The shock is setting in among state Republican Party
officials after learning that one of their own, GOP State Committee member
William Rauwerdink, harbors a secret past as a big-time, white-collar criminal.
U-Wisc. photo

Rauwerdink, a 14th Congressional District representative on the committee from West Bloomfield Township, was hit with a
16-count criminal indictment by the feds in 2003 related to his fraudulent
activities at Lason Inc. of Troy, a document-imaging and data-management company.

As I first reported for Deadline Detroit on Thursday (see
story below), Rauwerdink pleaded guilty in 2007 to several charges in the
massive fraud, served nearly four years in prison and was ordered to pay an
astounding $285 million in restitution to many, many victims.

The timing of these revelations could not be worse for the MIGOP as they head into their state convention next Friday and Saturday to pick a new party chairman.

“I’m a little shell-shocked, like everybody else,” Paul Welday, a
former chairman of the Oakland County Republican Party and a fellow 14th
District GOP delegate, told the Detroit Free Press.

“I guarantee you nobody knew anything about this … at least that I’m
aware of.”

But there are a lot more details about Rauwerdink’s
sordid past that never made it into the Deadline Detroit story. This guy has
been fooling people in various walks of life for years.

Here is Part II of Rauwerdink’s story, based on the 2003
indictment, U.S. District Court records, U.S. Attorney’s Office information,
U.S. Securities and Exchange Commission documents, prior news reports, and
Rauwerdink’s own blog and LinkedIn page:

* Rauwerdink certainly has not been hiding in the shadows
since the criminal indictment. In 2004, he started a new, privately held firm,
BAM Investments, a company he boasts about online in his LinkedIn biography
(without mentioning Lason). He also has established numerous ties, as a
classroom instructor and board member, at several universities.

At the University of Wisconsin, his alma mater, where he
was a cheerleader before graduating in 1972, Rauwerdink serves on the
university business school’s Dean’s Advisory Board. According to the university’s
website, Rauwerdink started teaching an entrepreneurship class last fall at the
Ross Graduate School of Business at the University of Michigan as an adjunct
professor. He has also taught at Harvard,
the Harvard Business School executive education programs, Simmons Graduate
School (Boston), and Enspire Learning, a leading institution for executive

In addition, Rauwerdink is a member of the
Michigan Venture Capital Association.

* Rauwerdink and Lason became an issue
in last year’s Illinois governor’s race, due to the Republican gubernatorial nominee’s
ties to the disgraced company, and as late as September Rauwerdink was still
viewed as an anchor around the neck of the GOP’s Bruce Rauner (now the

LinkedIn photo

On Sept. 13, 2014, with Rauner trailing the Democratic
incumbent by three percentage points in the polls, a columnist for Crain’s
Chicago Business wrote: “Rauwerdink was fined $200,000 by the SEC in connection with
insider trading allegations at another company a few months before Rauner’s (private
equity) firm brought him aboard (at Lason in 1996), which leads me to doubt
that Lason was ever on the straight and narrow.
“We’ve had enough of that
corrupt nonsense in Illinois government. Rauner won’t be able to run away so
easily from a criminal appointee if he’s elected — assuming the Lason legacy
doesn’t bite his political rear first.”    

* When federal prosecutors brought charges
against Rauwerdink, they said that he profited from the accounting scheme
at Lason through his salary, bonuses, stock options and executive loans, much
of which was awarded based on the rapid rise in Lason’s stock price on Wall
Street. Two other Lason officers, Gary Monroe and John Messinger, were also
convicted of fraud but, under a plea bargain agreement, their restitution was
limited to $20 million each in federal court.

* Among Rauwerdink’s roles, beyond cooking the books, was
to routinely issue press releases in which Lason falsely boasted of big revenue
gains for the company, information that fooled stock analysts, underwriters, brokers,
Lason shareholders, the investing public, and the media reporting on business news.

* SEC documents show that the ongoing scam culminated in
the third quarter of 1999 when Lason’s earnings were overstated by 65 percent.
Numerous fraudulent accounting entries throughout the 1999 financial documents were
discovered later by federal investigators.

The well-organized fraud was known at Lason as “Tailwind,”
a sleazy effort to wildly exaggerate Lason’s earnings and to hide large
expenses. At one point, when a Lason auditor questioned an invalid invoice that
was counted as revenue in 1998, the Tailwind team created a phony check to
paper over the fraud.

* In March 2008, Rauwerdink put to rest another aspect of
his legal troubles when he agreed to settle a separate civil suit brought
against him and the other two convicted Lason officers by the SEC. The
settlement barred the defendants from serving as officers in a publicly traded
company and essentially warned them that they will face strong repercussions if
they ever violate federal anti-fraud or record-keeping provisions in the
future. The partners in crime accepted the settlement without admitting or
denying wrongdoing.

* According to Gina Balaya, spokeswoman for the U.S.
Attorney’s Office in Detroit, Rauwerdink was not banned from conducting
business in the financial services sector. Rauwerdink apparently stayed in the game
by steering clear of publicly held companies with shareholders.
* According to records at the SEC and the state Insurance
and Financial Services Department, Rauwerdink is not licensed to do business in
the financial services sector.
* From 1996 through the end of 1999, Lason engaged in a
business growth strategy of acquiring similar document management companies.
The indictment said that Rauwerdink and others at Lason encouraged several of
these companies to engage in Tailwind-style accounting to further boost the
value of Lason’s stock.
* The acquisitions were financed through loans from a group
of financial institutions led by Bank One Michigan, now a part of JP Morgan Chase.
The other banks, all insured by the Federal Deposit Insurance Corporation
(FDIC), were: Comerica Bank; Hibernia National Bank; Bank of America; National
City Bank; Michigan National Bank; Fuji Bank, Ltd.; Union Bank of California,
N.A.; AmSouth Bank; BankBoston, N.A; Chase Manhattan Bank; Mellon Bank, N.A.;
Fleet National Bank; and ABN AMRO Bank, N.V.
* A considerable portion of Lason’s business was conducted
with the Big Three automakers, though General Motors dropped the firm in 1998
after Lason reportedly botched the job.
* In stories published by Crain’s Detroit Business on Jan.
17, 2000, and again on July 3 of that year, Rauwerdink – while hiding
information from the public about Lason’s true financial picture — insisted
that the company’s sudden  difficulties
could be cured through some basic restructuring.

