New Richmond Businessman Sentenced for Fraud
MADISON, WI—John W. Vaudreuil, United States Attorney for the Western District of Wisconsin, announced that James P. Henkel, 44, Maplewood, Minn., was sentenced yesterday by U.S. District Judge James D. Peterson to one year and one day in prison for submitting false information to the First National Community Bank of New Richmond in connection with a Small Business Administration (SBA) loan. Henkel has already paid in excess of $600,000 in restitution, and was also ordered to pay a $25,000 fine. Henkel pleaded guilty to this charge on December 9, 2014.
Between 2002 and 2009, Henkel was the owner and operator of Talmage Auto Center, Inc. and a Napa auto parts store in New Richmond, Wis. In 2008, Henkel began taking steps to sell the businesses, including hiring a broker to assist him. In addition, Henkel enlisted the assistance of his bookkeeper to falsify entries in the business records to make the businesses appear more profitable than they were to a potential buyer. Henkel provided these falsified records both to the ultimate buyer, and to First National Community Bank of New Richmond, in connection with the business loan for the purchase of the businesses.
Henkel had other loans with First National Community Bank and at times dealt directly with the bank by providing financial documents for the buyer’s loan packet. Specifically, on March 27, 2009, the defendant provided an amended tax return for tax year 2008 for Talmage that contained false information that inflated the value of the business by 25%. The bank considered this information when it submitted the loan packet to the SBA and recommended approving the loan. The SBA then approved the loan, based in part on the false information submitted by Henkel.
Both the bank and the buyer suffered losses when the businesses ultimately failed. In sentencing Henkel, Judge Peterson pointed out that the scheme was well thought out and complex, with many components, and resulted in extreme financial damage and hardship for the buyer. Henkel has already paid approximately $81,000 in restitution to the buyer, and over $500,000 in restitution to the bank and SBA. Judge Peterson has scheduled a hearing for March 25, 2015, to determine if the buyer is entitled to any additional restitution.
The charge against Henkel was the result of an investigation conducted by the New Richmond Police Department, the Small Business Administration, Office of Inspector General, and the Federal Bureau of Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Laura Przybylinski Finn.