Cheryl and Scott Peterson in an elevator service room in Jackson, Wis., on Jan. 29, 2015. Cheryl Peterson’s complaint to the state that her company was being unfairly targeted led to a probe that nullified a restriction on Scott Peterson’s ability to service elevators, and to disciplinary action against the state workers who imposed it. Kate Golden / Wisconsin Center for Investigative Journalism
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A state regulatory agency’s investigation into complaints alleging that a non-union elevator service contractor was unfairly targeted led to two state employees being disciplined and two more leaving.

The employees said they acted to protect public safety in restricting the contractor’s ability to service a particular elevator model. But the state Department of Safety and Professional Services, responding to complaints filed with an office created by Gov. Scott Walker to assist small businesses, accused the employees of violating workplace rules and nullified this restriction.

“The department took appropriate steps to review and investigate this complaint,” DSPS spokeswoman Hannah Zillmer said. “The investigation was vigorous and was also done in a manner protecting the rights of the involved employees.”

But Sean Heiser, a field representative at the American Federation of State, County and Municipal Employees Council 24, which represents state workers, said he has heard from other DSPS staff that the way this matter was handled made them “afraid of doing their jobs, for fear of retaliation.”

The investigation took place last spring but case records were only recently released, four months after they were requested, to the Wisconsin Center for Investigative Journalism. The hundreds of pages of documents include transcripts of interviews with the accused workers.

Also included was a recording of a call to one of the workers by a DSPS supervisor and investigator. The employee was not told that the conversation was being taped.

Ensuring competence

DSPS was created in 2011 when the Department of Regulation and Licensing was merged with the Commerce Department’s Safety and Buildings Division. It is headed by Dave Ross, a Walker appointee who pledged early on to “focus on efficiencies and enhanced customer service” in order to achieve the governor’s job creation goals.

The Wisconsin Department of Safety and Professional Services, headquartered in Madison, oversees state rules regarding building safety. Bill Lueders/Wisconsin Center for Investigative Journalism

Walker is now calling for merging DSPS with the state Department of Financial Institutions to create “a one-stop shop for professional and financial services.”

DSPS, which has been faulted for not keeping state codes for new buildings up to date, oversees state rules regarding building safety. This includes ensuring “the safe and competent practice of licensed professionals.”

On May 24, 2013, DSPS received a complaint from Kelvin “Buck” Nord, business manager for the Elevator Constructors Union, Local 15, in New Berlin. It alleged that mechanic Scott Peterson of Elevator Services in Cedarburg lacked the know-how to service the Schindler 3300, an elevator model used in low- to mid-rise buildings.

Elevator Services is available for hire to perform mandatory safety tests and repairs. Scott Peterson is listed as president and his wife Cheryl is chief financial officer.

In response to Nord’s complaint, Rick Merkle, then a section chief of the agency’s Bureau of Field Services, arranged a June 5 visit to a property in Milwaukee to observe Peterson’s performance on the Schindler 3300. This review was done by DSPS inspectors Brian Rausch and Tim Marty.

Rausch’s report said Peterson tried multiple times, without success, to reset this elevator after a given test. But it was unclear whether these difficulties owed to Peterson’s ability or the elevator itself, the report said. A decision was made to give Peterson “another chance” to demonstrate competency.

In the meantime, Peterson was told he could not continue to do safety compliance tests on the Schindler 3300.

Tim Marty of Appleton retired last year from the Wisconsin Department of Safety and Professional Services after being caught up in a disciplinary investigation over an enforcement action. He says he was just doing his job. Photo taken Jan. 26, 2015, in Appleton, Wisconsin.
Dan Powers/Post-Crescent Media

Unionist sent gloating note

A second observed review, or audit, was conducted on the same elevator on June 25. Rausch’s report said Peterson seemed unfamiliar with the equipment, and was “not comfortable” doing a test that while “technically not required” may be necessary for providing service.

