Ramsey City Council member convicted of theft connected to his former business

Ramsey City Council Member David Elvig was convicted Friday on charges of embezzling more than $19,000 earmarked for employee benefits at his former furniture and cabinet business.

The convictions on two counts of felony theft followed a weeklong trial before an Anoka County jury and a lengthy investigation spurred by the U.S. Department of Labor. The case did not involve Elvig's work on the City Council, and it is unclear how it will affect his future there.

Elvig, 53, is the founder and president of E-Street Makers Inc. of Anoka, a high-end custom furniture and cabinetmaker that was shut down by the state after its sales-tax permit was revoked in 2011 over unpaid sales taxes.

His trial was not about the sales tax issue, however. Rather, Elvig was accused of embezzling $19,596.83 intended for his employees' 401(k) and group health and dental plans, from April 23, 2009, to Jan. 14, 2010. The charges alleged that he used plan contributions to pay for business expenses.

"The issue was the intent of the defendant," said Susan Crumb, the Hennepin County prosecutor who represented the state. "He pleaded ignorance, but that wasn't the case.

"The evidence of the victims' losses was quite clear."

Elvig did not immediately return a call. His attorney, Richard Milacko, could not be reached for comment.

The Ramsey city charter says council members convicted of felonies must vacate office. However, Elvig's future with the city may be determined by the sentence he receives from Judge Spencer Sokolowski at a hearing scheduled for June 17.

Crumb said she will ask the judge that Elvig pay restitution — about $28,000, which includes money employees paid because of insurance issues.

"If the sentence is more in line with one associated with a gross misdemeanor, we've been advised that his conviction could be viewed as a gross misdemeanor and he could remain on the council," said Ramsey City Administrator Kurt Ulrich.

"I don't believe anything like this has happened before in Ramsey. This is new territory for us."

In addition to the troubles that led to the court case this week, the Minnesota Department of Revenue says Elvig owes $104,005.47 in unpaid sales tax. At one point, the department said he owed $649,000, before the two sides agreed on the lesser amount.