Thursday, August 29, 2019

Settlement talks break down in case against former UW Oshkosh officials; critical hearing set for January

Former UW Oshkosh Chancellor Richard Wells, center, and former Vice Chancellor Thomas Sonnleitner, right, leave their seats after a Winnebago County Circuit Court hearing. Steven Biskupic, left, is Sonnleitner's attorney.

By Miles Maguire

Settlement discussions between two former UW Oshkosh officials and the state have broken down, and the case is now set for a critical hearing and oral ruling in January.

That hearing will address a motion to dismiss filed on behalf of former Chancellor Richard Wells and former Vice Chancellor Thomas Sonnleitner. They stand accused of felony counts of misconduct in office for their role in enabling a range of real estate investments by the UW Oshkosh Foundation.

The two men had reached a tentative agreement to settle a related civil case, but a new law, passed in last year’s lame duck session, prevents the state Department of Justice from accepting the terms without getting approval from state legislators, according to the agency.

A joint resolution of the civil and criminal cases was anticipated by the state as recently as June.

In the criminal case, the parties have been “working diligently” to come to a resolution, said Winnebago County Circuit Court Judge John A. Jorgensen at a hearing Thursday morning. But “apparently as this point in time we are at a point where no resolution has been reached and so we are going to proceed forward in a contested manner.” 

The new hearing date comes almost exactly three years after the state first announced that it was pursuing civil claims against Wells and Sonnleitner. At issue was their role in providing loan guarantees for real estate projects that failed to meet financial targets and helped to drag the university’s foundation into U.S. Bankruptcy Court.

The underlying dispute was resolved through mediation in December with the state paying out millions but also receiving major real estate assets, including a campus welcome center, in return. “UW has also now received a payment from its insurance carrier on a fraud/crime policy,” the Department of Justice said in a July 19 memo to the Joint Finance Committee, which has approval authority over court settlements.

The Justice Department has struggled to find a way to comply with the new law requiring legislative approval of actions by an executive branch agency, and Democrats have seized on the law as an example of Republican overreach.

“Wisconsinites cast their vote to allow Josh Kaul to act on their behalf, and in the best interest of our state,” said Rep. Gordon Hintz, who represents the Oshkosh area and serves as the minority leader in the Assembly. “In one of the most blatant attacks on democracy in our state’s history, Republicans have decided to override the will of the people and strip powers away from the democratically elected Attorney General. What a mess.”

The motion to dismiss the criminal charges is based on procedural issues as well as the argument that any actions Wells and Sonnleitner took were within the scope of their authority as it was understood at the time.

The defense is expected to file a supplemental brief to its motion to dismiss by Oct. 1 with the state responding by Nov. 1.

Jorgensen said he would issue an oral ruling Jan. 15.

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