Emails show that Rausch debated whether to mention Peterson’s inability to perform this test. David Holmes, lead inspector of the state’s elevator safety program, responded: “Regardless if it is required or not he should know how to do it.”

Rausch’s June 26 audit report said Peterson “has not demonstrated the ability necessary” to test and maintain the Schindler 3300 and continued the restriction on his ability to do so. This decision, it said, was made in consultation with Merkle, Marty and Holmes.

Rausch sent a copy of this report to Nord, who passed it on to a fellow union official with a gloating note: “A little noise results in actions being taken. Mr. Scott (Peterson) is in trouble and … in the next 2 weeks he should be out (of) business and out of our hair. Yahooooooo!! Go get him TIM MARTY!”

This note was attached to a subsequent email that Nord sent to Rausch, saying he was “impressed” with how DSPS handled the matter. The chain was forwarded to Merkle, Marty and Holmes.

Nord, in an interview with the Wisconsin Center for Investigative Journalism, said the state never asked him about this email, which he argues was meant as a joke to the other union official, who knew Nord and Marty “didn’t get along.” He believes the DSPS workers “did their job” in writing Peterson up, adding that some union contractors also lack the skills to service the difficult Schindler 3300.

Cheryl Peterson, in a Center interview, said the Schindler 3300 used in the audit tests was the only such elevator in their company’s portfolio, and that it stopped servicing this elevator after receiving Rausch’s reports.

In October 2013, the records show, Merkle emailed the Petersons, saying he wanted to “review your inspection process for the Schindler 3300,” so their company could resume doing this work. Cheryl Peterson replied: “Thank you we will let you know when we are ready.”

The Petersons never followed through on Merkle’s offer. But they were in communication with others in state government.

State probe launched

In February 2014, the records show, Cheryl Peterson complained that her company was being unfairly targeted because it was a non-union operation to Nancy Mistele, director of the state’s Office of Business Development.

The office was created in 2012 by Walker’s Department of Administration to help small businesses cut through government red tape. It proclaims that its success “depends on business owners who point out the rules that are negatively impacting their business.”

Mistele, a one-time Republican candidate for state office, passed this complaint on to DSPS, where she previously worked as an administrator. In March 2014, the agency tapped Bill Searls, its consumer protection supervisor, to investigate. Searls, a former police detective, set to work interviewing sources, including the Petersons.

Several sources told Searls they believed the union was pushing private inspectors to write more code violations, to drum up business for union companies that do maintenance and repairs. Mimi Ziemann, district manager of a non-union elevator inspection company that contracts with the state, also alleged that Merkle had falsely attributed a minor paperwork complaint against the Petersons to her company, when in fact it came from the union.

Merkle, later asked by Searls about this claim, hotly denied it. “I don’t lie,” he asserted. “I don’t expect anybody to lie for me.”

In late March, Searls was present when Thomas Wightman, administrator of the agency’s Division of Industry Services, called Merkle to ask questions regarding unrelated work issues. Searls’ memo on this “interview” notes that it was recorded, but not that this was done without Merkle’s knowledge or consent.

Searls declined comment on the propriety of this recording. Wightman, who resigned in May, also declined comment.

Zillmer forwarded the agency’s Technology Usage Policy, which instructs employees that they should have “no expectation of privacy” regarding office communications but does not clearly state that their conversations may be secretly taped. Zillmer called the Merkle call “the only employee conversation recorded in the agency’s history.”

Sean Heiser, a field representative for a union that represents state workers, said he has heard from DSPS staff who say the way this matter was handled made them “afraid of doing their jobs, for fear of retaliation.” Robert Allen

On April 21, 2014, DSPS placed Merkle, Marty, Rausch and Holmes on paid administrative leave. Over the next several days, these workers and supervisor Robin Zentner were each interviewed for more than two hours by Searls, a DSPS lawyer and a human resources official. A court reporter was present and produced transcripts.

