Dear Sportsman, November 10, 2019
HOT Government of Racine, Wisconsin is asking for your help in recovering fraudulently obtained monies from the Wisconsin DNR-Knowles Nelson Stewardship Grant.
The Knowles-Nelson Stewardship Program is a vital source of funding used by local nonprofit organizations to protect land and water in Wisconsin. Stewardship grants are used to: Protect our water
resources and air quality. June 10, 2014,” Machinery Row” a $65 Million Dollar redevelopment project was announced. The 20-acre site in the heart of the City of Racine Wisconsin was to be transformed into higher-end, market-rate apartments, as well as stores, restaurants and other commercial space, under the plan from Financial District Properties, (FDP) a development firm based in Davenport, Iowa. FDP’s principal owner Rodney Blackwell attempted to but could not obtain financing for the project. However, the city administration elected to provide a $4.5 million-dollar taxpayer loan to FDP/Blackwell to purchasethe properties in December 2014. The city however had no intention of FDP/Blackwell controlling the project.
Prior to closing the loan with FDP/Blackwell the city establishes “title in lieu of foreclosure” as a precondition of the loan it is both intentional fraud on FDP and also constructive fraud on the public.
“Title in lieu” is a mortgage and if the city is both the mortgagee and the mortgagor FDP/Blackwell was actually not in the deal because there is no debt to the city and the city has and holds title to theproperty. FDP/Blackwell was unknowingly used as a closing vehicle for the city to gain control of the development. FDP/Blackwell was a strawman used by the city to purchase the properties with city taxpayer money. The administration did not inform the alderman, the public or the redevelopment authority of the activities. At closing of the 3 parcels of property the (City/Blackwell) extracted $450,000 from the sellers of the properties in an environmental hold back to put into an escrow account which
the administration told the public that Blackwell was paying interest on the city taxpayer loan. The administration financially rewarded Blackwell along the way. Blackwell removed the tenants from the
properties avoiding relocation compensation. The city withdrew monies from the escrow account to make the interest payments on the city loan. In 2016 the city needing more money to pay property
taxes and judgments that were being attached to the properties the city applies for grants with the Wisconsin DNR Knowles - Nelson Grant program and uses the money to pay taxes and judgments. The
request to the DNR was a promenade walkway for $470,000. In reality they were buying their own property back since Blackwell had signed a deed in lieu of foreclosure in December of 2014 prior to his straw-man purchase. There was never any promenade walkway built. There were multiple safeguards that should have been executed by city officials and the DNR which has cost the Racine Taxpayer in excess of 10 million dollars.
Review Video - What Went Wrong With Racine Machinery Row?
There have been two stewardship grants obtained from the City of Racine Wisconsin that are of concern:
Grant 1
March 26,2014 The City of Racine has procured a DNR Knowles Nelson grant for park land acquisition. The $240,000+ grant will help purchase 3.2 acres of land along Mound Avenue for
the City’s West Bluff Overlook project, which is part of the RootWorks Root River Corridor
Revitalization Plan. Vandewalle & Associates assisted with drafting the successful grant request. The grant would transform the property from its current state as parking lot and former
industrial building into the bike path, outdoor classroom and overlook. The bike path, classroom and overlook has not been built.
Grant 2
June 22, 2016, the City received an Urban Green Space subprogram grant to acquire 5.6 acres in downtown Racine along the Root River. The property is an abandoned industrial site. The City intends to convert the parcel to a river promenade and waterfront green space. The City will be purchasing the 5.6 acres from developer Financial District Properties for $940,000 the city will then be reimbursed for $470,750 from the Knowles Nelson Stewardship Grant (½ of the
purchase price for the land). The river promenade and waterfront green space has not been built.
Issues of Concern Grant 1
HOT Government raising concerns about connections two members of the Root River Council Monte Osterman and Marty Defatte — have to one of the buildings the city purchased through the Knowles Nelson grant: an industrial warehouse at 1251 Mound Ave.
Osterman’s business, Osterman Granite & amp; Marble, leased space in the building. Defatte, a real estate agent for Shorewest, was listed as a real estate agent on the property. Both men were board members of the Root River Council. Both men benefited from the grant purchase. Osterman was the President and Defatte was a board member.
Page 28 of the Back to The Root Plan has a bike path thru Mound Ave, authored by Osterman and Defatte 2008. Osterman is a Racine County Board Supervisor. Osterman moves to 1251 mound during which time the RootWorks plan is being drafted. Osterman and Defatte had detailed knowledge of the Mound Ave purchase and both benefited from the Knowles Nelson Grant in direct violation of grant requirements. Osterman Granite & Marble returning to Downtown
Osterman is paid relocation costs, Defatte is paid real estate commission from grant funds.
Complaint Filed on Osterman
Exhibit 1
Exhibit 2
Issues of Concern Grant 2
The City of Racine committed fraud from the beginning and continued to defraud the public with the promenade land purchase. In this land spin off the city purchase approximately 5 acres with 50% of the money coming from a Knowles-Nelsen Grant and an in-kind value of land donated by FDP with a combined total of approximately $940,000. Several things don’t pass the smell test here; first of all, with the city holding “title in lieu” and this defined as a mortgage means the city owns its own mortgage and there is no debt to be repaid. FDP did not hold perfected title and therefore could not donate in-kind land. Debt is the legal foundation defining and required in a mortgage. Second, why did the city take 100% control the escrow of the $470,000 Knowles-Nelsen cash portion of the sale if FDP actually owned and controlled the property? Would Blackwell not have been intitled to the proceeds of the sale?
The answer is obvious.
Legal issues get deeper for the City of Racine as they reward themselves with greater power and prestige in the community. The city conspired to influence a primary election for Mayor. The city
conspired with intent to deny relocation benefits on Machinery Row business owners. The city conspired with intent to disguise Machinery Row as a private project. The enterprise committed other
fraud and misrepresentations to Federal Court, malfeasance, intend to harm several businesses, and more.
The Machinery Row Timeline of Events.
How you can help?
The financial contributions of sportsmen and women help state fish and wildlife agencies restore and manage wildlife and their habitats. Hunters create one giant economic engine, providing the financial
support to create thousands of jobs directly involved in the manufacture, sale or provision of hunting and outdoor products and services. However, the behavior which deviates from the formal duties of a public role with funding from the Knowles – Nelson Grant Program undermines the success of the DNR and the entire states ability to control the abuse of entrusted power for private gain.
We at HOT Government ask you contact your state representative from the DNR and also send an email asking WHY? there is no investigation into the fraudulent Knowles -Nelson Grant!
Signed.
Jim Spodick
Harry Wait
