City attorney says calls of ‘conflict of interest’ against LF mayor over banking depository unfounded

By Terry Lehrke, News Editor

An allegation that Mayor Cathy VanRisseghem had a conflict of interest when she voted to move the city’s checking account to Pine Country Bank was put to rest Monday.

The call for a review by the city’s attorney came from Council Member at Large Brian-Paul Crowder, because a social media website said the mayor may have refinanced her home with Pine Country Bank and her son-in-law, also a Park Board member, may have obtained business financing through the bank.

City Attorney Toni Wetzel said the short answer was that the conflict would only arise if someone on the Council was an employee or a director of the bank.

She noted no member of the Council was an employee or director of Pine Country Bank.

Even at that, she said, if the conflict were identified and recorded in the minutes, the Council could still vote to deposit funds in the bank.

In a July 31 email to Wetzel, City Administrator Dan Vogt noted that on a social media website information had been posted indicating a cursory record search at Morrison County showed VanRisseghem had financed her home through Pine Country Bank and David Meyer, appointed Park Board member and the mayor’s son-in-law, was featured on the bank’s website as having obtained business financing.

The site said the issue not only raised legal issues regarding VanRisseghem’s vote and input, but it also raised questions regarding Councilman Frank Gosiak, the mayor’s brother.

In the email, Vogt asked Wetzel not to proceed as they had discussed the matter and that time involved to review the issue, would cost the city money.

Vogt contacted the League of Minnesota Cities (LMC), which told him the question should be determined by the city’s attorney because such an opinion was “dependent on the specific facts of a particular situation.”

Vogt was also sent information available on the LMC website, noting that no restriction applies to the designation of a depository or the deposit of public funds if the funds are protected in accordance with state law (Minn. Stat. 471.88, subd. 2).

That statute allows a City Council, by unanimous vote, to designate a bank or savings association as an authorized depository of public funds even if a council member is a director or employee of the institution, provided they make an official disclosure of their interest.

However, the statute does not require a similar disclosure for council members who have banking relationships with the institution selected as the depository for city funds.

Prior to the discussion, resident Robin Hensel questioned whether the mayor, when she was executive director at the Little Falls Convention and Visitors Bureau, was doing city business during her time at the CVB, citing a Facebook post from 2011, asking citizens to contact the CVB for a city-related item.
“If this isn’t a conflict of interest, I don’t know what it is,” said Hensel.

Next, resident Jody Scott-Olson addressed the email Vogt sent to Wetzel.

She felt that since the majority of the Council had been in office for nearly four years, conflict of interest should have been addressed and considered.

She said she had found “all sorts of information” through the LMC and from the state legislature on what constituted a conflict of interest.

Scott-Olson said she found a number of cities that publish similar information on how to handle conflict of interests, what’s expected and that many referenced information from the LMC, including the city of Brainerd, where Vogt had been city administrator.

She questioned why Vogt sent an email “that makes it seem as though he has no clue how to answer any of these questions” and had to send an email to the Attorney General’s Office to get answers.

Vogt said in all the years he’d been a city administrator, he’d never had this question come up when a Council voted on a depository. “All we’re doing is depositing funds using that bank,” he said.

“Apparently I’ve been targeted,” said VanRisseghem.

In addressing the information that said she had refinanced her home through Pine Country Bank, she said, “I have not dealt with Pine Country Bank for many, many years and my son-in-law has never had a business financing with them.”

Scott-Olson pointed out Meyer was on the bank’s website.

“Mr. Meyer did a commercial with them and that’s his business,” said VanRisseghem.

She said the Council didn’t know where other members banked, including Mr. Crowder.

“The main thing is the community, as a Council, we’re supposed to be doing business here in town,” she said.

Crowder noted that three members of the Council voted against using Pine Country Bank (Council Members Greg Zylka, Jeremy Hanfler and Crowder) and using the bank with the better “deal” but couldn’t remember the name of the bank.

The bank with the better interest rate at the time the vote was taken was Central Minnesota Credit Union.

“We’re supposed to be fiscally responsible,” said Crowder. “Why do we go against being fiscally responsible and go to a bank that’s not paying as much money?”

“So you’re more worried about fiscal responsibility or more interest we could make — or loans I have or somebody else might have doing business,” said VanRisseghem.

Crowder called it a “huge question mark” why the Council hadn’t voted for the bank with the higher interest rate. “Why wouldn’t we want to make more interest?” he said.

Klinker noted this was the third or fourth time Crowder had brought the issue up.

Crowder countered that Klinker said the other banks were not pro-business. “I talked to every one of them and they’re all pro-business,” said Crowder.

“It’s an election year, isn’t it,” Vogt said.

  • robin hensel

    After I printed and researched the conflict of interest/ethics policy of the City of Brainerd, which identifies these exact circumstances as a conflict, it is clear to me that the city attorney contradicts that of other municipal attorneys. Regime change/city attorney!!!!!

  • newpolitiq7

    Most average voters would just like to know what criteria the Council members used to choose Pine Country Bank, if their terms (interest rate and fees) were not as good as the local credit union. This article does not answer that question. In this situation, seems like the most fiscally responsible decision would have been for Council members to vote for the best rates and fees, period. When the Council doesn’t do that, of course questions will be asked about possible conflicts of interest. Only makes sense. Thank you, MCR, for continuing to pursue this story, to find out why the Council didn’t just simply vote for the best rates.