One Ramsey councilman convicted, another under investigation

One Ramsey City Council member allegedly owes a state-high $649,000 in unpaid sales taxes and is being investigated by the Minnesota Department of Revenue and U.S. Department of Labor. Another was recently sentenced to jail for punching a woman in the head three times.

"I was on top of the top, not only as a craftsman, but as an internationally recognized designer," said David Elvig, 51, the longest-tenured council member in the small northern suburb, who is disputing the state's financial claims against him stemming from his now-closed business.

Elvig is the founder and president of E-Street Makers Inc. of Anoka, a high-end custom furniture- and cabinet-maker that was shut by state order after its sales-tax permit was revoked in February. In addition to allegedly owing $648,928.90 in sales tax -- topping the state's sales-tax permit-revocation list -- Elvig can't sell his business unless he covers several liens against it, including one filed with the secretary of state's office for more than $108,000.

He told the Star Tribune Friday that the Internal Revenue Service also "has been looking into this for months." The IRS and Department of Labor declined to comment.

Elvig cites a divorce, canceled jobs and projects put on hold because of the recession, along with not downsizing, as contributing factors to his financial woes. He said he went to the State Capitol on the day the government shutdown ended and filed an appeal with the Department of Revenue "for a courtesy review that will prove I don't owe them, that a mistake was made." His filing included 2,500 pages of documents, he said.

'She blew smoke in my face'

Jeff Wise, 47, is another member of the council, and a liquor store owner in Ramsey. He was convicted of two counts of fifth-degree assault in May and sentenced on June 27 to 90 days in jail with 65 stayed. He told the Star Tribune that he expects his sentence to begin after Nov. 1 and that he is awaiting word from an Isanti County judge.

Ramsey city administrator Kurt Ulrich uses words like "unfortunate" and "coincidence" when describing the "personal" ordeals of the two councilmen.

City attorney Bill Goodrich said that in the weeks after Wise's conviction and sentencing, "not a single citizen has called to complain."

The incident involving Wise occurred last Nov. 13. According to court documents, he had been served six to eight drinks at a bar and restaurant near Princeton, Minn., before getting into a car with three other people. A woman Wise didn't know, seated beside him in the back, lit a cigarette, saying the driver had given her permission to do so.

Wise began yelling at her for smoking, according to the police report. He knocked the cigarette out of her hand and into the front seat, then elbowed the woman, knocking the wind out of her. Isanti County Attorney Jeffrey Edblad said Wise hit her in the back of the head, forehead, jaw and temple with his fist.

"I should not have done what I did," Wise told the Star Tribune. But he said he acted in self-defense.

"She blew smoke in my face and then I got a handful of nails in my eyes, a scratched cornea," Wise said. "I'm sure I struck her with a reasonable amount of force, but it was not a closed fist. I pushed her open-handed.

"Would I do it again? Heck, no. But I still believe, to this day, that I had a strong self-defense case."

Wise was ordered to undergo a chemical-use assessment and not to use alcohol and is subject to random testing. The misdemeanor conviction doesn't prohibit him from remaining on Ramsey's council. A councilman must forfeit his position only if convicted of a felony.

With councilman David Jeffrey resigning on May 31 in order to undergo aggressive chemotherapy to fight pancreatic cancer, the seven-man Ramsey council is already short one member.

Disputed claim

Elvig's case could be headed to court. At the request of the federal government, Edblad said he reviewed the matter last week "for potential criminal charges." He is handling the case to avoid a potential conflict in Anoka County, where Ramsey is located.

"We anticipate filing a felony-level criminal complaint [in Anoka County] relating to alleged financial improprieties that were borne out of the federal investigation" by mid-week, Edblad said Friday.

The $108,714.04 lien was filed in June 2009. Last December, the state filed another lien against Elvig's company, this one for more than $16,000. Another 2010 lien was for more than $13,000.

Elvig says that the state was wrong to file a "blanket of 6 percent, across the board" of sales-tax charges for gross receipts it had not necessarily seen. He says that the state claims some of that tax debt stems from sales made in March 2010 -- three months after E-Street Makers was formally closed, he said.

"We never hid anything," said Elvig, a City Council member since 2002. He was re-elected last fall and has served on the city's economic development authority, finance committee and Housing and Redevelopment Authority for several years.

"They did an audit," Elvig said of the Department of Revenue. "We let them know the company was failing. We asked them what information they wanted."

Elvig said he began an appeal to the state but was unable to meet a deadline of July 1 to supply information because of the state shutdown, which started that day. He said that on Thursday he personally delivered "a formal dispute" that included bank records that could exonerate him.

The state could determine the next chapter in what once seemed like a feel-good small-business success story. Elvig built E-Street Makers from scratch, designing custom pieces that could be displayed in art galleries. His work -- often made of exotic wood -- could be found in 3M and IBM corporate offices, yachts and multimillion-dollar homes.

Central Minnesota Development Co., a lender in Andover, still runs Elvig's unidentified photo in its series of "real people, real success stories." Elvig repaid in full the two loans he received from Central Minnesota, said company president Mike Mulrooney.

"E-Street Makers addressed the high-end market for office furnishings," Mulrooney said. "That market was certainly hit hard with the recession before many others."

Paul Levy • 612-673-4419