brath said she was told by Midwest representative Naomi Isaacson that Isaacson would obtain a letter from Vermillion State Bank confirming that there was a balance sufficient to cover the check.

On Wednesday, according to the city, Associated Bank received a notice that the check from Midwest Properties in the amount of $204,262.34 had not cleared a second time and was being returned for non-sufficient funds by Vermillion State Bank.

On Thursday, Marquardt said she personally put in a call to Karnitz at Aspen Financial who said the loan to Midwest was still being processed and that a transfer of funds would take place sometime next week.

But whether that happens or not, Marquardt said Midwest has taken advantage of the city.

“The city has been given a bogus check, and these businesses have been operating under that check,” she said.

Isaacson, reached by phone Friday afternoon, denied the city’s claims to a Leader reporter.

“Politics and incorrect information,” Isaacson said.

Isaacson was asked what the correct information is.

“Well, I’m not telling you, but what you have is not correct,” she said.

Isaacson was asked if it wouldn’t be better for people to know what the correct information is.

“I don’t know, ‘cause you don’t print the truth, anyway,’” she said.

Issacson was told that the Leader would print whatever she had to say.

“That’s not what’s happened in the past,” she said.

It was pointed out to Isaacson that in the past representatives from SIST and its subsidiaries have not always been willing to talk to the Leader.

“How can we get your side of the story if you won’t talk to us?” the reporter asked.

At this point, Isaacson hung up on the reporter.

Licenses were taken back by the city at the following locations, including two motels owned by SIST subsidiary Midwest Hotels and Motels of Shawano, LLC.

• The Best Western Village Haus, 201 N. Airport Dr., which had a Class ‘B’ beer and liquor license, and licenses for cigarettes, soda and amusements.
• The AmericInn, 1330 E. Green Bay St., soda and amusement licenses.
• Three gas stations owned by Midwest Oil of Shawano, LLC; 1381 E. Green Bay St., which had Class ‘A’ beer, cigarette and soda licenses; 1206 E. Green Bay St., cigarette and soda; and 716 S. Main St., Class ‘A’ beer, cigarette and soda.

In addition, soda and amusement licenses were pulled at the Family Dollar Store, 229 E. Green Bay St., which leases from Midwest Properties.

One business that leases from Midwest Properties, El Mariachi Cantina and Grill, 635 S. Main St., and one that leases from SIST, the Hunan Chinese Restaurant, 145 S. Main St., were able to keep their licenses after the owners of the businesses paid the property taxes on behalf of their landlords.

That came to $1,947.14 for El Mariachi, and $958.17 for Hunan Chinese Restaurant. The amounts are from information the city made available on June 30 when the taxes were due.

Eduardo Oviedo, owner of El Mariachi, was reached at the restaurant and told a reporter he would not have time to talk until next week. The owner of Hunan Chinese Restaurant was not available for comment Saturday.

Pat Schroeder, manager at Family Dollar, said she removed all of the soda from the shelves and put it all in the back room.

“I wasn’t too happy, but what can you do?” she said.

Under normal circumstances, she said, she expects she would have sold out all the soda she had in stock this weekend.

“I’m sure I’m losing money,” she said.

Marquardt said it was unfortunate that innocent businesses that happen to lease from SIST or its subsidiaries had to be caught up in the fallout.

“They’re innocent victims whose livelihood is dependent on those taxes being paid,” Marquardt said. “To put those businesses in that position is unfortunate.”

Marquardt said the city had no choice but to pull all the licenses, including from those establishments that lease.

“We don’t like it, but we have to treat everybody the same,” she said.

There will also be consequences for the Shawano Country Tourism Council. A portion of the check included motel room taxes from the Best Western and AmericInn that were paid to the tourism council by the city and that the city will now have to take back. An exact amount was not available Friday afternoon.