Fact Checker

Fact Checker: Ad attacks Ernst challenger Theresa Greenfield's business record

Democratic U.S. Senate candidate Theresa Greenfield speaks Nov. 2, 2019, during the Finkenauer Fish Fry at the Hawkeye D
Democratic U.S. Senate candidate Theresa Greenfield speaks Nov. 2, 2019, during the Finkenauer Fish Fry at the Hawkeye Downs Expo Center in Cedar Rapids. (Liz Martin/The Gazette)

This November’s race between incumbent Republican Sen. Joni Ernst and Democrat Theresa Greenfield is expected to be one of the most costly in U.S. Senate history.

National senatorial campaign committees already have reserved more than $35 million in television airtime in Iowa, according to Rollcall.com.

One of the early ads, which started airing less than two weeks after Greenfield won a five-way Democratic primary, is a 30-second commercial by the National Republican Senatorial Committee attacking Greenfield’s record as a businesswoman.

The NRSC claims in the ad:

“Greenfield’s failed homebuilding business ran up millions in debt.”

“Theresa Greenfield’s company was repeatedly sued by homeowners and banks for fraud, shoddy work and not making payments on time.”

“Rottlund Homes shut its doors” and “destroyed Iowa jobs.”

Analysis

As sources for the ad, the NRSC lists a Nov. 18, 2011, article in Builder magazine and a July 5, 2017, profile of Greenfield in the Des Moines Register. Neither article directly bolsters all the claims in the ad and the committee did not return a phone call or email from Fact Checker for more specific sourcing.

The ad focuses on Rottlund Homes, a Minnesota-based homebuilding company where Greenfield worked for more than six years. Greenfield’s LinkedIn profile says she was director of real estate from August 2005 to November 2007 and then director of the Des Moines division from December 2007 to December 2011.

Rottlund went out of business in 2011, one of many homebuilders across the nation done in by the Great Recession. Steve Kahn, then Rottlund’s chief financial officer, told Builder in November 2011 the company would liquidate its assets after failing to reach a deal with banks to fund its operations.

So it’s true Rottlund Homes “shut its doors,” as the ad claims.

The ad’s next claim is that the firm “ran up millions in debt.”

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In a lawsuit filed in Ramsey County District Court in Minnesota in November 2011, three lenders said Rottlund owed them more than $28 million.

News outlets, including Builder and Finance & Commerce, wrote about the lawsuit. CFO Kahn told Builder that because of Rottlund’s significant debt, lenders likely would not recover all the money they’d put into the company. Even if Rottlund repaid some or all of what it owed lenders, the firm did “run up millions” in debt before it failed.

The hardest claim to check is about Rottlund Homes being “repeatedly sued by homeowners and banks for fraud, shoddy work and not making payments on time.” Minnesota court filings haven’t all been digitized, so you can’t view a wide range of petitions to see specific claims against Rottlund.

A call to Minnesota’s Hennepin County District Court turned up a 2010 lawsuit by a suburban Minneapolis condominium association against the Rottlund Company. The Minneapolis St. Paul Business Journal wrote a story about the lawsuit July 18, 2010.

“Members of an Eden Prairie condominium association say builder The Rottlund Co. Inc. is responsible for poor workmanship that caused ‘significant damage and deficiencies’ to the spaces they share with neighbors,” reporter Jim Hammerand wrote.

The case was settled in August 2011, court filings show, but there are no details.

Rottlund Homes is listed as the defendant in 26 lawsuits in Iowa’s Polk County from 1995 to 2013, according to Iowa Court Online, but most of those occurred before Greenfield worked for the company. Because Polk County didn’t digitize records until the early 2010s, Fact Checker can’t look at the allegations in many of the suits.

The National Republican Senatorial Committee’s last claim is that Greenfield’s former employer “destroyed Iowa jobs.” The committee didn’t respond to the Fact Checker, which would have asked “which jobs?” If the committee means the jobs of Rottlund employees working in the Des Moines area, that’s likely true — Greenfield’s own job was eliminated.

Conclusion

It’s important to consider what was happening in the world when Rottlund Homes went under. After the housing bubble in 2006, home prices started to decline and kept falling for several years. That sparked the Great Recession, which caused thousands of foreclosures, plunging home prices and “dozens of builders” to close operations or merge, Builder magazine reported April 29, 2018.

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Graded a C

It’s hard to know what share of Rottlund’s failure was due to market forces and what was due to poor business decisions. It’s also hard to know whether Greenfield, manager of the Des Moines division, had influence over what was happening at the corporate level.

The ad says that Rottlund Homes was “her company.” When most people hear those words they might think she was the founder or chief executive officer, but she was neither.

The NRSC’s claims about Rottlund Homes are largely true. The company did close its Des Moines office and shut down all operations without paying some creditors. The Fact Checker found some evidence the company was sued for shoddy workmanship and late payments, but not fraud. And many of those lawsuits stemmed from the company’s actions before or after the six years she spent at Rottlund.

We give the ad a C. While most of claims are accurate, they put responsibility on Greenfield without also proving her culpability.

Criteria

The Fact Checker team checks statements made by an Iowa political candidate/officeholder or a national candidate/officeholder about Iowa, or in ads that appear in our market.

Claims must be independently verifiable.

We give statements grades from A to F based on accuracy and context.

If you spot a claim you think needs checking, email us at factchecker@thegazette.com.

This Fact Checker was researched and written by Erin Jordan of The Gazette.

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We value your trust and work hard to provide fair, accurate coverage. If you have found an error or omission in our reporting, tell us here.

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