Ron The Cop

A lie told often enough becomes the truth.

March 18th, 2009

RTC on Jay Olsen not guilty verdict


RTC AKA RBT returns from the “undead” and posts the following comment in the S-R Blog “A Matter of Opinion” re the not guilty verdict in the Jay Olsen Spokane PD shooting case.  For newer readers RBT was banned for life from S-R blogs by former S-R Editor Steve Smith for his incessant ankle biting re the RPS bond fraud and the related Savage manslaughter case.  I was only seeking the truth ala Lt. Columbo and Smith finally had to drop the axe as the truth was leaking out adverse to the interests of the S-R’s owners.


Nice to see you’re back in town. Just a little perspective from my point of view. I haven’t spoken with anyone inside the PD on the Olsen shooting. I’ve just read the S-R reports and listened to Mark Fuhrman when his show was on.

Olsen was way out of line re police policy/procedure and tactics. If the jury had decided to hold him to the level of a police officer they should have convicted at least for “reckless endangerment.” Without sitting in court and hearing the evidence I’m speculating the defense was able to convince the jury to hold Olsen accountable to the standard of an ordinarily citizen. Of course the testimony of the dispatcher saying Pete admitted to taking the car gave rise to some reasonable doubt (Mind we have another tape missing). It then comes down to state of mind of Olsen and what he believed Pete was doing that caused him to be in imminent fear for his life. The defense apparently was able to sway the jury in this direction. The jury is what the jury is and whether good or bad brings the perspective of ordinary citizens into our criminal justice system.

In my 35 year tenure as a police officer we lost six officers alone from gunshots. This is not to mention many more from surrounding agencies. Hesitation can kill. On the other hand Olsen did not display good tactics and judgment that somewhat precipitated the events.

Don’t get me wrong the Spokane PD is in need of major reform but from what I’ve seen the majority of street cops I’ve seen are hard working and trying to do a difficult job for many different constituencies. If there is anyone to find fault with I would look at the County Prosecutor’s Office for not making a compelling case in front of the jury. You are very well aware of my concerns re this office involving another manslaughter case that they are currently dithering on whether to file.


S-R Columnist Doug Clark has this column up today.  I posted this comment in the discussion thread:

Chef Gus,

I couldn’t agree more. County Prosecutor Steve Tucker is an elected County official. The prosecutor in this case is an employee of and responsible to Tucker. The Board of Commissioners has no authority over Tucker other than approving his budget. Tucker is elected to office because no other credible candidate have chosen to run against him. Tucker has been backed by the S-R twice so far when running for office. I’m told on most days you can have an audience with Tucker at the 19th hole of the Downriver Golf Course or The Globe. Doug has commented on Tucker’s activities in the past. Does that give you some insight:-)

I posted a related comment in Camden’s thread the other day and will post as a separate comment here as it is relevant. In the meantime here’s an email I sent to Doug Clark re his assessment of the prosecutor and my opinion of Tucker’s job performance



I don’t know if you saw my post at “A Matter of Opinion” but sometimes we do think alike:-). As you are aware there is another important case that the Co Prosecutor’s Office is currently dithering on. Steve Tucker has sought a limited review of this case by the State AG. I’m smelling a setup here and will post an analysis later. Bottom line is no one has done the underlying criminal investigation that is necessary. Key witnesses have not been interviewed. See my followup letter to Sheriff Knezovich and Chief Kirkpatrick ……

Based on my professional experience there is strong probable cause for issuing a criminal complaint. This case needs to go to trial so that a jury can weigh the facts and decide if anyone is guilty of manslaughter. Steve Tucker shouldn’t be allowed to dump this case. Those who have responsibility for doing a criminal investigation are all passing the ball around the bases without throwing the ball to home plate.

March 13th, 2009

Shades of Spokane re political corruption?


[Note: Slightly edited to correct syntax error]

HT Hot Air

Where have we heard this before:-)

Ron the Cop

Maxine Waters intervened with regulators to protect personal investment

posted at 10:48 am on March 13, 2009 by Ed Morrissey
Send to a Friend | Share on Facebook | printer-friendly

Rep. Maxine Waters (D-CA) intervened with regulators on behalf of a bank to which she had personal financial ties, the Wall Street Journal reports.  Waters also greased the skids with Treasury to get the bank a meeting it desired.  Waters and her husband own as much as $500,000 in OneUnited stock . . .


