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State shuts down Fox Valley scrap companies after owner convicted of scheme bilking recycling firm of millions.

Byline: Nate Beck,

State regulators are shutting down two salvage companies in the Fox Valley after the owner was convicted of overseeing a scheme that bilked the Fond du Lac-based company Sadoff Iron and Metal out of some $14.3 million over a six-year period.

Sterling W. Kienbaum, 54,was sentenced to serve 11 years in prison in August after pleading no contest to racketeering and felony theft charges for skimming cash from Sadoff by packing scrap vehicles with dirt. Kienbaum paid an employee, Daniel Christianson, 53, of Wild Rose, to drop off overloaded scrap vehicles at Sadoff. An employee of Sadoff, encouraged by payouts from Kienbaum, would then look the other way when the cars came in. As a result, Sadoff, from 2009 to 2015, paid $14.3 million more than what Kienbaum's vehicles were actually worth.

Kienbaum, Christenson and the Sadoff employee involved in the scheme Donald Krueger, 51, of Fond du Lac are now each faced with theft and racketeering charges. The Wisconsin Department of Transportation, which regulates salvage operations, ismeanwhile pursuingfurtherpenalties, seeking to shut down two Fox Valley-area businesses owned by Kienbaum: Gibson Iron Metal and Auto, Inc. in Neenah and Fox Valley Iron Metal & Auto Salvage,of Oshkosh.

In a decision dated Oct. 4, an administrative law judge agreed to the department's request for a license revocation. Brian Hayes, administrator of the Wisconsin Department of Administration's Division of Hearings and Appeals, at the same time rejected two of Kienbaum'sarguments: thathis convictionis enough punishment for the "fraudulent activities" he had engaged in, and that Sadoffstillhas an adequate means, in a lawsuit it has filed against Kienbaum, toremedy the damages it suffered in the scheme.

"These arguments are not persuasive," Hayes wrote. "Although there is little precedent upon which to judge what actions warrant the revocation of a motor vehicle salvage dealer license, it is difficult to imagine more egregious behavior than that engaged in by Sterling Kienbaum as an owner and officer of the Respondents."

The decision requires the two companies tobe shut down before the end of the year and bars them from buying new salvageable materials. Thebusinessmust also sell or recycle any vehicles or parts they already hold. Together, Fox Valley Iron Metal & Auto Salvage and Gibson Iron Metal & Auto employ about 50 people. Kienbaum's ownership interest in the two companieswas placed in a blind trustfollowing his conviction and the businesses continued even operating ever after a case was opened against him in December 2016.

Sadoff Iron and Metal is among the largest scrap-recycling companies in northeast Wisconsin. Ithas sitesinFond du Lac, Green Bay, Manitowoc, Oshkosh and Sheboygan, as well as in in Omaha and Lincoln, Nebraska.

To tally up its damages from the scheme,Sadoffhired a forensic accountant.

It was later discovered that Krueger and Christianson were each paid thousands for their role in the operation. Krueger told investigators that he received $35,000 from 2014 to 2015. He also said that he, for as long as 18 years, had been taking payments in return for waiving through overloaded scrap.

Before Kienbaum's latest conviction,Christianson and Kruegerhad beensentenced to five years of probation for one count each oftheft of more than $10,000 as party to a crime. The two also face additional theft and racketeering charges for their role in the scheme;Christianson has a plea and sentencing hearing on Nov. 26 and a similar case is proceeding against Krueger.

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Publication:The Daily Reporter
Date:Nov 13, 2018
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