State v. Sterling W. Kienbaum

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
March 25, 2026
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2024AP1758 Cir. Ct. No. 2017CF124

STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II

STATE OF WISCONSIN,

PLAINTIFF-RESPONDENT,

V.

STERLING W. KIENBAUM,

DEFENDANT-APPELLANT.

APPEAL from an order of the circuit court for Fond du Lac County:
TRICIA L. WALKER, Judge. Affirmed.

Before Neubauer, P.J., Gundrum, and Lazar, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).
No. 2024AP1758

¶1 PER CURIAM. Sterling W. Kienbaum appeals a circuit court order
denying his WIS. STAT. § 974.06 (2023-24)1 motion for plea withdrawal, a new
restitution hearing, sentence modification, or resentencing. Kienbaum argues the
State improperly withheld evidence pertaining to the amount of loss his victim
suffered and therefore he should be permitted to withdraw his plea, be relieved
from his restitution stipulation, or receive sentence modification or resentencing.
We reject Kienbaum’s arguments and affirm.

BACKGROUND

¶2 This is the second time this case is before us. Kienbaum and others
engaged in a fraudulent scheme whereby Kienbaum’s company, which sold scrap
metal by the pound, would fill scrap automobiles with extra weight, sell them to
Sadoff Iron and Metal (“Sadoff”), and then remove the added weight. The State
originally charged Kienbaum with racketeering and five theft counts. The
fraudulent seven-year scheme netted Kienbaum millions.

¶3 Pursuant to a plea agreement, Kienbaum pled no contest to one
count of racketeering and one count of theft. In exchange, the State moved to
dismiss and read in the remaining charges, and the parties were free to argue an
appropriate sentence. A multi-day restitution hearing was scheduled before
sentencing.

¶4 After the first day of restitution testimony, but before any financial
experts testified, the State and Kienbaum adjourned for negotiations. They
returned to court one day later and advised that they had reached a stipulation.

1
All references to the Wisconsin Statutes are to the 2023-24 version.

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Specifically, in exchange for Kienbaum prepaying $6 million in restitution before
sentencing, the State would agree to recommend a sentence of no more than eight
years’ initial confinement. Kienbaum remained free to argue an appropriate
sentence.

¶5 The parties also advised the circuit court regarding Sadoff’s pending
civil action against Kienbaum. Sadoff’s civil litigation counsel advised the court
that Sadoff did not “object to the resolution that’s been reached between the State
and the defendant; however, we don’t believe that the $6 million is the full
measure of damages … [and] we’re not waiving our right to otherwise recover
those damages.” On July 24, 2018, based in part on the “agreement of the parties
as stated on the record,” the court ordered Kienbaum to pay restitution to Sadoff in
the amount of $6 million.

¶6 On August 28, 2018, the circuit court sentenced Kienbaum to prison.
On January 24, 2019, Kienbaum filed a postconviction motion for sentence
modification asserting that his sentence was excessive and that his resolution of
Sadoff’s civil suit pursuant to a confidential settlement agreement constituted a
new factor. Kienbaum filed a copy of the confidential agreement and argued that
no one knew at the time of sentencing that “Kienbaum and his companies would
step to the plate and make a substantial financial commitment to resolve that
[civil] case.” The court denied the motion determining the sentence was not
excessive and resolution of the civil case was not a new factor warranting sentence
modification. We affirmed. State v. Kienbaum, No. 2019AP680-CR,
unpublished slip op. (WI App Sept. 23, 2020).

¶7 In July 2022, Kienbaum filed the underlying WIS. STAT. § 974.06
motion for plea withdrawal, a new restitution hearing, sentence modification, or

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resentencing. The motion was based on Kienbaum’s assertion that Sadoff
“knowingly used inaccurate measures of the loss it incurred as a result of this
crime to artificially inflate its restitution award and to increase the financial and
criminal liability of Kienbaum.”

¶8 Broadly, Kienbaum’s allegations related to an opinion that Sadoff’s
expert, Scott Shaffer, included in his September 21, 2016 damage report. Shaffer,
a forensic accountant, was retained by Sadoff to quantify the damages Sadoff
suffered as a result of Kienbaum’s fraudulent actions. Shaffer also testified at
Kienbaum’s preliminary hearing on behalf of the State. In his 2016 report,
Shaffer’s ultimate damage conclusion was calculated

by comparing the gross profit percentage earned during the
Damage Period to Sadoff’s average gross profit percentage
earned from June 2015 through July 2016 (“Post-Damage
Period”). This comparison quantifies the difference
between the profit percentage earned while Sadoff was
overpaying [Kienbaum’s] Entities and the profit percentage
earned after Sadoff stopped purchasing from [Kienbaum’s]
Entities.