I just received this comment from Larry Shook an award winning investigative reporter on a related note re the nomination of Michael Ormsby to US Attorney for the Eastern District of WA.  This all goes to the credibility of those whom we choose to govern.  From my street cop mentality there are folks from both sides of the aisle that need to go to jail.  And I wouldn’t overlook folks at the SEC who were asleep at the switch for a decade for unk reasons after receiving prior ample warnings of  Madoff’s $50B Ponzi scheme.

Ron the Cop



I see in today’s Wall Street Journal that President Obama’s approval ratings have dropped substantially since he took office. ((“Obama’s Poll Numbers Are Falling to Earth,” p. A11). “The president’s approval rating is below George W. Bush’s in the same period of 2001,” note the authors of this opinion piece. Mike Ormsby epitomizes the spectacular corruption that has sucked the U.S. and global economy through a worm hole toward some part of the financial/economic/political universe we can’t now know. The evidence recently provided the Obama administration by former mayor Talbott, former councilwoman Rodgers, former sheriff Bamonte, and award-winning journalist Tim Connor proves this. As Mr. Connor has said, appointing Ormsby to be a U.S. attorney would be like installing Bernie Madoff as Treasury Secretary. If President Obama approves Ormsby’s nomination to be U.S. attorney for Eastern Washington, I fear it will portend disaster for the Obama administration–and for a global community that desperately needs his administration to succeed and govern capably. Let’s hope our new President is at least well enough qualified for office to avoid a fiasco like this. The evidence is simply overwhelming that Ormsby, and his many co-conspirators in the $100 million public funds River Park Square fraud should be wearing orange jumpsuits, picking up cigarette butts along country roads. God help us if President Obama allows Ormsby and his ilk into public office. Anyone wishing to review the case against Ormsby can contact Tim Connor at the email address above. I’m sure he would be happy to share the letter Mayor Talbott, Councilwoman Rodgers, Sheriff Bamonte and he recently sent to President Obama [Note: letter is posted here].  Anyone wishing a quick orientation in the corruption in which Mr. Ormsby remains a central figure can see “Deathtrap” at All recipients of this email are free to circulate it as they choose.

Best wishes, Larry Shook



Larry Shook wrote back re the SEC also turning a blind eye on the Cowles RPS bond scam in Spokane, WA:

Thanks, Ron.

Re the SEC’s culpability, I still have the tape of the 8/31/98 Spokane City Council meeting at which Pennsylvania attorney Mark Schwartz presented to the council the RPS complaints he had filed with the SEC and IRS. By simply acting on Mr. Schwartz’s complaints–in other words, doing their jobs–these agencies could have prevented the RPS financial fiasco, and perhaps the 4/8/06 death of Jo Ellen Savage in the RPS garage. Mr. Schwartz, of course, has a national reputation as one of America’s foremost authorities on the corruption that has long plagued the municipal bond industry. As our current crisis shows, unchecked public corruption is one of the deadliest enemies this nation faces. By the way, I think the Madoff Ponzi scheme is now estimated at $65 billion, and I understand Justice seeks to recover well over $100 billion.


For those interested in reading a succinct summation of the RPS bond fraud as led by the Cowles Co (Owner of the Spokesman-Review and the RPS mall and parking garage) and the direct involvement of US Attorney nominee Michael Ormsby in this bond fraud, read the letter that Tim Connor (investigative journalist), Cherie Rodgers (Former Spokane City Council member), John Talbott (Former Spokane Mayore), and Tony Bamonte (Former three term Sheriff of Pend Oreille County, WA and nationally known for solving the longest active murder case in the US – Breaking Blue) sent to President Obama in opposition to Obama’s selection [ See excerpt below].  As Shook noted Connor retorted:

As Mr. Connor has said, appointing Ormsby to be a U.S. attorney would be like installing Bernie Madoff as Treasury Secretary.

