Winnipeg Free Press - PRINT EDITION

Katz 'just doesn't get it' in shell-company saga

Mayor rejects suggestion purchase, resale unethical

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Mayor Sam Katz wants to dismiss any suggestion he has business dealings with Winnipeg's chief administrative officer.

On Thursday, Katz said he sold an Arizona shell company -- Duddy Enterprises -- back to Phil Sheegl, the city's top bureaucrat and his close friend, to end criticism over the corporate transaction. The mayor said there was never a conflict of interest.

"That's not a business relationship. We don't have any business together," Katz said Thursday. "I don't have any businesses other than the ones you and everyone else knows about."

Arthur Schafer, professor at the University of Manitoba's Centre for Professional and Applied Ethics, said the mayor doesn't understand public-service ethics: "He just doesn't get it."

Katz bought the shell company from Sheegl on March 29 for $1. In September, the sale prompted questions about his personal and business dealings with the city's CAO and their activities in Arizona.

Katz declared he was a victim of a "witch hunt" and said there was nothing untoward about the purchase. Both Katz and Sheegl later conceded the sale was not a good idea due to the optics, and the mayor called the experience a "valuable lesson learned."

Ten days later, Katz sold the company back to Sheegl.

If he had kept the shell firm, Katz said the media would've continued to report about it. He said he didn't want the grief and aggravation, so he sold it back to Sheegl to bring "closure" to the matter.

The resale of Duddy Enterprises came one month after Katz was forced to answer questions about his activities in Arizona, when it was revealed he acquired a home in Scottsdale's upscale Windgate Ranch development from the sister-in-law of Sandy Shindleman, the head of Shindico Realty. Katz defended the purchase, but declined to answer questions about how long he's lived there or why the tax bill was sent to his Winnipeg home the year before he took possession of the property.

The mayor has bought and sold several Scottsdale properties over the last decade, but has refused to disclose how often he travels there, calling it a personal matter.

In 2002, prior to being elected, Katz sold a 50 per cent interest in his Raintree Drive condo to Sheegl's Winnix Corporation. Sheegl's company put $85,000 cash down to acquire the interest in the Scottsdale property.

Katz has not said whether Duddy Enterprises ever had assets. When asked to clarify the nature of Duddy Enterprises' past business activities, he said: "You'd have to ask somebody else about that, because somebody else had that a long, long time ago."

"I got a clean company is all I can tell you and I gave it back the same way," Katz said.

Sheegl declined to be interviewed by the Free Press on Thursday.

Three days before Katz purchased the shell company, Duddy Enterprises was listed as an investor in WinWin Company -- an Arizona corporation owned by Sheegl -- which previously bought and sold vacant property in Scottsdale. Arizona company records show Sheegl terminated WinWin on March 26, 2012.

Sheegl is a business partner in at least eight different Arizona companies, public records show.

Ethicist Shafer said Katz has failed to keep his private interests separate from the city's.

He has demonstrated poor judgment that has blurred the roles and accountability that should exist between a mayor and the city's top administrator, he added.

"He doesn't understand that it looks bad because it is bad, so he keeps repeating the same mistakes."

What does Duddy do?

Duddy Enterprises LLC was first incorporated in Arizona in late 2002. It was an investor in WinWin Company until the corporation dissolved on March 26, 2012.

WinWin Company was an Arizona-based corporation owned by Phil Sheegl.

In 2000, Maricopa County records show WinWin purchased a parcel of vacant land from Winnix Properties, another one of Sheegl's Arizona-based companies. An affadavit of value filed with the Arizona Department of Revenue regarding the sale shows both companies are registered to Sheegl's Winnipeg address. However, it states the buyer and seller are not related.

WinWin bought the land from Winnix for $1.1 million with $439,098 cash down.

In 2004, WinWin sold a piece of vacant land in Scottsdale to another company for $2.3 million. Records do not clarify whether this is the same plot of vacant land WinWin purchased in 2000.

-- source: Arizona Corporation Commision/Maricopa County Recorder documents

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Republished from the Winnipeg Free Press print edition October 19, 2012 A4

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