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BREAKING NEWS

Attorney: No conflict of interest in Wells

By Staff | Mar 21, 2010

David Frundt

Any concerns of a potential conflict of interest involving two Wells Economic Development Authority board members have been laid to rest.

City Attorney David Frundt says Jim Heckman and Kim Sorenson did not violate any state laws when the EDA board approved a $150,000 loan in February for the Singleteary Food Solutions project.

Austin Bleess, the city’s community development director, updated board members at their meeting held Tuesday.

Frundt issued an opinion after researching state law and information provided by the League of Minnesota Cities.

A memorandum explaining the city attorney’s findings was included in each board member’s informational packet.

“On its face, because the Singleteary loan involves Mr. Heckman’s employer, Paragon Bank, the potential for conflict of interest does exist.

“However, Mr. Heckman did properly abstain from voting on this loan agreement and did disclose the conflict to the board,” wrote Frundt.

The issue came to light because of the possibility of Heckman and Sorenson benefitting financially from Singleteary’s proposed project.Heckman is the president of Paragon Bank, which has an outstanding loan of around $600,000 for a facility purchased for the new business venture.

Sorenson, who has an engineering background, could be hired by Singleteary for consulting on planned remodeling and renovation at the facility they purchased.

Frundt concluded that because Sorenson does not have any contract with Singleteary to provide services now or in the future, no conflict of interest exists.

“If in the future, Singleteary Food does enter into a contract with Mr. Sorenson’s employer and said contract will involve some sort of public funding, Mr. Sorenson may then have a conflict of interest,” he wrote.

Frundt did recommend the EDA board address a technical violation.

He says Heckman should have provided a “written disclosure” at the time the EDA loan was approved for Singleteary.

On Tuesday, Heckman submitted a letter dated March 10:

“I am employed by Paragon Bank. Paragon Bank has a relationship with Singleteary Solutions in the fact that Paragon Bank will be negotiating the sale of the Wells Co-Pack building to Mr. Singleteary.

I have previously disclosed with a letter dated July 2009 that I would make the board aware of the mutual customer relationship between Paragon Bank and the Wells EDA.

I have verbally disclosed this relationship in our discussions at the meetings. As they may have or may not have been recorded in the minutes, I am following up with a written letter pertaining to this situation.

By definition, I see that there is no “conflict of interest” in this transaction.

If you have any questions, do not hesitate to contact me.

Frundt says the violation does not void the loan because it was not made “inadvertently and not purposefully.”