Alisa M. Schafer

USA TODAY NETWORK-Wisconsin

MANITOWOC – A Manitowoc business owned by James A. Nickels was ordered to pay $3.6 million in restitution to its investors after the state Department of Financial Institutions found the business had violated several laws, including selling promissory notes as a Ponzi scheme.

The final order from the department was served Dec. 9 after an investigation of Fiscal Concierge, LLC, revealed Nickels had sold promissory notes totaling approximately $4 million to at least 35 investors and none of the notes had been registered with the state Division of Securities.

According to the document from the DFI, the promissory note terms promised investors annual returns, paid in monthly installments, of at least eight percent for the duration of one year and the note could be renewed on an annual basis.

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The document stated: “Division staff analysis of Fiscal Concierge’s bank records and business records show that the company has never been a profitable business at any time and that Nickels and Fiscal Concierge have never been able to make principal or interest payments to earlier investors without an infusion of additional money from another investor or investors.”

Nickels said that when he started the company, his lawyers never advised him to register the security bonds he was selling to investors, so he was unaware that there could be any consequences from the state.

“We are now working on a plan to resolve these issues,” Nickels said. “… These are wonderful people and I deeply regret what has happened.”

Nickels, uncle to Manitowoc Mayor Justin Nickels, founded Fiscal Concierge in July 2006 as a third-party bill-pay service provider that uses access to a customer’s checking account to make payments of any bills the customer wishes the business to handle for a monthly payment of up to $60.

Fiscal Concierge’s average annual revenue from 2010 to 2015 was $7,774, and its annual expenses averaged about $450,000. In addition to those expenditures, the DFI reported that Nickels withdrew about $170,000 annually for personal expenses.

Nickels’ registration as a broker-dealer agent had undergone revocation proceedings from the Division of Securities in June 2006, prior to creating Fiscal Concierge. The resulting agreement ordered Nickels to be suspended for 90 days and he had agreed not to re-enter the securities business in Wisconsin.

Nickels started selling promissory notes through Fiscal Concierge in May 2007. According to the DFI, Nickels did not disclose his disciplinary history, settlements or pending litigations in a marketing packet he distributed to at least 13 of his investors, which violates state statute.

The DFI also states that Nickels claimed to never miss an interest or principal payment to his investors, even after missing an interest payment in October 2013. As of Oct. 21, the date of the initial DFI order, at least 31 investors who currently hold promissory notes issued by Fiscal Concierge had not received timely interest payments since May 2016.

According to the DFI order, seven of the noteholders have died since 2007. One of those investors was Nickels’ mother, Audrey, who died April 2015.

There are open lawsuits from the Estate of Audrey Nickels and two other estates of deceased investors suing Nickels and Fiscal Concierge for the money he owes them from the security bonds.

Dave Nickels, James Nickels’ brother and a Manitowoc County Supervisor, has been representing their mother's estate and said he was not aware of any efforts from Fiscal Concierge to resolve the $162,700 owed to the estate by Nickels and Fiscal Concierge.

In addition to the restitution owed to the investors, Nickels also was fined $50,000 for violations committed against investors. The order also calls for Fiscal Concierge to cease and desist any further offers or sales of securities until they qualify as covered securities or are registered per state statute.

Gregory Anderson, an accountant with Ihlenfeld, Skatrud & Anderson, Inc. in Manitowoc, also was named in the order as being involved with the various violations. Anderson was hired by Nickels to perform accounting and tax preparation services for Nickels and Fiscal Concierge.

The DFI stated that despite Anderson’s knowledge of the financial condition of Fiscal Concierge, he solicited at least 27 clients of Ihlenfeld, Skatrud & Anderson, Inc. to invest in promissory notes issued by Fiscal Concierge. For his involvement, Anderson was fined $25,000 by the DFI.

According to the DFI order document, Nickels, Anderson and Fiscal Concierge have until Jan. 8 to resolve the fines and restitution payments.

Alisa M. Schafer: 920-686-2105 and aschafer@gannett.com