Wendy Maus, the former chief financial officer of Waukesha-based Palmer Company will have to pay nearly $860,000 in restitution, but avoided any additional jail time after lying about the company’s IRS debts to secure a loan.
Maus pleaded guilty in December to two counts of making false statements to a federally insured bank. According to the plea agreement, she had not disclosed $419,000 in Palmer Company debts to the IRS when Investors Bank, now part of National Exchange Bank & Trust after a merger with American Bank, purchased a $1.5 million line of credit and $660,000 mortgage from First Business Bank in 2012.
The debts grew to more than $650,000 by March 2013 and were the result of withholding payroll deductions but not paying the IRS as the distributor of industrial cleaning supplies and equipment struggled to continue operations. Palmer Company was out of business by July 2013 and the bank eventually charged off $859,699.83 in losses from the loans.
Eastern Wisconsin U.S. District Court Judge Lynn Adelman sentenced Maus last week to time served and ordered her to pay restitution to National Exchange Bank for the full amount of the losses. Adelman also ordered four years of supervised release.
Maus had faced up to 30 years in prison, but prosecutors agreed to recommend a maximum of 24 months as part of the plea deal. Sentencing guidelines for the case suggested Maus receive 12 to 18 months in prison, two to five years of supervised release and up to $2 million in fines.
Maus’ attorney argued for a time served sentence, describing the matter in court filings as “a highly unusual fraud case.”
“Wendy Maus is before this court not because of the typical white-collar motivation of greed, but because of a misguided attempt to save Palmer Company, her father’s janitorial supply business, which failed during the recession,” attorney Michelle Jacobs wrote.
Jacobs noted that Maus hadn’t received anything individually and had put hundreds of thousands of dollars of her own money into the business, including $361,000 towards the tax liability, $270,000 to pay the bank and additional money to clean up the business after it closed.
Jacobs also argued that the bank hadn’t issued any new money to the company but instead “bought what was obviously risky debt from another bank in the middle of the recession, with no audit,” relying instead on a personal guarantee from Maus’ father, the owner of Palmer.