House Speaker Daudt sued by debt collectors, was tardy on taxes

House Speaker Kurt Daudt
House Speaker Kurt Daudt speaks to legislators during the special session at the State Office Building June 12, 2015.
Jeffrey Thompson | MPR News 2015

Updated: 9:15 a.m. | Posted: 4 a.m.

Debt collectors sued Minnesota House Speaker Kurt Daudt three times in the past year over thousands of dollars in credit card charges, and he also was late paying taxes for land he owns, MPR News has discovered through public court and property records.

One of the debt cases was due for a court hearing Monday, the day before the Legislature was set to start its election-year session. But the sides worked out a settlement. Daudt's lawyer, who was present at the courthouse, refused to disclose details of the settlement.

Meanwhile, Daudt incurred penalties for not paying 2015 taxes on the Isanti County property where he lives, and paid the money he owed only after learning MPR News was working on a story.

Approached Monday outside a pre-session fundraiser at a Roseville country club, Daudt agreed to an interview about his finances later in the day at his Capitol-area office. Hours later, an aide said Daudt had changed his mind and would issue a prepared statement.

"Like many Minnesotans who struggled as a result of the recession, I lost my job and faced credit card debt," Daudt said in the statement. "This issue is now resolved and there is no outstanding debt. When I stand up for middle-class families who are feeling squeezed, it is not a talking point, it is real life."

Speaker of the House Kurt Daudt
Kurt Daudt, as newly elected Speaker of the House, is interviewed following the opening day of the session Jan. 6, 2015.
Jeffrey Thompson | MPR News 2015

The situation reveals a paradox for Minnesota's highest-ranking Republican: He often rails against a state government for struggling to "live within our means" while failing to do so personally. And it subjects him to scrutiny over whether he's received special treatment because of his political position.

The other two lawsuits took abrupt turns last spring after default judgments were entered against Daudt. Messerli & Kramer PA, a law firm that also has a major lobbying presence at the state Capitol, reversed course shortly after winning the judgments for its client and urged a judge to wipe away the rulings, a rare concession in these types of actions.

On Tuesday morning Daudt spoke with MPR's Cathy Wurzer. He said he did not believe he received special treatment because of his position in state government.

"No, in fact I don't think that they even knew that. And like I said, the debt had been paid in full, and that's why it was dismissed. And I assume that's normal practice," Daudt said.

In all three cases another Capitol lobbyist has been involved on Daudt's behalf, according to public court filings. That lobbyist, attorney R. Reid LeBeau II, is often turned to by the House Republican caucus for work on election law and ethics cases, though it isn't clear who has paid his fees in Daudt's personal finance cases.

Monday's court action headed off an attempt by Daudt to have the newest case dismissed on a technicality. He had asked Isanti County District Judge Amy Brosnahan to dismiss the lawsuit filed on behalf of U.S. Bank National Association because Daudt argues that court papers were delivered to a home where the mortgage is in his name, but where he does not reside.

LeBeau wrote in a court filing last month that a summons and complaint were left with Daudt's mother at the Cambridge home connected to the lawmaker, and weren't properly conveyed to him "at his usual place of abode." That other home is 17 miles away in Zimmerman, and Daudt attests in an affidavit that he has lived there for 20 years.

"My home in Zimmerman is my principal place of abode," Daudt said in his sworn statement. "I have received all of my personal mail and personal bills at my Zimmerman address since June 1995."

U.S. Bank and its debt collector, Portfolio Recovery Associates, were seeking to recover $9,356 in overdue charges and legal fees incurred pursuing the money. The credit card debt dates to 2011 and was still outstanding as of last December, when the lawsuit was filed.

The amounts in the earlier cases are smaller. In March 2015, Capital One Bank filed a pair of lawsuits against Daudt. The company was represented by Messerli & Kramer PA and it won judgments of $2,238.46 and $1,595.40 on March 12. Less than two weeks later, the firm went back to court and, with little written explanation, asked for the judgments to be "vacated." A judge did so a week later.

The next month, the law firm went further and asked for the cases to be "dismissed with prejudice," meaning it was forfeiting the right to pursue future action and agreeing it would eat its own legal costs.

Those lawsuits were also delivered to Daudt's mother at his Cambridge property, but Daudt never argued in court that the suits should be thrown out for that reason.

MPR News examined debt collection judgments entered on behalf of Capital One from January through June 2015. Of the nearly 650 cases reviewed, only four were vacated, including both of the cases covering Daudt. More than 500 are still active with the debt judgments hanging over the delinquent parties, and another 100 were ultimately satisfied. The rest were settled or dismissed before a ruling.

