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Minnesota State Senator, Wife & Their Company Sued For $748,000 SBA Loan Default

This is a re-post of articles about Minnesota State Senator, Sean Nienow and his wife, Cynthia, who, along with their company, National Camp Association, Inc. have been sued by the United States Department of the Treasury for approximately $748,000 in connection with an SBA loan default.

The lawsuit was filed January 17, 2014 with the U.S. District Attorney’s Office in Minneapolis for failure to make payments on a $613,000 small-business loan.

The complaint states that on January 16, 2009, the Small Business Association (SBA), through U.S. Bank, provided a loan to National Camp Association, Inc. The note was signed by Sean Nienow as the president and secretary of National Camp Association, Inc., and was personally guaranteed by the Nienows.

According to Isanti County court documents, Sean Nienow purchased the assets of National Camp Association, Inc, a New York corporation, for the amount of $699,000. He paid $621,000 on January 22, 2009, the day of closing, and promised to pay $30,000 plus accrued interest by January 16, 2011.

On October 11, 2011, Nienow and National Camp Association, Inc. were served with default and failure to make payments on any of the $30,000 or accrued interest, according to the lawsuit filed in Isanti County.

Isanti County District Judge Edward Bearse ordered Nienow to pay $7,755 to the New York company.

The business, described by various news sources as an organization helping parents find camps for their children, filed with the Minnesota Secretary of State on May 29, 2008 with Sean Nienow as its chief executive officer.

The registered office address was an unlisted address next to the Nienow’s home in Cambridge.

“There was no letter or permit application for a home occupation permit for the camp business,” said Lynda Woulfe, Cambridge city administrator. “It would have required one because they were conducting business out of the home.”

The intent of the home occupation permit is to allow limited passive commercial-type uses in a residential area to not detract from the character and integrity of residential neighborhoods. The home occupancy statute lists conditions and provisions such as utility usage not exceed that which is normally associated with the residence.

The U.S. Bank loan was guaranteed through SBA. This is usually done when the bank wants to loan the money, but the company may not have a lot of collateral, said Royce Nelligan, SBA district council. The SBA guarantee is typically 70 percent of the total loan.

The complaint states that the Nienows stopped making payments on the loan in July 2010. The principal balance is for $558,076.53. With administrative costs, attorney’s fees, and postjudgement interest, the lawsuit is asking for $747,937.62.

National Camp Association, Inc. was dissolved August 1, 2012, according to the Secretary of State’s website.

The complaint states demand for payment was made, but the defendants have not complied.

Nienow released a statement that the lawsuit is not related to any of his legislative duties. He is not taking any calls on the case.

“I have not yet received a copy of the legal filing in question,” Nienow said in his statement. “But it is clearly not related at all to any of my Minnesota Legislative duties. As with all pending actions of this sort, discussion of any details cannot take place until it is fully resolved.”

Nienow had previously served  two terms, starting in 2003 and 2005, but was unseated by Rick Olseen (D-Harris). Nienow won back his seat in November 2010, and has held two additional terms, starting in 2011 and 2013. His seat is up for election in 2016.

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