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Lawmakers introduce bill that would make defrauding the state’s jobs agency a felony

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MADISON -- A bipartisan group of Wisconsin lawmakers say those who defraud the state's economic development agency should go to prison.

The bill, which was introduced Friday, January 8th, would make it a felony to defraud the embattled Wisconsin Economic Development Corporation. The punishment would be up to 15 years in prison or a $50,000 fine.

Rep. Samantha Kerkman

Rep. Samantha Kerkman

"We do need (the WEDC), and we need them to be strong, and we need them to not hurt the Wisconsin brand," said Rep. Samantha Kerkman, R-Salem.

In two known cases, business owners have made false statements or concealed information on their applications for state-backed loans from the Wisconsin Economic Development Corporation. In at least one of the instances, the state is still trying to get its money back after the company defaulted on its loan.

Kerkman has teamed up with Sen. Dave Hansen, D-Green Bay. Democrats make up roughly half the Senate co-sponsors and about one-third of the co-sponsors in the Assembly, according to list compiled by Kerkman's office and provided to FOX6 News.



Over the past year, Republicans have gone after fraud in the state's FoodShare and unemployment compensation programs. Those efforts have been criticized by Democrats as targeting the state's poorest residents.

Since its creation in 2011, the WEDC has struck several problematic deals with companies that promised job creation or retention.

In 2011, the owner of now-defunct Building Committee Inc. concealed information on his application for a WEDC-backed loan, failing to note that his company had been sued in the previous five years.

WEDC provided the company with a $500,000 loan, but BCI defaulted. In 2014, a Dane County judge ruled that the company must repay the loan, plus interest, but online court records indicate that the taxpayers have still not been made whole.

Democrats have proposed a complete overhaul of the economic development agency, which was launched in 2011 in the opening days of Gov. Scott Walker's administration, yet Republicans have rebuffed most of those efforts.

Assembly Minority Leader Peter Barca

Assembly Minority Leader Peter Barca

"I generally support the concept of what they've put forward," said the Assembly's Democratic leader, Peter Barca, adding that he hadn't reviewed Kerkman's proposal yet.

Barca said he was concerned that it may still take years before a prosecutor finds out about alleged fraud. He and Sen. Julie Lassa, D-Stevens Point, have introduced separate legislation that would require WEDC staff to report fraud to state or county prosecutors.

"By not reporting it immediately, what ends up happening is other governmental units that they may also be seeking funds from, would have absolutely no idea this is taking place," Barca said.

Barca said Building Committee Inc.'s owner attempted to borrow from local economic development agencies, despite a questionable past and the inaccurate state application.

Kerkman's bill isn't retroactive, meaning it wouldn't apply to business owners that have already made false statements on their applications.

The bill has 25 co-sponsors in the Assembly and nine in the Senate, according to records provided by Kerkman's office.

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