In the two cases besides Daudt's that were vacated, both defendants filed for bankruptcy protection, prompting collectors to back off.

Messerli & Kramer handled virtually all of the Capital One cases in Minnesota's courts.

No one from the firm's lobbying or debt collection wings returned messages Monday despite repeated requests from MPR News.

Messerli & Kramer is a recognized Twin Cities law firm that has many practice areas, from family law to collections to government relations. At the Capitol, it's a lobbying powerhouse with clients such as tech giant Apple, tobacco conglomerate Altria, retailer Best Buy, baseball's Minnesota Twins and a number of local governments.

This session it will be representing St. Paul in its pursuit of a new pro soccer stadium, after having previously worked directly for the Minnesota United soccer franchise.

In the cases last March, Daudt is officially listed in the court register as representing himself. But correspondence in the court file from Messerli & Kramer attorneys to court officials note a carbon copy was sent to LeBeau.

Daudt isn't the first lawmaker to turn to a lobbyist directly for legal help or use a law firm known for its lobbying presence. For example, Sen. Jeff Hayden, DFL-Minneapolis, did so when fighting ethics charges, and to negotiate a settlement over expenses he claimed at a troubled nonprofit. Republican Rep. Denny McNamara used LeBeau during an ethics proceeding last summer.

Rep. campaign comm. paid law firm in 2015.
Campaign finance reports show that the House Republican Campaign Committee paid the law firm of Jacobson, Magnuson, Anderson & Halloran nearly $21,000 during 2015.
Campaign finance reports

In 2015, the House Republican Campaign Committee paid LeBeau's firm nearly $21,000 for legal services.

LeBeau declined to comment Monday on Daudt's legal situation, including who was paying him and how much his services cost.

Kurt Daudt
Kurt Daudt, R-Isanti, checks out the House chamber at the state Capitol on December 17, 2010, as a freshman Republican member of the House from District 17A.
Nikki Tundel | MPR News 2010

At 42, Daudt rose like a rocket through the political ranks. He managed an unsuccessful gubernatorial campaign for then-House Minority Leader Marty Seifert in 2010. That same year, the Isanti County commissioner won his own seat in the House. After only a single two-year term, Daudt's colleagues elevated him to minority leader. He became speaker when Republicans reclaimed the majority in 2014. He has been mentioned as a potential candidate for governor two years from now.

When he arrived in St. Paul, Daudt left his job in the business office at a local car dealership, fearing he wouldn't be able to devote the time. He now lists his occupation solely as "legislator" on his required economic disclosure form on file with state campaign regulators.

Minnesota legislators are considered part-time, though most put in full-time hours when the Legislature is in session, and then devote countless hours to constituent work or campaigning other times of the year. They're paid $31,140 a year — a salary that hasn't risen since 1999 — as well as daily living allowances when they're at the Capitol. As a legislative leader Daudt earns an additional $12,456. House members can also take $66 in daily allowances.

Until January, Daudt listed his only property holding as a Cambridge home where he is named on the mortgage and is up-to-date on his taxes. Days before signing his court affidavit in January, he amended an economic disclosure form to list two other parcels in Stanford Township, which is just outside Zimmerman.

Daudt is part owner of a farm outside Zimmerman.
A farm outside Zimmerman, in Isanti County, is partly owned by Daudt and has several homes on the property, March 7, 2016. Property taxes for two of the tracts of land were overdue.
Brian Bakst | MPR News

The land is associated with the address he calls home and is on property where his brother also has a home, valued at $311,100 by local assessors. Isanti County records show the tracts of land in the lawmaker's name are worth $2,400 and $1,700 respectively. County tax reports showed Daudt hadn't paid 2015 taxes on either parcel, which would have cost him a combined $68. With penalties, he paid about $141 on Monday evening.

Daudt has a mortgage on a home in Cambridge.
On Spectacle Lake in Cambridge, Daudt has a mortgage on a home which he says is his mother's residence, March 7, 2016.
Brian Bakst | MPR News

According to Daudt's affidavit, his mother lives in the Cambridge home where he is on the mortgage. That has an assessed value of $172,000; he is current on those taxes. In fact, records show he paid hundreds more in taxes than was due on that house in 2013 and 2014, for which he later got a refund.

The property that Daudt lists as his official residence matters: The Zimmerman address puts him within his House district, whereas the Cambridge home is in another legislative district.

MPR News reporter Mark Zdechlik contributed to this report.