The former owner of Menomonee Falls-based Masterlink Corporation was indicted in federal court last week on charges of filing false loan statements for the company.
Bruce Magnuson is accused of filing false financial statements from 2006 until the company went into receivership in 2010, according to the indictment. The financial statements, which greatly inflated the financial stability of the information technology firm, were used to secure a $750,000 small-business loan from M&I Bank in July 2009, the indictment asserts.
Magnuson, 62, has already entered into a plea agreement with the U.S. District Attorney’s Office, according to court documents. Under the agreement, Magnuson would pay $608,098 for the Masterlink loan and another $358,368 for a loan secured by one of his other corporations. Magnuson would also face anywhere from three to four years in prison.
According to the Wisconsin Department of Financial Institutions, Magnuson currently serves as CEO for Cablemaster Corporation in Milwaukee, an electrical wire and cable distributer and manufacturer.
Masterlink Corporation was founded by Magnuson in 1989 and specialized in IT consulting and network integration. The company was named a “Future 50” fast-growing company by the Metropolitan Milwaukee Association of Commerce in 2007, 2008 and 2009.
In July 2009, Magnuson submitted an application for a $750,000 small-business loan through M&I Bank, the indictment states. The loan was dispersed in February 2010 and guaranteed by the U.S. Small Business Administration.
In June 2010, a private consultant hired to assist the company in preparing for receivership discovered that the company failed to disclose a $900,000 liability and overstated fixed assets in its March 2010 quarterly financial statement.
According to the affidavit, Masterlink claimed its March 2010 statement that it had $921,476 in fixed assets, when in fact it only had $94,729. Fixed assets include buildings, machinery and land.
The company also claimed it was owed $2.6 million in its March 2010 statement, when in fact payments due to the company were less than $1 million.
The consultant confronted Masterlink officers and was provided an accurate financial statement. He presented the correct information to M&I Bank officials and Magnuson then admitted that the financial statements were false, the affidavit states.
Masterlink Corporation filed for receivership, a state court proceeding similar to bankruptcy, in August 2010. The company was administratively dissolved in November 2013, according to the Wisconsin Department of Financial Institutions.