Monday, October 7, 2019

County Commissioner Faces Embezzlement Investigation

Comm. James Hanning
Crooked County Commissioner Caught Embezzling from a Partner? 
Influence Used to Squash Subpoenas
for Financial Records? 
Victim Faces Numerous Attempts
to Railroad on False Charges. 

Tyler Paulsen was just a young kid that had worked hard in construction and saved to buy land and build a house. He started dating a young woman, the daughter of James Hanning, and managed to be convinced to go into a partnership with his potential future father in law. Paulsen had money but small credit, Hanning had bad credit and no money. But Hanning was a County Commissioner in Wagoner County.

Eric Jordan Mug Shot
Along the way Paulsen claimed and documented that he invested close to $500,000 into various properties with Hanning maintaining the records and depositing most of the rent from the properties. Then the first warning sign, a vendor not being paid on time, someone that Paulsen had recommended to Hanning. The conversation with Hanning over the unpaid bills caused some alarm so Paulsen went down to another major vendor, Lowes, and pulled the statement. Thousands of dollars of materials had been delivered not to the rental properties but to Hanning's home for home improvement projects.

At this point the embezzlement allegations appeared to be in excess of $100,000.

Paulsen had begun accumulating property in 2012, purchasing six properties and a 50% interest in another property before starting a partnership with James Hanning. Apparently the 50% interest property was the first deal with Hanning and a second property was purchased for $15,000 with Hanning putting in $9,000 and Paulsen putting in $6,000 on the June 2016 deal. At that point Paulsen had around $285,000 in property to Hanning's $39,000 investment in the eight properties.
D.A. Jack Thorpe 

At the time according to the court filings, Hanning admitted that he had taken money out of the business but was entitled to pay the money back under the operating agreement, asking Paulsen if he knew the exact amount that had been taken. Paulsen's answer was that a complete review of the business finances was needed to determine that amount. Paulsen was able to get hold of some information for 2016 showing that nearly $59,000 in rent should have been deposited and only $23,325 made it into the bank account. The business records that would show where the balance of the cash went have yet to be turned over to the court.

They named the partnership Capital Ventures Investment, CVI for short. Something happened in the summer of 2017 that caused Paulsen to ask for the books on the partnership for inspection and copying. Hanning refused access to the records identified as a spiral notebook of rent receipts records and a computer file of the same. Rather than allowing Paulsen to access the bank records, they changed the passwords to the online bank accounts and filed a September 2017 lawsuit against Paulsen.

The lawsuit managed to quash numerous attempts to get the financial information through subpeona for at least four months. Paulsen did manage to get enough information through requests and depositions to prove that Hanning did in fact receive money for rentals that never made it to the bank accounts. Hanning and his wife admitted under oath that they have the business records but after years of effort have yet to be ordered to turn over a copy to the super-majority owner of the partnership.

Why? The Hannings argued that the request for financial information was overly broad and expensive to comply with. But by March 2019 the court ruled that the information had to be turned over to Paulsen. The Hannings responded with nearly one thousand pages of information, all of which neglected to actually provide any information as to the amount of rent paid by clients of the property partnership nor expenses paid out maintaining the business and properties. The mentioned spiral notebook and the rent receipt book used to give renter receipts remained unavailable to Paulsen. Draws taken, utilities paid out on the properties, rents paid in to the partnership, all the normal information that most businesses retain for years on end.

Reading the depositions will make your hair stand up on the back of your neck. The partners were loose with receipts, paying personal bills out of the company bank account, demanding all rent payments in cash or cashiers checks, even taking cash payments by tenants as draws. The depositions of James Hanning, his wife, and the accountant will make a businessman blanch at the shear stupidity of mixing personal finances with a LLC finances.

Through it all the Hannings and their attorneys managed to quash subpoenas to banks, even bar Paulsen from getting their personal banking and financial information, a standard practice in lawsuits of any sort. Instead, they demanded that a receiver be set up to put together a set of records, strange as the Hannings had all the records in existence. By November 14th 2017 a property manager had been appointed and charged with the task of putting the business financial records into shape by obtaining all the documents and records that the Hannings possessed or should have kept.

Instead of resolving the matter the Hannings and their attorney view the property manager as a stop agent to further depositions and subpoenas, arguing that it is up to the property manager to provide the records that they possess. Paulsen is paying 100% of the property manager to manage the eight rental properties and the two parties are splitting the cost of assembling the business records. The Hannings are obviously pre occupied with shielding their personal financial records from being looked at, with them having a long history of financial problems, a bankruptcy, and numerous debt collection efforts according to the court filings.

The Hanning's attorney meanwhile was attempting to get Paulsen's attorney thrown off the case and it appears that the judge didn't much care for the attorney either from the transcripts.

There is no doubt though that Paulsen is the major stockholder of the partnership and the victim. Paulsen contributed the vast majority of the investment money to purchase the properties or brought them into the partnership. Hanning and his wife locked him out of the bank account access both online and in person at the time they filed their lawsuit. They claim “sweat equity” has eaten up most of Paulsen's share of the while painting a picture of Paulsen being active in repairing and collecting rent and even investing additional cash into the LLC partnership. The local court is heavily weighted in County Commissioner James Hanning's favor and even basic discovery is not being allowed on Paulsen's side.

Conspiracy theory? Consider that one of Hanning's attorney was former Wagoner County Judge Bruce Sewell. Consider that the current attorney handling Hanning's case is a current Assistant D.A. for Cherokee County, one Eric Michael Jordan. Why is that important? Because Eric Jordan was fired from Wagoner County in February of 2017 for backing over a neighbor while drunk driving. Jordan was chased down by deputies it appears and caught drunk driving. He was brought back to his home and the scene of the crime and watched by Wagoner County deputies till the OHP officer arrived and charged with misdemeanor DUI and misdemeanor personal injury while DUI and not for the felony of hit and run.

Wagoner County D.A. Jack Thorpe fired Eric Jordan, then turned around and hired him in Cherokee County shortly thereafter where Jordan continues to prosecute cases as an assistant D.A.. Jordan faced the OBA a few months later but was found not to be unfit to practice law. Jordan received one year deferred sentences on both charges and around $1500 in fines. And now, Jordan's arrest and convictions do not appear on as they have been wiped off the record.

Meanwhile, the neighbor that Jordan ran over has sued Jordan and as of this writing, over 2.5 years after the incident, has yet to be compensated for his claims. Jordan appears to be offering $100,000 at this point including all medical and legal costs, a paltry sum for backing over a man standing at his mail box and leaving him bloodied on the ground.

The case remains mired as County Commissioner James Hanning continues to pull strings and favors to keep the case hung up in court.  The property agent instantly demanded Paulsen's tax returns yet has yet to get Hanning's tax returns nor any of the records that Hanning or his wife admitted to keeping in the numerous deposits ins.   The local judge has completely prohibited Paulsen from doing additional discovery while Hanning continues to collect the rent and bleed the partnership bank account of funds.

This story is so complex that it will take several weeks to tell.  In addition to having the fix in against the victim in Wagoner County District Court, the victim was subjected to several attempts to railroad him on criminal charges, was arrested at Church on false charges, and even had massive interference in his custody battle.  Which Pausen won anyway which should tell you a bit about his character and perseverance.