In the wake of his conviction in Anoka County District Court on two felony charges Friday, Ramsey City Councilmember David Elvig resigned from the council Tuesday.
It took a jury less than two hours April 19 to find Elvig guilty of two counts of theft by swindle from the employees of his personal business, E-Street Makers.
“Although the final outcome with the court is not yet fully resolved and it may be or may not be possible for me to remain on the council; I believe it is in the best interest of the city for me to step down as a council member and HRA (Housing and Redevelopment Authority) member at this time,” Elvig said at the beginning of the April 23 city council meeting.
In a statement on the jury’s verdict, Elvig said, “I respect the jury’s decision and I am now prepared to face the consequences. I sincerely regret any harm I may have caused to a solid group of employees, and as I have maintained all along I fully intend to make restitutions and amends.”
On his resignation, Elvig said, “I don’t want any of my personal issues to become a distraction for my colleagues. I don’t want our dedicated city staff to be distracted from the tasks we’ve outlined through our strategic planning efforts and the real work of growing and managing this organization.”
For the last 11 years, “I brought and maintained a deep historical perspective, experience and skill sets that were aligned with the city’s needs, and I have always been committed to helping Ramsey realize its full potential.”
“When you’re an elected official there’s always a question of when you should serve and when you should step away and let others offer their service. This conflict has been on my mind of several months .... so regardless of the final disposition of my court case, this is a good time for me to resign my service.”
Elvig’s sentencing date has been scheduled for June 17. Under city charter a councilmember cannot continue to serve if he/she is convicted of a felony charge. Elvig’s term runs through 2014.
The council will meet May 7, 5:30 p.m., to declare Elvig’s Ward 1 vacant and set a date for the August special election.
Under sentencing guidelines, felony theft by swindle convictions would be probation offenses, but the prosecution could ask that Elvig serve jail time and pay restitution as well, according to Prosecutor Susan Crumb, an assistant Hennepin County Attorney.
Crumb said she would not make a recommendation on the case until a pre-sentence investigation has been completed.
According to the September 2011 complaint, which was originally handled by the Isanti County Attorney’s Office, Elvig, the owner of E-Street Makers, embezzled $19,596.83 from his employees’ 401(k) profit sharing, group health and dental plans, from April 23, 2009 to Jan. 14, 2010.
E-Street Makers, once located at 731 Lund Blvd., went out of business in December 2009 and its assets were foreclosed on in March 2011.
The U.S. Department of Labor Employee Benefits and Security (EBSA) investigated Elvig for misappropriating employee contributions to the 401(k) profit sharing plan, group health care and dental plans and 401(k) loan repayments.
The investigation found that Elvig kept the contributions in E-Street’s general operating account and used it to pay business expenses, such as payroll, instead of applying it to the three employee plans for up to 15 employees.
As a result, the health plan was terminated July 30, 2009, retroactive effective to May 31, 2009 and dental plan was terminated effective March 1, 2009, according to the complaint.
In addition to losing earnings on their 401(k) plans, employees with 401(k) loans defaulted on their repayments as a result of the money not being transferred to the plan and they were subjected to costly penalties and taxes, according to the complaint.
Elvig was originally charged Sept. 8, 2011 in Anoka County District Court with two felony counts of theft by swindle and theft by take/use/transfer of moveable property.
The case was transferred to the Isanti County Attorney’s Office because of possible conflict of interest with Elvig being a Ramsey City Council member.
The charges were amended Aug. 29, 2012 by the Isanti County Attorney’s Office to add 24 additional felony and 30 gross misdemeanor and misdemeanor charges of theft by swindle, theft by take/use or transfer of movable property as well as theft by indifference to owner rights, representing each E-Street Makers, Inc. employee.
When the Hennepin County Attorney’s Office took over the case in January, the complaint was amended again to drop 52 counts, leaving Elvig charged with two aggravated felony counts of theft by swindle.
Tammy Sakry is at email@example.com