The city of Burlington, Kan., and two local residents gave businessman Orvin Nordness Jr. almost $400,000 to build a plastic pallet plant there. But federal officials say Nordness took the money and ran.
Now, Nordness faces five years in jail without parole after pleading guilty Feb. 17 to mail fraud for his role in the project. He will be sentenced May 17 in U.S. District Court in Topeka, Kan., according to a Feb. 17 news release from U.S. Attorney Eric Melgren. The federal charge resulted from Nordness' use of U.S. mail and interstate wires.
Burlington city attorney Steve Smith personally loaned Nordness $106,000 to finance the proposed pallet plant.
``Looking back, I should have known better,'' Smith said by phone Feb. 19. ``But we were trying to get a business established for the city.
``I basically have no hope of getting that money back.''
Smith loaned the money to Nordness in early 1998, with local newspaper owner Glen German loaning Nordness $60,000 at the same time. In late 1997, Nordness received an economic development loan of $175,000 from the city of Burlington.
In each of those cases, Nordness pledged 80,000 shares of stock in another company as collateral.
In September 1997, Nordness formed NtecH LLC, a proposed maker of plastic pallets. Nordness soon changed the company's name to NtecH Plastics LLC. He was working with area resident Ron Hale, who had devised a method of making plastic pallets that used wheat straw as a raw material, according to Burlington city clerk Dan Allen.
Allen said Hale had worked in plastics in the Wichita area and had sold his house to finance the proposed venture. The plant was to supply pallets to Anheuser-Busch Inc. and other customers and would have created about 100 jobs.
Nordness ``got the money, but there was never a spade of dirt turned,'' Allen said.
When reached at his home in Madison, Wis., Nordness said the technology that Hale had developed for the pallets was ``not appropriate.''
``When you make products out of recycled plastics, they lose certain properties,'' Nordness said. ``In the testing we had done, we found you couldn't use this material.''
Nordness declined to comment on other aspects of the case. Hale could not be reached for comment.
According to Allen, Nordness never made any payments on the loan he received from Burlington, a city of about 3,000 located 60 miles south of Topeka. Interest on the loan has pushed the total amount Nordness owes the city to almost $201,000.
Work never began on the plant, Allen said, although blueprints were drawn up and the city bought an 11-acre parcel where Nordness was to build the plant.
Later in 1998, Burlington's bond lawyers attempted to foreclose on the loan, only to find out that Nordness did not own the shares he had claimed to own.
According to Smith, Nordness previously was involved in a similar deal relating to a brewery in Key West, Fla. Nordness declared bankruptcy in Wisconsin last month, according to Smith.
Smith said he last spoke with Nordness in 2000 when Smith had to repossess a sport utility vehicle that Nordness had leased for business purposes for the never-built plant.
Nordness is free on a $100,000 bond, according to U.S. Attorney spokeswoman Kena Rice.