Using this method, Shaffer calculated Sadoff’s damages to be $14,324,495.

¶9 Shaffer also included in an appendix to his report three “Sanity
Checks.” He testified these were other ways of looking at damages and a way to
check the validity of his gross-profit damage number. Shaffer explained the first
sanity “check was to look at the material costs as a percentage of sales during the
period the alleged fraud was taking place and compare it to the material costs as a
percentage of sales after the alleged fraud was taking place.” Under that approach,
Shaffer calculated damages to be $15,650,110.

¶10 Shaffer’s next sanity “test was to look at the fluff yields[,] …
meaning the amount of waste as a percentage of total input into the shredder, the

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amount of waste during the alleged fraud was higher, as a percentage, than the
amount of waste after the alleged fraud.” Under that approach, Shaffer calculated
Sadoff’s damages to be $15,872,985.

¶11 Finally, and at issue in this case, Shaffer participated in a
demonstration he called the “Shredder Observation” sanity test. In this test,
Shaffer and others, including Donald Krueger, who was a co-actor in Kienbaum’s
fraudulent scheme, conducted a simulation where they attempted to recreate the
fraud. They weighed ten cars, filled them with one or two bobcat scoops of dirt,
and weighed the cars again. Shaffer’s report included a spreadsheet detailing each
of the ten cars that included each car’s weight before and after the dirt was added.
The spreadsheet also contained a few notes about each car’s simulation. Examples
include: “2 bobcat scoops, trunk filled” or “Metal/Dirt/Rock; [Krueger] said
‘Good load’” or “1.5 scoops of dirt/metal debri[s]; [Krueger] said it looked OK.”
Based on the Shredder Observation, Shaffer estimated the cars were on average
36.9% heavier with the added dirt.

¶12 In Kienbaum’s underlying WIS. STAT. § 974.06 motion, Kienbaum
alleged that he did not learn until Krueger’s sentencing, which occurred
approximately two years after his own, that Krueger had objected to the Shredder
Observation sanity test. At Krueger’s sentencing, Krueger’s counsel told the
circuit court that Krueger had objected to the simulation because the dirt used in
this sanity check contained metal punchings, which made the dirt heavier than
what was used in the fraudulent scheme. Counsel argued that the other
participants to this simulation disregarded Krueger’s complaints. Krueger’s
counsel also asserted that because the dirt in this sanity check was heavier than
what was used in the fraudulent scheme, Shaffer (and Sadoff) had artificially
increased the damage amount.

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¶13 Kienbaum then obtained an affidavit from Krueger attesting to the
comments from his sentencing. In the current postconviction motion, Kienbaum
argued Krueger’s information constituted newly discovered evidence that also
“call[ed] [Kienbaum’s] sentence and restitution obligation into question.” He
argued the State improperly withheld this evidence in violation of Brady.2 He
sought plea withdrawal, a new restitution hearing, sentence modification, or
resentencing.

¶14 The circuit court scheduled a postconviction hearing. In anticipation
of that hearing, the newly-assigned prosecutor began reviewing the case file. The
case file included a transcript of Shaffer’s deposition from the civil case. During
that deposition, Kienbaum’s counsel and Shaffer discussed photographs that were
taken of the Shredder Observation. Specifically, when questioned about whether
there were “bits of recyclable material, metals and the like, was there any of that in
the dirt,” Shaffer testified that he would have to go back and look at the
photographs. Shaffer told Kienbaum’s counsel that the photographs were not used
to form his opinion, they were “strictly just to document the observation.”

¶15 After reading the deposition transcript, the postconviction prosecutor
reached out to Shaffer to request the photographs. Shaffer provided the prosecutor
with the photographs, a video from the simulation, and a two-page handwritten
chart with notes from that day. The prosecutor provided those materials to
Kienbaum.

2
Brady v. Maryland, 373 U.S. 83 (1963).

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¶16 At the postconviction hearing, Kienbaum argued the State
committed another Brady violation by failing to turn over these materials earlier.
He argued these new discovery items bolstered his motion for plea withdrawal, a
new restitution hearing, sentence modification, or resentencing.

¶17 The State disagreed, and it argued the items were not material and
therefore Brady was not implicated. The State also argued that Kienbaum’s
postconviction motion should be denied because Krueger’s objections to the sanity
check were previously known to Kienbaum. The State emphasized that
Kienbaum’s expert had authored a report in anticipation of the restitution hearing
that stated the expert had interviewed Krueger about the Shredder Observation,
and, based on Krueger’s observations, the expert opined the dirt used in the
simulation was too heavy and not a proper sanity check.

