Government is the problem, not the solution. – Ernie Leidiger, Chaska Herald, 2010
One of the consistent building blocks of State Rep. Ernie Leidiger’s political ideology has been his call that government (at the federal and state level) needs to get out of the private sector’s way, cut spending, and let the “job creators” do their work.
How has that ideology played out in Leidiger’s life and business career?
Rep. Leidiger hasn’t been the most ardent supporter of public education in his career in the legislature. Leidiger has voted against the last two bonding bills in the State House, both of which had vital projects in both the MnSCU and University of Minnesota systems. He also flip-flopped on a campaign promise and voted in favor of shifting $700 million away from our K-12 schools. Leidiger, it should be pointed out, graduated from the most public of public schools — the U.S. Naval Academy and U.S. Naval War College — with all tuition expense paid by taxpayers.
Rep. Leidiger often trumpets his private sector experience as the head of Brothers Office Furniture. In fact, Leidiger has a number of business entities registered with the state of Minnesota, most of which lead back to a company called Jelco Parts, Inc. — these include Brothers Liquidation, Brothers Office Installers, Brothers Office Parts, Brothers Office Services, BroBid.com, and Brothers Recycling. Brothers Office Furniture and Brothers Office LLC are registered under Leidiger’s business associate Mike Soderquist at the same address as the other Brothers businesses. Then, there’s Brothers Liquidation & Recycling LLC, registered at the same address as Brothers Office Furniture, but with no listed contact.
Leidiger and Soderquist are also involved in a venture called SJK International, a nonprofit that works to bring foreign students to the United States to work on J-1 visas. J-1 visas were originally designed for cultural exchange, but have come under fire for increasingly being used by employers as a cheap way to supplement their workforces or worse. [EDIT: Let me make it perfectly clear that I have no knowledge of SJK International being involved with such abuse.]
The extent to which Leidiger wants to be known as being associated with his businesses seems to vary, as well. His original economic disclosure form didn’t include Brothers, then was amended during the 2011 session to include it, and the most recent revision excludes it. In fact, his July 2012 economic disclosure form shows no sources of income for Leidiger outside of his position in the legislature, despite the long list of companies he has registered.
Leidiger’s business receives federal stimulus dollars
Setting the conditions for private sector growth and reducing government spending is the answer to economic stimulus. One only needs to see what has happened to the failure of the federal stimulus plan to realize that more government spending is not the answer. - State Rep. Ernie Leidiger, “News and Views“, February 2012
According to Leidiger, the federal stimulus plan was a failure and claims that more government spending is not the answer. It’s an interesting perspective, given that Jelco Parts, Inc. received a $500,000 Patriot Express loan from the Small Business Administation in July 2009 as part of the federal stimulus plan.
While the Patriot Express program began before the stimulus plan, under the stimulus bill several key changes were made to the program. First, the SBA guarantee on loans like Leidiger’s increased from 75% to 90% and eliminated the 3% fee on the guaranteed portion of the loan. On A $500,000 loan, that’s a savings of $13,500.
So the taxpayer — you — paid the fees to originate Leidiger’s loan. And if Leidiger’s business fails, the taxpayer — you — are on the hook to help cover his losses.
SBA loans, with their guarantees, are also only available to applicants who can’t get funding on their own through normal financing methods. So in Rep. Ernie Leidiger’s “government spending is not the answer” world, the market would have spoken and his business would go without that additional capital. Businessman Ernie Leidiger was happy to take the federal-backed funding and run with it.
Eviction, lawsuits, and pornography
Ernie knows what it’s like to make payroll and how to keep a concern running … these days what works is running lean, being nimble, and stay true to your business. – Ernie Leidiger 2010 campaign website
How have Leidiger’s companies failed since the infusion of government money? Not so great, really.
Former employees tell stories of a mismanaged operation with internal strife and unhappy customers. Brothers Office Furniture and Brothers Liquidation both carry “F” ratings from the Better Business Bureau as testament to those assertions.
Jelco Parts (and Leidiger’s other businesses) were evicted (Case 27-CV-HC-10-4859) from their Brooklyn Park offices in August 2010, just 13 months after receiving that guaranteed government loan. Since then, the businesses have relocated to north Minneapolis. The registration of the Brothers Office Furniture business under Soderquist comes at a timeframe concurrent with the legal dispute with their landlord in the eviction process.
