Investigation of contractor fraud on UW dorm projects stalled

Law enforcement has identified evidence of contractor fraud and theft involving the construction of two University of Wisconsin dorms in Baraboo in Marshfield.

It’s been more than a year since investigators uncovered what they believe is evidence of contractor fraud involving the construction of dorms at two University of Wisconsin System campuses.

Subcontractors that helped construct the student housing facilities at the Sytem’s Baraboo and Marshfield campuses in 2014 remain unpaid. Yet no charges have been filed.

A Baraboo police spokesman said complications involving out-of-state witnesses, defunct businesses, and the nature of the allegations have prevented the investigation from reaching the prosecution phase.

“The contractor fraud that was identified by our investigator can be associated only to an entire business entity; not an individual,” Baraboo Police Department Capt. Rob Sinden wrote in an email.

In 2014, local government and university officials in Sauk and Wood counties entered agreements with an Iowa firm called Bluffstone to construct and manage residence halls at the two campuses.

As the projects moved forward, subcontractors began to complain that they were not getting paid, and were collectively owed about $750,000. Two state lawmakers called on the Wisconsin Department of Justice to investigate.

In 2015, three subcontractors sued Bluffstone, the company that owns and operates the two dorms. A year and a half later, Bluffstone settled and paid two of the firms a total of $293,000. A third firm has not confirmed its portion of the settlement.

However, other subcontractors who were not party to the lawsuit remain unpaid for their work on the two student housing facilities.

“Somebody should be prosecuted,” said Scott Katzenberger, owner of Gaffney Plumbing of Marshfield. “It doesn’t give me a real good vibe from the justice system.”

More than three years after the university dorms opened, his firm still is owed $19,000. Katzenberger says he filed a complaint with the Marshfield Police Department in March 2015.

Marshfield Police Department Detective Allan Neinast confirmed in an email that his agency has completed its investigation and forwarded possible charges of contractor theft to the Wood County District Attorney’s Office.

“Any further information will have to be released by their department,” Neinast said. Wood County District Attorney Craig Lambert could not be reached for comment Wednesday.

Sinden said a Baraboo detective identified evidence of possible contractor fraud as early as November 2016. The matter was forwarded to the Sauk County District Attorney’s Office, which requested further investigation.

Numerous businesses involved in the project have filed for bankruptcy, and people associated with them “either cannot be located or refuse to speak to us and are out of state,” Sinden said.

He said federal law enforcement agencies that would have jurisdiction to act out of state have declined to take over the investigation. The case is being reviewed, Sinden said, for potential charges by the Sauk County District Attorney’s Office.

A phone call Wednesday to the district attorney’s office was not returned.

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