And lets not forget this political corruption in my opinion directly led to the horrifying death of Jo Savage in the RPS parking garage in 2006.  The statute of limitations on this case will toll on April 8, 2009.  Spokane County Prosecutor [Steve Tucker] is still dithering whether to file manslaughter charges in this case.  As Sheriff Bamonte and I have said on multiple occasions, it is our independent opinions that the facts and circumstances surrounding the Savage death amount to a 1st Degree Manslaughter under WA state law with the owners of the RPS parking garage being the principal suspects.  It is our belief Savage case needs to be filed and go to trial.  A jury should decide the guilt of the parties involved and not be brushed aside by a prosecutor that can be politically swayed by the Cowles.  See the very damning archive photo below from the S-R that is direct evidence that the owners of the RPS parking garage knew  of this imminent public hazard and failed to act over some FIFTEEN years until Savage fell to her death after one of these parking barriers failed in a similar manner. The S-R Editor Gary Graham attempted to kill this photo on Shook’s Girl from Hot Springs website two days ago.

And finally let it be known to all involved that have chosen to ignore their oaths of office and responsibilities to the citizens of Spokane that I’m as serious as a “heart attack” that I fully intend to bring a civil class action RICO lawsuit to root out this political corruption in Spokane:

. . . That question goes to the second reason Wright says he planted the seed of RICO: he wanted to telegraph his own plans. He quotes from the Civil Recourse section of RICO under USC 1962: “Section 1964 (c) permits any person whose property or business has been injured by a RICO violation to recover treble damages, plus costs of the suit and reasonable attorneys’ fees.”

“I have now documented that I have made multiple requests of law enforcement and government officials to do their jobs and properly investigate the evidence of RPS-related crime that I have provided them,” says Wright. “I’ll give them a chance to do their jobs. Because of the statute of limitations on Savage’s death, they don’t have much time left. If they don’t do their jobs, I intend to bring a civil RICO action against the perpetrators of River Park Square, which includes every complicit public official. I’m now in the process of searching for representation from a major class-action law firm.”

[Complete text of letter is posted here]

March 9, 2009

President Barack Obama
The White House
1 600 Pennsylvania Avenue
Washington, D.C.20500

Senator Harry Reid
Majority Leader, U.S. Senate
522 Hart Senate Office Building
washington, D.c.20510

Senator Patrick Leahy
Chairman, Senate Judiciary Committee
433 Russell Senate Office Building
Washington, D.C.20510

Dear President Obama, Senator Reid, and Senator Leahy:

As citizens and former elected otficials from Eastern Washington we are writing to request that Mike Ormsby’s name not go forward for confirmation as the next U.S. Attorney for the Eastern District of Washington.

Because of his central involvement, over a three year period, in the fraudulent River  Park Square garage transaction, Mr. Ormsby’s appointment would be a serious mistake both for Eastern Washington and the nation. At a time when it’s vital that the Justice Department send a message that it will not tolerate private fraud and public corruption, Mr. Ormsby’s appointment would send the opposite message.

Given the well-documented facts about the River Park Square garage fraud and Mr. Ormsby’s role in organizing and facilitating the debacle, and the fact that he was publicly accused by the IRS Office of Professional Responsibility of unethical conduct barely a year ago, it’s stunning that he was nominated for a U.S. Attorney’s position.


Public corruption was at the heart of the River Park Square transaction. The beneficiary  was the Cowles family, which publishes Spokane’s only daily newspaper, owns its NBC- TV affiliate, and has vast private holdings in the Spokane-area, including valuable real estate in the City’s downtown core. . .

Former garage manager Rex Franklin secures damaged portion of barrier at RPS garage after vehicle impact (Dan Pelle file photo/ March 11, 1991)

Former garage manager Rex Franklin secures damaged portion of barrier at RPS garage after vehicle impact (Dan Pelle file photo/ March 11, 1991 – Spokesman-Review)


Michelle Malkin has now weighed in on this debate regarding holding the crooks accountable:

Culture of corruption: Banking hypocrite Maxine Waters

March 11th, 2009

BREAKING – S-R Editor Graham attempts to pull damning Franklin photo from Girl From Hot Springs web site

Gary Graham, S-R Editor, emailed Larry Shook of Camas Magazine  requesting that he remove the Franklin photo from the Girl from Hot Springs site for copyright infringement.

Here’s the S-R archive link to the infamous 1991 photo of the then RPS garage manger, Rex Franklin, attempting to restrain one of the many parking barriers that failed.  It was one of these same barriers that failed in a similar manner that caused the death of Jo Savage in 2006 some FIFTEEN YEARS later.  To me when I first saw this photo I immediately recognized it as critical evidence in the Savage manslaughter case.  This photo is direct evidence that this was a serious imminent public hazard, that the owners were well aware and did nothing to mitigate this hazard over the ensuing years (Hinzman engineering report and Franklin sworn depo statement).

