SIST says city impeding payment of tax bill: Group wants to wire money, but city says after $204,000 check bounced, it will only take cash

The Shawano Leader/July 21, 2006
By Tim Ryan

The Samanta Roy Institute of Science and Technology said Thursday it is trying to resolve a bill for property and motel room taxes owed to the City of Shawano, but that the city refuses to accept the payment – unless all $206,000 is brought to City Hall in cash.

That’s the only basis on which the City of Shawano says it will do business with SIST or its subsidiaries after getting a check from them that came back for non sufficient funds.

The outstanding bill, which now comes to about $206,000 with interest, remains unpaid and five businesses owned by SIST and its subsidiaries – as well as one that leases – are still without licenses that were pulled July 14 for the sale of beer and liquor, cigarettes, soda, and amusements.

A representative of SIST maintained to the Shawano Leader on Thursday that the city was making it virtually impossible for SIST to pay the bill.

"We’re ready to take care of this tax issue with the city," said Kal Gronvall. "Our bank wanted to get the wiring instructions to wire the money to their bank with $206,000. They’re saying ‘no’ to the wire and they’re demanding $206,000 in cash. That’s unheard of."

But the city is standing by its policy.

"We have a policy that when we get an NSF (non sufficient funds) check, we have the requirement that there be cash. So we are demanding cash," said city attorney Tim Schmid.

That policy doesn’t allow for accepting a wire transfer instead of cash, he said.

"I don’t have the authority to change the city policy, nor would I recommend that we change the policy," Schmid said.

Gronvall said the rule is not reasonable.

"How would you get the cash from one bank to another or take it there, you’d have to have an armored guard or something," he said. "Who’s going to take that liability?"

Gronvall maintains the city is discriminating against SIST.

"They just want to give us as much problem as possible, create as much financial trouble for us as they possibly can," he said. "They’re all in concert together. Prejudice and discrimination. It’s all organized. Prejudice and discrimination."

Gronvall said it is very difficult to get $206,000 in cash out of the bank, something he said the city is well aware of.

"I don’t know what we’re going to do," he said. "We can’t obviously bring the cash, because the banks don’t have it. Sometimes you have to put in a 10-day request. I’m familiar with these things. You have to put in a 10-day request to get $50,000 or $100,000, so you don’t even do it."

Schmid said he didn’t believe it would be that difficult to get the money.

"I don’t believe that for a second," Schmid said. "I would highly doubt that’s accurate. I haven’t received anything in writing from anybody telling us they can’t get their hands on $200,000 in cash."

Regardless of how hard it is, it’s not the city’s concern, Schmid added.

"It’s not our problem that the amount is so big, it’s their problem," Schmid said. "We have a policy. They’re behind on taxes. They need to come up with the cash."

Nor is the city willing to accept a cashier’s check.

"Those aren’t guaranteed," Schmid said. "There are still risks. While it may be small there are risks in getting a cashier’s check."

Cheryl McCollum, director of communications with the Wisconsin Bankers Association, was asked about some of the points raised in this story and posed the Leader’s questions to a banker who works with security issues.

McCollum said it was that banker’s opinion that wire transfers pose some risk because account information must be divulged, and that a "good option" for dealing with such large sums of money would be a certified check.

She said the banker felt it was "not very realistic" for a party to expect delivery of more than $200,000 in cash.

An area bank executive from outside the city of Shawano was also asked about some of the banking questions raised. He was not told the specifics of this story.

On the logistics of being able to withdraw $200,000 from the bank, "It could be done with advance notice," he said. "We would need at least a week’s notice."

He was also asked about the viability of a cashier’s check, which he said was "the equivalent of cash," and a fully negotiable instrument.

Gronvall said the city should be willing to accept the wire transfer.

"If you were going to get $206,000 and all somebody wanted were your wiring instructions, wouldn’t you give it to them?" he said. "They’re going to be the recipient of $206,000. Here we are with our hand out saying we want to pay our taxes so we can get on with business, and they’re saying ‘no, we don’t want you to get on with your business. We want to give you more problems and give you something that’s absolutely impossible for you to do, so it will delay you some more and drag you more through the mud.’ That’s what they’re doing."

Schmid said the city was burned twice by accepting SIST’s word that money was going to be wired to SIST’s bank to cover the check.

"We gave them a license on the promise of they’re going to have a loan to cover the taxes and that fell through," Schmid said. "We ran the NSF check through twice and that still is no good. Now we should take another chance and say we’ll do whatever the City of Shawano has to do to help you? I don’t think so."

Gronvall was asked about the check that was returned by the bank but said he had no information about it. He said that area was handled by Naomi Isaacson.

"She is the CEO, she’s an attorney," Gronvall said. "I don’t know the ins and outs of all that. I can’t comment on that."

According to the city, a check in the amount of $204,262.34 from Midwest Properties of Shawano, LLC, to cover delinquent property and motel room taxes twice failed to clear the bank due to insufficient funds.

The check was delivered to the city on June 30, the day before beer and liquor and other licenses were due to expire. Under city ordinances, those licenses could not be issued until all property and motel room taxes were paid.

Gronvall said he has also asked the city attorney to put the demand for cash in writing, which he said the city will not do.

"They’re well aware of the city’s policy," Schmid said. "I don’t have to do that."

Schmid said he told SIST representatives he would provide such a letter to their bank, however.

"I haven’t heard from the bank," he said.

The city also issued a statement Thursday saying SIST previously wrote a check to Shawano Municipal Utilities that was returned for non sufficient funds, and knew from that experience that future payments on the outstanding bill would have to be made in cash.

SIST is a non profit 501(c)(3) organization that has said in the past that the businesses it operates in the Shawano area are with the intent to raise money to eventually open an international boarding school similar to one it operates in India.