* During his time at Lason, from 1996 until the company’s
bankruptcy in 2001, Rauwerdink held the titles of executive vice president, chief
financial officer (CFO), treasurer and board secretary.


State GOP Official’s Shady Past Includes Prison For $285-Million Fraud

Chad Selweski
For Deadline Detroit

When the Michigan Republican Party elites gather on Feb.
20-21 for their state convention in Lansing, among the GOP State Committee
members expected to attend is a West Bloomfield Township businessman who served
nearly four years in prison and was ordered to pay $285 million in restitution
after pleading guilty in a massive financial fraud case.  

William Rauwerdink has managed to keep his secret past
hidden as he serves on the committee that oversees all party operations and
policies. He was elected to that post by delegates at the 2013 state

He may not be famous within the state Republican Party
but Rauwerdink is infamous in some financial circles, from Metro Detroit to
Wall Street.

Rauwerdink, 65, was indicted in 2003
by federal prosecutors on 16 counts of fraud related to his role as chief
financial officer of a document- and data-management company, Lason
Inc. of Troy.

This was not some nickel-and-dime scam. A Wayne State
University professor who studies white-collar crime last year called it “one of
the worst accounting frauds ever” before it was upstaged by much bigger
scams at Enron and WorldCom.

Prison Term and

After Rauwerdink admitted to cooking the books at the
Troy firm, the company CFO pleaded guilty to mail, wire and bank fraud,
and received a prison sentence in 2007 of three years and nine months, followed
by two years of court-supervised release, restitution payments of $115 million
to Lason’s former shareholders, and $170 million in restitution to Lason’s
lenders, a 14-member bank group led by Bank One Michigan, now a part of
JPMorgan Chase.

Prosecutors in the case said Rauwerdink was “deeply
involved” in a scheme at Lason known as “Tailwind,” which reported revenues at
heights that were wildly off the mark in order to boost the firm’s stock price
on Wall Street. The indictment also charged Rauwerdink with repeatedly
filing fabricated information – record earnings, quarter after quarter – with
the U.S. Securities and Exchange Commission in 1998-99.

The staggering restitution amount was imposed by U.S.
District Judge Arthur Tarnow of Detroit because of the “greed and avarice”
that prevailed at Lason “at the expense of Lason’s shareholders, banks,
employees, and customers,” the judge said at sentencing.

It’s unclear if any of his fellow Republican State
Committee members realize that they have a big-time white-collar criminal in
their midst. It’s even more unlikely that anyone in GOP inner circles knows
that Rauwerdink has established a track record of fraudulent activities.

Rauwerdink first ran afoul of federal
regulators in 1995, shortly before he landed his executive post at Lason.
According to CFO Magazine, Rauwerdink,
as CFO of a company called The Medstat Group, agreed to pay a $200,000 fine to
settle charges brought by federal authorities of insider trading in Medstat

State Party Position

Rauwerdink serves as a Republican State Committee member
representing the 14thCongressional District, which covers wide
swaths of  Detroit and Oakland County.

In a blog that he wrote in 2011-13, the businessman
recalled that he first dipped his toe into the political waters in 2010, when
he was elected as a GOP precinct delegate and attended the August 2010 state
convention, where delegates elected the party’s nominees for state Supreme
Court, attorney general and secretary of state.

Though Rauwerdink remains a political neophyte in a
relatively low-profile post, the shenanigans at Lason received scrutiny on a
much bigger stage last year in Illinois. Early in his 2014 campaign,
Republican Bruce Rauner, now the governor of Illinois, had to fend off
questions about his involvement in Lason.

The Chicago Tribune reported in January
2014 that Rauner served on the Lason board of directors and that he had hired
Rauwerdink, the primary architect of the bookkeeping sleight of hand, in
1996. The governor resigned from Lason in late 1999 just as the high-flying
company’s stock began to crater and before it declared bankruptcy.

Rauwerdink, who is presumably seeking re-election to the
state committee at next week’s MIGOP convention – he has given no indication to
the contrary — could not be reached for comment. He is currently listed as the
founder of BAM Investments in Troy, which does not list an address or phone

Brazen Chutzpah

In a brazen display of chutzpah, he formed BAM
Investments in 2004 as he awaited trial in federal court in the Lason case, and
he boasts on his LinkedIn page of financial deals in excess of $10 million that
he has completed at BAM.

The state  Republicans
don’t need any more blemishes.

At the state convention, Michigan Republicans will face
the internal fallout of a rough 2014 when one state committee member resigned
after getting sentenced to three years in prison for extortion; a county
party chairman held onto his post despite two prior felony convictions, and
Republican National Committee member Dave Agema who repeatedly refused to
step down after posting several bigoted commentaries online.

Interestingly, as a state committee member with a
supposedly successful financial services company, Rauwerdink would normally
receive countless solicitations for campaign contributions from party candidates.

But those with their eyes on public office may want to
cross him off their list. After all, any of his extra cash should be going
to feds to pay off his restitution.