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Elk Run controversy is on council's agenda

The Pine Island City Council is expected to address some questions surrounding a land sale for the Elk Run biobusiness project at its meeting at 7 p.m. tonight at city hall.

First issue

One issue involves Geoff Griffin, a contract representative of Elk Run developer Tower Investments during its acquisition of land for the park.

Griffin, who has an office in Chatfield, has admitted he accepted direct compensation for a real estate transaction for the park, even though he wasn't licensed as a real estate broker at the time, meaning it was illegal for him to accept the money directly.

"In 2007, I unknowingly made an error and accepted compensation for a real estate transaction by depositing a check written directly to me that should have been written to my company," according to a letter addressed "To whom it may concern" provided by Tower.


Company executives took pains to emphasize that Griffin, who is the Tower Elk Run project manager, is not a Tower employee. Instead, Tower senior vice presidents John Pierce and Alex Marks said, Griffin works on contract through his company, G-Cubed Engineering.

The commission was for the sale of land owned by Elmer and Judy Stock to Tower, a development company with offices in Chatfield; Woodland, Calif.; and Nashville, Tenn.

Griffin notes that after he finished courses and passed his exam to become a real estate broker, he "instructed my office manager to work with the Department of Commerce to convert the broker of record for G-Cubed Realty … to myself. I mistakenly assumed this was complete in January of 2007, when I accepted the commission check as a broker rather than depositing it in the G-Cubed trust account and being compensated as a sales agent."

"Tower Investments takes very seriously questions raised concerning Mr. Griffin's real estate representation," Tower says in its letter, but it accepts Griffin's explanation.

"Griffin recently advised Tower of this error and is working with the Department of Commerce to resolve this infraction. He is cooperating with them fully in settling this matter. Mr. Griffin has always demonstrated the highest ethical standards in representing Tower, and we are confident that this will be handled appropriately between Mr. Griffin and the Department of Commerce," Tower wrote.

The Department of Commerce says a licensee may not pay any portion of his or her compensation to an unlicensed person, according to its rules. When there's been a violation of its real estate broker rules, the department often seeks to negotiate a settlement with the licensee of some agreed-upon sanctions, the regulations say.

Second issue

The other issue also involves money that was paid in connection with that land sale.


Carl Krause, husband of city council member Jayne Krause, got a check equal to about 2.5 percent of Griffin's commission from John Hoehne, who also sold land to Tower, in 2007, according to an article in Finance & Commerce, a daily business newspaper published in Minneapolis. The article says Krause said he was paid to help influence the sale, but splitting a commission with someone who is not a licensed real estate salesperson or broker is illegal, Department of Commerce rules say.

The article says Griffin told Carl Krause on Feb. 8, 2007, that he couldn't pay him directly because he wasn't a licensed broker, but told Krause he would get him money. On that same day, John Hoehne gave Krause a check for $9,562, which is 2.5 percent of the $382,500 commission that Griffin received from the Stocks' land sale.

Krause now has concerns that a road leading to his used car dealership along U.S. 52, CJ Auto, will be closed to build the Elk Run interchange, which he says will hurt his business, the article says.

Jayne Krause has voted both for and against Elk Run proposals, and has also abstained from voting; she told the Post-Bulletin in an interview that she didn't know about the payment to her husband until three or four months ago, and that her husband told her about the check because he didn't want her to hear about it first from the media.

"I'm not worried because there's nothing that they can find or say or do that would show that I did anything unethical or illegal or anything else," she told the P-B. She said she received none of the money.

"I had nothing to do with that. I didn't know about it," she said.

Search for answers

City officials want to check that out. Mayor Paul Perry said Jayne Krause will have to answer some questions and the situation will likely be discussed at tonight's meeting.


"I read through (the article in Finance & Commerce,) and it's pretty obvious that we're going to need to find out what went on there," Perry said.

In a letter to Tower, Hoehne says he gave the check to Carl Krause, payable from his wife's checking account, to "shut up" Carl Krause.

Tower provided a copy to the Post-Bulletin of an e-mail from John Hoehne to Tower's Alex Marks dated July 13, 2010. It reads, in part, "Carl Krause and I have been friends for 15 plus years or more. … He was saying in the restaurant and at city hall (that Geoff Griffin) owed him this $9,562.50. I had sold my farm for what I considered good money. I could not stand to hear him badmouth Griffin and Tower Investments, so I told my wife to write him a check for that amount."

Hoehne says parenthetically in the e-mail, "This check was written without the knowledge of Tower Investments or Geoff Griffin."

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