Rep. Ernie Leidiger (R - Mayer) in a committee hearing, April 2012 (Photo by author)
by Aaron Klemz
Oct 22, 2012, 9:30 AM

Leidiger’s default puts taxpayers on the hook

According to public documents acquired by Sean Olsen at Brick City Blog, a business owned by State Rep. Ernie Leidiger (R -Mayer) defaulted on a $500,000 federally guaranteed Small Business Administration (SBA) loan in July 2010. The documents show that Crow River State Bank demanded that the SBA repurchase a loan to Jelco Parts, resulting in federal taxpayers picking up the tab for the default. The amount of taxpayer money lost in the default remains unknown, as the SBA documents redacted the unpaid balance of the loan.

This loan, through the Patriot Express program, was 90% federally guaranteed under the stimulus law. Here’s an excerpt from a speech from SBA Administrator Karen G. Mills to the American Legion’s National Convention in August 2009, the same month that the loan to Leidiger’s business was finalized.

This year, we knew the small business community needed a little extra help. That’s part of the reason why Congress and the Administration made the Recovery Act happen.

It allowed the SBA to make two important changes to our top loan programs. First, we reduced or eliminated some of the loan fees so that small businesses could keep more of their own money. Second, we increased the federal backing on these loans up to 90% so that more lenders would offer SBA loans. […]

We’re particularly proud of the SBA’s Patriot Express Loan pilot initiative. It is only for the military community – and it has our lowest interest rates. Under the stimulus, we’ve issued more than 1,200 Patriot Express loans totaling $90 million. And it’s called “Express” for a good reason. After a bank approves a loan, the SBA can often approve the application within 24 hours. This gets you the capital you need… when you need it.

The reason Leidiger’s default is noteworthy is that he’s been an outspoken opponent of federal stimulus spending, actually blaming it for the demise of his business. In September, we reported that Leidiger has $144,000 in tax liens. After several days of stonewalling, this was his response to the Chaska Villager:

Leidiger said if the Obama administration had not done a federal stimulus program the business would have been fine.

“It’s not a pretty thing to go through,” Leidiger said. “This is why I ran. Small businesses are getting screwed by the Obama economy. We’ve got to reduce government spending.”

It’s just like what Joe Biden said about Rep. Paul Ryan’s request for stimulus funds for businesses in his House district – “I love these guys!” Only this time, the stimulus request wasn’t for someone else’s business, it was for Leidiger’s own business.

It takes some incredible chutzpah to take a half million dollars in federal stimulus loan money, default on the loan 11 months later, and then blame the stimulus for destroying your business. But that’s Rep. Ernie Leidiger for you.

Wednesday morning, the single debate between Leidiger and his DFL opponent Keith Pickering will be held at Island View Golf Club. It’ll cost you 10 dollars to get in, but if you go, here are some questions you should ask of Leidiger.

1) If you were opposed to federal stimulus spending, why did you take a half million dollar stimulus loan?

2) How much money did your loan default cost federal taxpayers?

3) How can voters trust a politician who’s had at least nine tax liens filed against him over the past 14 years to effectively manage the state budget?

I warned Republicans a month ago that if they didn’t work to remove Leidiger from the ballot they may face the “Solyndra of Office Furniture.” Well, here it is, folks. Will Republicans continue to put up with a politician who can’t pay his taxes on time and hypocritically takes the same federal money he criticizes? Well, Speaker Zellers? What do you say?


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