April 2: Nienow dogged by accusations of reneging on federal loans

  • Article by: ABBY SIMONS , Star Tribune
  • Updated: July 11, 2014 - 5:55 PM

A default judgment is sought against state Sen. Sean Nienow over a $748,000 business loan.

Sen. Sean Nienow
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Sen. Sean Nienow

Photo: Renee Jones Schneider, Star Tribune

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Federal authorities moved Tuesday for a default judgment against state Sen. Sean Nienow, R-Cambridge, and his wife, Cynthia Nienow, for their failure to repay more than $748,000 in overdue federal loans and other costs.

The government had already filed a lawsuit against Nienow, a vocal advocate of fiscal conservatism, in January for his failure to make payments on an initial small business loan of $613,000.

Nienow did not respond to phone calls, e-mails and text messages from the Star Tribune seeking comment. He did tell the Associated Press that “everything is in discussion” and that he would make “every effort” to repay the money.

According to the lawsuit, the U.S. Small Business Administration on Jan. 16, 2009, loaned the Nienows money to buy National Camp Association, Inc., a now-defunct guidance and referral service aimed at helping families find camps for children, and providing other services like staff placement to camps. The loan was personally guaranteed by the Nienows. In July 2010, the suit alleges, the couple stopped making payments.

It’s not the first time a judgment was entered against the two-time state senator.

In 2011, National Camp Association’s previous owner filed a suit against Nienow, shedding light on how he spent the SBA loan, but not on what happened with the organization.

Jeffrey Solomon, of New York, alleged in the suit that Nienow failed to repay $78,000 in loans for the sale of National Camp Association. According to the suit, Nienow paid Solomon $621,000 for the rights to the company, with a promise to pay two additional loans of $30,000 and $48,000. Solomon said when no payments were made on the first note, he made multiple attempts to collect before suing Nienow in Isanti County in 2011. Solomon, who founded the business in 1983, decided to sell it and connected with Nienow through a business broker.

“Frankly, I’m still perplexed why someone, particularly someone that holds public office, would choose to conduct themselves financially this way,” Solomon said in an interview. “I don’t know what the reasons are, but I certainly tried reaching out to Nienow a couple of times.”

Attorneys involved in Nienow’s Isanti County case also documented his lack of a response, despite multiple attempts to set up mediation.

“Despite our good faith efforts to reach out to defendants, they failed to answer or return any of our phone calls and letters,” attorney Kristi Weikel wrote in a March 30, 2012 letter to Isanti County Judge James Dehn.

In a 2011 letter sent to Solomon’s attorneys, Nienow accused Solomon of failing to transfer $100,000 in “receivables” to him as part of the deal. Nienow said Solomon verbally promised him the loans would be forgiven. Nienow did not file the letter with the court and Solomon’s attorneys say no such agreement existed. Last June, Isanti County Judge Edward Bearse entered a summary judgment against Nienow for $30,000 plus interest and $7,000 in attorney’s fees and expenses.

Solomon’s attorney, Lee Martie, said the case against Nienow took a year to resolve because two Isanti County judges removed themselves from the case, given Nienow’s status as a state senator.

“I know when I took on the case, they asked me ‘Lee, are you willing to do this case? Heads up, he’s a state senator and don’t’ be surprised if he has a lawyer and tries to fight this.’ ” Martin said. “I know how to litigate, but in this case I didn’t have to. It was easy to get a judgment because he never responded or cooperated with any of our requests.”

What became of National Camp Association remains a mystery. According to the Minnesota Secretary of State’s office, the business was shuttered in August 2012. Solomon said its fate is baffling.

‘It was a business that didn’t take a lot of effort to run and I think that is what was appealing to him,” he said. “It wasn’t a business that required any great expertise. It was already set in motion and had a proven track record.”

 

Abby Simons • 651-925-5043

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Sen. Sean Nienow