Two corporations — the original Brothers Office Furniture and Brothers Office Corporation — that rolled up to Jelco Parts were discontinued around this time. It appears Leidiger and his associates were trying to disassociate the two businesses. Why would you need to do such a thing?
Experts consulted indicate that this may be a strategy to protect the assets of Brothers Office Furniture should Jelco Parts default on its SBA loan, as that company’s assets would be at risk to cover the portion of the loan that was not guaranteed if the two organizations were still legally bound together. This may also explain why Leidiger’s residence in Mayer is registered under the name of his wife Jan, and sister-in-law Linda – as Leidiger’s personal assets could also be at risk if Jelco Parts defaulted.
Meanwhile, Brothers Office Furniture lost a lawsuit and was ordered to pay $7,500 in damages in April 2011 and still hasn’t paid up (Case 27-CV-11-11245). Per state law, such judgments are supposed to paid within 30 days. The plaintiff in this case has had to go to court to get a writ of execution in an attempt to collect from Leidiger’s company — as of yet, unsuccessfully, as the judgment is still listed as active in the state court system.
And, that’s not the only lawsuit the Leidiger businesses have endured recently. Judgments against Brothers Recycling & Liquidation ($32,389,90 from May 2011, also resulting in a writ of execution, Case 73-CV-11-4601) and Brothers Office Furniture & Liquidation ($1,415.28 from November 2011, Case 27-CV-12-3581) are also unpaid at this time. Total it up and you’ve got over $40,000 in unpaid legal judgments against the Brothers family of businesses.
That’s not to say, though, that there haven’t been some high points. Although Rep. Ernie Leidiger is a noted supporter of “traditional family values”, Brothers Liquidation did have a major sale last year — selling off the inventory of the Shinders bookstore chain, which included 20,000 X-rated magazines (all of which I’m sure were the “traditional family values” kind of pornography).
Pulling up the ladder
So what does this all mean? Some people who read this will no doubt be concerned about some of the specifics listed above. And while there are certainly things to be troubled about there, I think the most important lesson to learn from this comes not from focusing on any individual event, but about what the totality of this record means in context with the political positions that Leidiger advocates for.
While Rep. Ernie Leidiger voices opposition to many forms of government spending and votes against bills that would create jobs, businessman Ernie Leidiger happily collects government-guaranteed loans originated with no fees. Rep. Ernie Leidiger supports traditional family values, while businessman Ernie Leidiger sells pornography.
(And let’s not forget about Rep. Leidiger’s creative interpretations of campaign finance law that violated two state statutes and generated $800 in civil penalties or his embrace of radical preachers who espouse hateful agendas.)
This is not to suggest that the programs that Leidiger has benefited from are bad programs, or that Leidiger’s military service wasn’t noble. To the contrary, the programs in question are good programs and should be continued and Leidiger’s Naval career is honorable.
And I’m not going to deride Leidiger’s entrepreneurial spirit. It’s great that we have people like Leidiger who are willing to take risks and start businesses. We need more of them. But, Leidiger’s policies and positions don’t reflect the reality of his own life.
Leidiger says “government is the problem” — yet, government has been there at nearly every step of the way in his adult life. He served in the Navy and got two taxpayer-funded degrees. His business is supported by a $500,000 SBA loan — guaranteed by the federal government and originated with fees paid by the taxpayer. His business has had over $16,000 in state contracts since 2008. He is the recipient of numerous government benefit programs due to his military service and his position as a state legislator.
Would Ernie Leidiger have the same level of achievement today without the products of government to help him on the way? It’s impossible to say, but the journey certainly would have been more difficult. And now that he’s made it, Ernie Leidiger has set out to undo the sorts of programs that allow people to have the same journey he has had. He’s pulling up the ladder, leaving future generations (and those pushed to the sidelines by our current economic woes) to fend for themselves. That’s what concerns me the most here.
This is exactly the kind of “leadership” that we don’t need. Being ignorant of your past and our present is no way to point this state towards the future.
[UPDATE]: More problems for Leidiger here.