¶18 Following an evidentiary hearing, the circuit court denied
Kienbaum’s postconviction motion. The court first determined that Kienbaum
knew of any issues with Shaffer’s sanity check. It cited Kienbaum’s expert’s
report and the specific passages that had critiqued Shaffer’s sanity check. The
court also observed that the Shredder Observation was simply a check on Shaffer’s
estimation of damages. This check was not the ultimate value conclusion. As to
the photographs, video, and handwritten notes from the sanity check, the court
concluded there was no Brady violation because these items were not material. In
support, the court again observed that these items related to the sanity check,
Kienbaum was already aware of the issues with this sanity check, and this sanity
check was not an independent valuation method.

¶19 Because the circuit court determined the information was not newly
discovered evidence and there was no Brady violation, the court denied

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Kienbaum’s request for plea withdrawal, a new restitution hearing, and sentence
modification. As for Kienbaum’s request for resentencing, the court denied his
motion and determined Kienbaum failed to establish the sentencing court relied on
inaccurate information during sentencing. Kienbaum appeals.

DISCUSSION

¶20 Kienbaum renews his arguments on appeal for plea withdrawal, a
new restitution hearing, sentence modification, or resentencing. We address each
in turn.

I. Plea Withdrawal

¶21 “After sentencing, a defendant who seeks to withdraw a guilty or no
contest plea carries the heavy burden of establishing, by clear and convincing
evidence, that withdrawal of the plea is necessary to correct a manifest injustice.”
State v. McCallum, 208 Wis. 2d 463, 473, 561 N.W.2d 707 (1997). Plea
withdrawal is committed to the circuit court’s discretion. Id. We will reverse the
court only if it has erroneously exercised its discretion in denying a plea
withdrawal request. Id.

¶22 On appeal, Kienbaum seeks plea withdrawal on the basis of newly
discovered evidence. He argues that at the time he entered into the plea
agreement, he was unaware that Krueger had not validated the Shredder
Observation sanity check. He also asserts that he did not have the handwritten
notes, photographs, or video of the Shredder Observation. Kienbaum contends
these items are newly discovered evidence and the State violated his right to
exculpatory evidence pursuant to Brady by withholding this information.

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¶23 To warrant plea withdrawal on the basis of newly discovered
evidence, a defendant must show by clear and convincing evidence that:

(1) the evidence was discovered after conviction; (2) the
defendant was not negligent in seeking evidence; (3) the
evidence is material to an issue in the case; and (4) the
evidence is not merely cumulative.

McCallum, 208 Wis. 2d at 473. “If the defendant proves these four criteria by
clear and convincing evidence, the circuit court must determine whether a
reasonable probability exists that a different result would be reached in a trial.”
Id.

¶24 In order to establish a Brady violation, a defendant must show:
(1) the State suppressed the evidence in question; (2) the evidence was favorable
to the defendant; and (3) the evidence was material to the determination of the
defendant’s guilt or punishment. State v. Rockette, 2006 WI App 103, ¶39, 294
Wis. 2d 611, 718 N.W.2d 269. Evidence is material only if there is a reasonable
probability that, had it been disclosed to the defense, the result of the proceeding
would have been different. Id.

¶25 We begin with Kienbaum’s claims relating to Krueger’s revelations
about the Shredder Observation sanity check. We agree with the circuit court that
the evidence surrounding Krueger’s objections to the Shredder Observation was
not newly discovered evidence and was not improperly withheld by the State.
Rather, as recognized by the court, the record reflects that, at the time of the
restitution hearing, Kienbaum’s expert had already worked with Krueger to
develop his critiques of Shaffer’s Shredder Observation.

¶26 Specifically, in anticipation of the restitution hearing, Kienbaum’s
expert authored a report stating, in part, that he interviewed Krueger on April 5,

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2018 and Krueger told the expert that he “was present at and observed
Mr. Shaffer’s ‘sanity check.’” Based on their conversation, Kienbaum’s expert
opined, in part:

The Shaffer Report’s “sanity check” of the purportedly
“excess” dirt / waste contained in [Kienbaum’s] loads is not
representative of actual loads received from [Kienbaum]. I
understand this is because dirt weighed during the testing
came from a different part of Sadoff’s yard. I also
understand there were various metal pieces included in the
test loads which could make the loads significantly heavier
(about two to three times). For example, iron weighs
approximately five times more than loose dirt.

¶27 Kienbaum’s expert report undermines Kienbaum’s current claims
that he did not learn of this information until approximately two years after
sentencing. We conclude that Krueger’s purported new revelations regarding this
sanity check do not constitute newly discovered evidence warranting plea
withdrawal.

