Democratic Congressional Candidate Spent Workers’ Paychecks on Self

He’s running to unseat GOP Congressman Jim Sensenbrenner and he claims to have a proven record on job creation. Khary Penebaker, a Democrat from Hartland, Wisconsin, has spent his professional career in the roofing industry and in his free time volunteers for anti-gun groups seeking to curtail access to firearms. But despite his claim that he’s turned a small time business into a respectable employer, court records show that when he served as the president of Penebaker Enterprises he refused to pay workers and used corporate funds to pay for personal expenses, including daycare for one of his children.

“Khary Penebaker has created actual jobs by growing a commercial roofing company from three to fifty employees in a few short years,” declares, the website of the long-shot candidate in Wisconsin’s 5th Congressional District.

Since 1996, Penebaker has worked in the Milwaukee area roofing industry. From 2002 until 2011, Penebaker Enterprises, LLC operated as a roofing company that was affiliated at least for a time with Community Roofing, Inc. according to Penebaker’s LinkedIn page. But while Penebaker boasts of his business acumen and the success of his company in securing several prominent contracts, including the re-roofing of the Milwaukee City Hall, a lawsuit filed against him and his company in 2004 paints a less rosy picture.

Alleging breach of contract, unjust enrichment and theft by a contractor, Tradesman International, a staffing service for various construction trades, sued Penebaker just two years after his company was started claiming the businessman had defrauded them out of $135,934.05. That money was supposed to have been used to pay the very workers Penebaker had hired from the staffing company to work for his business.

It is one thing to create jobs. It is another matter to defraud those workers of their pay.

Despite admitting that he was “robbing Peter to pay Paul,” Penebaker insisted that he was unhappy with the performance of the employees. But that excuse was put to the lie when the court pointed out that he continued to use those employees month after month to complete various jobs. The contract that he had with the staffing company also, according to court records, gave Penebaker the option of laying off specific workers at will if he was dissatisfied with their performance.

Not one of the businessman’s excuses for not paying his workers stood up under the scrutiny of the court, which found:

“Mr. Penebaker’s testimony leads the Court to find that he intended to convert funds that he received on particular jobs for his own use, for use on jobs other than that the funds were received for, or to pay other suppliers in full before paying Tradesman. Mr. Penebaker clearly mixed the funds he received on jobs to pay some of the debt owed on a particular job, but also to pay for personal expenses. Many of the expenses paid out of Penebaker Enterprises, are clearly inappropriate to be within the business account. As such, both Penebaker Enterprises and Mr. Penebaker are liable for the damages listed above. . . .”

The personal expenses Penebaker spent corporate funds on ranged from paying “for his daughter’s daycare” to making payments on his student loans, court documents reveal.

Penebaker’s refusal to pay his company’s workers stretched from January 2003 to May 2003, a five-month period during the second year of his firm’s existence.

Ironically, two vague ideas that Penebaker promotes on his campaign website include a tax credit for small businesses who hire newly graduated workers with student loan debt and a business tax credit for childcare. In some unspecified way the student tax credit is to help “school graduates, so they can immediately get ahead of their student loan debt”. The “childcare-to-business tax credit” is supposed to help “parents to resume their careers as small business owners”. Both of those appear to directly relate to Penebaker’s personal experience of using corporate funds – in this case employee wages – to pay for his own student loan and childcare expenses.

Penebaker Enterprises was administratively dissolved by the state of Wisconsin in 2013 after the company failed to respond to multiple notices warning that it was overdue and delinquent on registration paperwork.

As for Khary Penebaker himself, he’s running around Wisconsin’s 5th District touting his credentials as a job creator. The workers he refused to pay until a court ordered him to may disagree with his self-assessment.

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Brian Sikma

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