The End of the CIA and JDC

August 2, 2001

by

You probably haven't read much in the local papers about the dissolution of the City Of Jefferson's Commerce and Industry Association.  You may have read that the CIA had been shut down.  The Jefferson Development Corporation is about to close its doors, too.  How did this come about?

In March 2001 I made an open records request to the CIA to see its Quickbooks file.  This database shows all the financial transactions of the CIA.  I'd made this request periodically to see what's happening.

What I found surprised me.  On December 27, Executive Director David Olsen wrote two checks to  "MFS Heritage Trust Company" - one for $2584.15, another for $944.85, totaling $3529.  A quick Internet check showed this was a company that offered SIMPLE IRA retirement savings plans.  

I did not recall any action of the CIA Board to authorize this new fringe benefit for the Executive Director.  There was nothing about this in the minutes.  Indeed, there hadn't been a CIA meeting since January.  I asked the CIA President Steve Lewis.  "What IRA?" he responded.  I got the same quizzical response from CIA Board member and City Administrator David Schornack.  Indeed, the action had not been authorized.  What was doubly puzzling was that Olsen had never been taking payroll deductions for this IRA.  As far as I could tell from the Quickbooks info, all his 2000 paychecks were the same, and there were no deductions.

In March, the CIA and City Council were already debating the rapidly increasing spending of the CIA and JDC.  Money that had been given to the JDC under the guise of developing the city's business parks was now being used to puff the resume of the Executive Director and pay for facade improvements on private businesses downtown.  The Executive Director had been sent to several conferences in far-flung cities at JDC expense, rapidly eroding the accounts.  See my article "Charles Atlas Economic Development" for more details.

Word of my discovery caused quite a stir among the CIA Board.  Although you can't quite call Olsen's actions "stealing," what he did was certainly an unauthorized use of funds.  He didn't try to cover his trail, but he didn't bring it to their attention, either.  After all, just days later at the January 2001 CIA Board meeting, he failed to mention his new IRA account.  He also failed to mention that he'd selected a new health insurance plan that cost nearly $1,000 a month.  The CIA Board pointed out that his was his second doubling of insurance costs in the past 18 months... they'd gone from nearly $250 to $500 to $1000.

The CIA Board soon called a meeting to discuss the issues.  They had a conference call with the Waukesha County financial planner Olsen had used to set up the IRA.  It's my guess that he purposefully avoided using a local financial planner to avoid rapid discovery, or that he'd approached a local financial institution to set up the account and he was turned away because they recognized that he didn't have the CIA authority to set up such an account.

During the call, the financial planner admitted back-dating the documents in order to allow Olsen to set up the IRA for the previous quarter.  There were questions about how Olsen had not been taking deductions, yet created the two checks for the IRA at the end of the year.  One check is the employer's contribution, the other is his contribution.  Olsen explained that although he had written out three normal paychecks at the ending six weeks of the year, he had not actually cashed them. 

He returned them to the CIA account to create the surplus that allowed these two checks to be written.  By creating the employer contribution in this fashion, what was normally his salary became a tax-free contribution.  In the process of attempting to correct this, he so severely screwed up the Quickbooks entries that the CIA had to authorize the hiring of an accountant to straighten them out.

Meanwhile, Olsen explained, he hadn't taken any paychecks from the CIA account since December.  However, there were numerous checks missing that hadn't been accounted for in Quickbooks.

Seeing that these actions were so entangled and perhaps irrevocable, the CIA voted to retroactively authorize Olsen's IRA account and insurance increase.  They also instructed him to find a lower-cost insurance plan.

At the same meeting, the CIA Board also openly discussed writing a letter of reprimand to be placed in Olsen's file - where ever that is, whatever that means.  I suspect it's in the same Permanent Record that follows you through grade school, high school and beyond.

A source told me that the letter of reprimand upbraided him for a number of things going back several years, including his appearance in a national magazine touting the benefits of online travel services instead of local travel agents, his imprudent behavior and confrontations in my own office, his unauthorized establishment of a retirement fund, failing to keep records, and unprofessional behavior.

CIA Shuts Down

Shortly before the start of the May 15, 2001 City Council meeting, in a 7:25 p.m. last-minute deal, a CIA Board leader promised a key member of the Council opposed to CIA funding that Executive Director David Olsen would be asked to submit his resignation within three months, and that the new position would be filled with a public search for professionally trained candidates. In exchange, the Council member would no longer oppose the CIA funding.  With this deal, CIA funding was secured for another four months, but it also led to its demise.

Pushed by the lack of results and the end of funding sources such as the Water and Electric Commission's contributions, the CIA decided that it needed to disband.  The Executive Director's last day was June 31.

JDC Shuts Down

At its August 7, 2001 meeting, the Jefferson Development Corporation planned to dissolve.

That same evening, the City Council will be asked to approve a slate of 13 appointees to a new City economic development commission.

However, at the time I write this, the Council will only have a draft of the ordinance creating the new committee, and this description will be necessarily brief, much like the other committee descriptions in the City ordinances.  I don't think this is enough planning for a replacement for the JDC and CIA.

The Mayor said the list of names will not be finalized until the night of the meeting, so they'll have little in hand before the meeting.  I don't see how the City Council can make a quick decision about appointees on a commission with a vague charter.  The Mayor said the new commission will decide their tasks at their organizational meetings.

Shut down?  Not really...

Well, the CIA may have shut down, but its finances are still up in the air.  In a final passive-aggressive move, as of today the Executive Director has not surrendered the records of the CIA to the City Administrator.  He hasn't turned over all the CIA's financial information, either.  Many records such as the many audio tapes of meetings that everyone knew were made are now missing.  Olsen claims they do not exist.  Presumably the tapes were purchased, recorded, and then thrown away.

The JDC's coffers were to be turned over to the City Administrator, too.  Only the JDC's certificate of deposit has been transferred to the City.  I suppose we'll have to wait weeks after the JDC's dissolution before those finalized records can be viewed.

And there's some question about all the hats previously worn by the Executive Director, and what's going to happen to all those hats.  Even though the CIA position had been terminated, David Olsen believed himself to be a member of the JDC.  At its July meeting, Olsen attended the meeting and attempted to make a motion.  Council member and JDC Board member Sue Johann called a point of order to determine why Mr. Olsen was acting as if he was part of the JDC Board even though his position had been terminated.  He claimed that he was now a representative of the Chamber. 

JDC Board member Jim van Lieshout piped up, saying he thought he was the Chamber's representative on the JDC Board.  Someone pointed out that there had been no official action by the JDC Board to keep Olsen on the Board in any capacity.  Ultimately, no action was taken.  All in all, I regret not attending this meeting.  It sounds like it was fun.

This also leaves the issue of Olsen's appointments to the Jefferson County Economic Development Corporation's Board as Jefferson's representative, as well as his presence on the study committee for the Highway 26 bypass deliberations.

Meanwhile, he remains as the unpaid Executive Director of the Jefferson Chamber of Commerce.  The Council Finance Committee turned down the Chamber's initial pleas for more funding in order to pay Mr. Olsen in this post, and indicated that all future funding would come with more scrutiny.

No doubt the Chamber members themselves will be asked to conduct more fund-raising in order to pay the Executive Director at least on a part-time basis, in addition to the full-time secretary already paid by the Chamber.  I've heard rumors from Chamber members that this suggestion isn't well-received. 

Of course, for quite some time I've suggested that the Chamber's members need a better accounting of how it raises and spends its money.