¶28 We next turn to Kienbaum’s claims that he should be permitted to
withdraw his plea because the State improperly withheld handwritten notes,
photographs, and a video of the Shredder Observation. The circuit court
concluded that Kienbaum failed to establish this information was material and
therefore no Brady violation occurred. We agree.

¶29 To the extent Kienbaum argues these items show the dirt used in the
Shredder Observation was heavier than the dirt used in the scheme, we have
already determined that Kienbaum knew about these critiques as discussed above.
The withheld information relates only to Shaffer’s Shredder Observation sanity
check. However, Shaffer unequivocally testified that this sanity check was not an
independent valuation method, but rather simply a method to check whether his
ultimate value conclusion, which was based on Sadoff’s books and records, was

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No. 2024AP1758

reasonable. Further, at the postconviction hearing, Shaffer testified that had he
testified at the restitution hearing, his testimony would have been consistent with
his May 1, 2018 updated report and those opinions “did not derive either in whole
or in part from the weighing observation.”

¶30 Because Kienbaum failed to establish that Krueger’s objections to
the Shredder Observation were newly discovered evidence and because Kienbaum
failed to establish that the withheld photographs, video, and notes were material
under Brady, Kienbaum has not demonstrated that he should be permitted to
withdraw his plea in order to correct a manifest injustice.

II. Restitution hearing

¶31 Kienbaum next argues that the circuit court erred by failing to vacate
the stipulated restitution order based on his claims of newly discovered evidence
and Brady violations. However, because we have already determined Krueger’s
revelations regarding the sanity check were not newly discovered evidence, and
Brady was not implicated by any withholding of the photographs, video, or
handwritten notes, it follows that the court did not err by failing to vacate the
stipulated restitution order on these bases.

III. Sentence modification or resentencing

¶32 We next turn to Kienbaum’s claims regarding sentence modification
or resentencing. To be entitled to sentence modification on the basis of a new
factor, Kienbaum must first prove by clear and convincing evidence the existence
of a new factor. See State v. Harbor, 2011 WI 28, ¶36, 333 Wis. 2d 53, 797
N.W.2d 828. A new factor is defined as a fact or a set of facts that is “highly
relevant to the imposition of sentence, but not known to the [circuit court] at the

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time of original sentencing, either because it was not then in existence or because,
even though it was then in existence, it was unknowingly overlooked by all of the
parties.” Id., ¶40 (emphasis added). To be entitled to resentencing, Kienbaum
must prove by clear and convincing evidence that (1) the information presented at
sentencing was inaccurate and (2) the circuit court actually relied on the inaccurate
information at sentencing. See State v. Tiepelman, 2006 WI 66, ¶26, 291 Wis. 2d
179, 717 N.W.2d 1.

¶33 Both of Kienbaum’s sentencing claims are premised on his claims of
newly discovered evidence and Brady violations. Kienbaum argues he is entitled
to sentence modification because “the new evidence presented creates a dynamic
where Mr. Kienbaum was sentenced based upon a misunderstanding of the loss
incurred by Sadoff.” Alternatively, Kienbaum asserts he is entitled to
resentencing because the circuit court relied on inaccurate information during
sentencing, namely “that the scheme in question definitively yielded a $6 million
loss to Sadoff.” Kienbaum argues that if the “newly discovered evidence”
discussed above “had not been improperly withheld, this information would have
helped Mr. Kienbaum rebut the claims against him and to challenge the veracity of
the statements of Sadoff’s staff at sentencing.”

¶34 We conclude Kienbaum is not entitled to sentence modification or
resentencing. As for sentence modification, Kienbaum has not established the
existence of a new factor. We have already determined that Krueger’s revelations
were known to Kienbaum at the time of sentencing and did not constitute newly
discovered evidence. As to the photographs, video, and handwritten notes from
the sanity test, Kienbaum has not established the existence of these items was
highly relevant to the imposition of sentence. See Harbor, 333 Wis. 2d 53, ¶40.

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No. 2024AP1758

This is especially true considering the parties stipulated to the restitution amount
and the Shredder Observation was never used an independent measure of value.

¶35 As for resentencing, Kienbaum has not established that the circuit
court relied on inaccurate information at sentencing. See Tiepelman, 291 Wis. 2d
179, ¶26. During postconviction proceedings, the court found that at the time of
sentencing, “the information in front of the Court is accurate as far as it’s a
stipulation and that stipulation should not be overturned.” We agree. The record
reflects that Kienbaum knew at the time he entered the $6 million restitution
stipulation that his expert had worked with Krueger to offer critiques of Shaffer’s
Shredder Observation sanity test. Because Kienbaum knew of this information,
Kienbaum has not established that his stipulated restitution amount should now be
deemed inaccurate. See id.

By the Court.—Order affirmed.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)5.

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