The five targeted workers collectively had 112 years of state service, most in the safety arena.

Searls grilled each of the employees regarding the email in which Nord appeared to be gloating over how he was using the state to drive the Petersons out of business. None of them seemed to have paid the email much attention.

“Wow,” said Rausch, who had earlier received and passed on this communication, when it was read to him. But Rausch insisted the enforcement action “stands on its own. If Buck Nord is happy about this, I don’t really care.” He called Peterson’s reviewed performance “a train wreck,” adding, “He had so little comfort with this equipment that it was really troubling to me.”

Rausch said he had no idea why Nord would refer to putting Peterson out of business, as the state’s enforcement action did no such thing. “I care about the safety issue,” he said. “I don’t want to put Scott Peterson out of business.”

Cheryl Peterson said her company has always had a good relationship with Rausch, despite his audit reports, and continues to contact him for advice.

Workers disciplined, restrictions nullified

All of the DSPS employees caught up in the probe disputed having acted to please Nord or because Peterson ran a non-union shop.

“I know when people are taking advantage of me,” Merkle told the investigators, citing his decade of service in the military. “I didn’t just fall off the back of the truck yesterday.” He insisted he was “not a union person” and was motivated solely by concern about Peterson’s aptitude on the Schindler 3300: “If they’re not doing the test correctly, this is a life-safety issue.”

Marty also called Peterson’s inability to perform the test potentially “life-threatening … for the public using that elevator.” He told the Center that DSPS inspectors were just doing their jobs by looking into — and in his view substantiating — Nord’s complaint.

Tim Marty of Appleton retired last year from the Wisconsin Department of Safety and Professional Services after being caught up in a disciplinary investigation over an enforcement action. He says he was just doing his job. Dan Powers/Post-Crescent Media

“A complaint is a complaint,” said Marty, who lives in Appleton. “None of us were on a witch hunt to get rid of this non-union company.”

But Marty did perceive a witch hunt against him. Rather than face disciplinary action, he decided to retire “earlier than I anticipated.” And Merkle resigned, bitterly telling the DSPS team his reputation had been “tarnished.”

At times, the transcripts of the interviews read like interrogations.

Searls, referring to the email chain that included Nord’s gloating message, asked Zentner, “Does this give you concern?” Zentner responded, “Is there anything in there that our employees are referencing anything with respect to union activity?”

DSPS attorney Jeanette Lytle shot back, “Does there need to be for you to be concerned?”

In May, Rausch and Holmes each received three-day suspensions for infractions including negligence, acting in a “reckless, careless or unprofessional manner,” disclosing confidential information, and restricting Peterson’s license using codes that were “not enforceable in Wisconsin.”

Zentner, who agreed that the conduct of others as described to him was “inappropriate,” was not disciplined. Neither was another employee who was flagged in the interviews for routinely missing “numerous things … some of which were obvious” in his elevator inspections.

Merkle, Rausch, Holmes and Zentner all passed up opportunities to comment.

Peterson was never required to do anything else to prove his ability to service the Schindler 3300. According to Zillmer, DSPS concluded that the employees who placed a restriction on his license acted outside of their authority.

“Therefore,” she wrote, “the department considers that restriction to be non-binding, and essentially non-existent.”

Cheryl Peterson said her company recently resumed doing safety checks on the Schindler 3300 elevator in Milwaukee, after being notified by the state that there were no restrictions. But she said “another qualified mechanic” employed by Elevator Services, not her husband, is now doing this work.

“We’re just a small business trying to earn a living,” Peterson said.

The nonprofit Wisconsin Center for Investigative Journalism ( collaborates with Wisconsin Public Radio, Wisconsin Public Television, other news media and the UW-Madison School of Journalism and Mass Communication. All works created, published, posted or disseminated by the Center do not necessarily reflect the views or opinions of UW-Madison or any of its affiliates.

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