The Franklin photo goes to the very heart of the Savage manslaughter case showing the “reckless” intent of the garage owners (Cowles Co and owners of the S-R).  A move to remove this photo now from the public view is very suspicious.  As you are probably aware I‘m on record in my professional opinion that the Spokesman-Review is an instrumentality of an ongoing criminal enterprise/conspiracy to conceal its criminal acts.   If the RPS bond fraud and the Savage death were  reported by a uncorrupted newspaper there would be a clamorous hue and cry of the citizens of Spokane for justice.  An action to remove this photo from the public view borders on evidence tampering which could be considered aiding/abetting the “perps” to conceal this crime.  This copyright infringement notion is nothing more than a sham effort to conceal these crimes from the public which has been the usual MO of these perps to control the flow of information to the public through intimidation, character assassination, and unfair competitive business practices.

For those interested in previous S-R coverage of the RPS bond fraud and the Savage death here are the ongoing coverage links.  The S-R has switched from their old web page to their new “beta” site and as yet these links are not active from the home page:

Old links still active but may not be updated:

Jo Savage death in RPS parking garage:

Stories for RPS  bond fraud:

New URL links to new site.  Not all of the past info/photos are at these new links:

Savage Death

RPS bond fraud

Ryan Pitts, S-R Online Editor, has said when they get the time and the staff they will be moving these links forward.

Ron the Cop

Former garage manager Rex Franklin secures damaged portion of barrier at RPS garage after vehicle impact (Dan Pelle file photo/ March 11, 1991)

Former garage manager Rex Franklin secures damaged portion of barrier at RPS garage after vehicle impact (Dan Pelle file photo/ March 11, 1991 – Spokesman-Review)


Forwarded conversation
Subject: Re: Your unauthorized use of Spokesman-Review photos

From: Larry Shook <>
Date: Tue, Mar 10, 2009 at 9:46 PM

Hi, Gary. Thank you for your email below. In it you inform me that I am in violation of copyright laws by publishing Spokesman-Review photos of Rex Franklin and the exterior of the River Park Square Parking garage at I don’t believe that I am in violation of the law, because these photos are included as evidence in criminal complaints regarding your employers that have been filed with various public officials by former Sheriff Tony Bamonte and former Detective Ron Wright. The public officials include the Spokane City Council, Spokane County Commission, the Spokane Police Chief, Spokane County Sheriff, and the Washington State attorney general. Sheriff Bamonte and Detective Wright have provided me with copies of their complaints. As such, I believe the photos in question are now in the public domain and my reproduction of them does not violate copyright law. I’m sure Sheriff Bamonte and Detective Wright would be happy to provide you with copies of their complaints in order to assist you with your reporting. You may contact them at the email addresses above. As part of his extensive efforts to have first-degree manslaughter charges brought against your employers in the matter of Jo Ellen Savage’s April 8, 2006 death in the River Park Square garage, I know Sheriff Bamonte has shared a considerable amount of correspondence with your publisher, Stacey Cowles. I assume Mr. Cowles would be happy to share that correspondence with you to assist in any reporting you might wish to do about this matter.

Beyond that, my understanding is that my use of the photos in question is protected under the fair use doctrine of federal copyright law. As a fellow journalist, I know you agree that you and I work under significant professional ethical mandates to serve the public interest. Those mandates are supported by a variety of legal protections. A cursory review of fair use doctrine provides such guidance as:
“Section 107 contains a list of the various purposes for which the reproduction of a particular work may be considered ‘fair,’ such as criticism, comment, news reporting, teaching, scholarship, and research. Section 107 also sets out four factors to be considered in determining whether or not a particular use is fair:

  1. the purpose and character of the use, including whether such use is of commercial nature or is for nonprofit educational purposes…”

The Girl From Hotsprings Web site is published in the public interest, at my expense, free of charge. I do not realize any income from it. If I wish to reproduce Spokesman-Review photos in the book I plan to publish I will do so only with your publishing company’s express written permission.

And the following from Boston attorney Andrew D. Epstein, a member of Volunteer Lawyers for the Arts of Massachusetts.

“Q. Are there any times that I can use a copyrighted work without risking infringement?

A. Yes. The concept of fair use permits the utilization of copyrighted materials for certain purposes. For example, a newspaper can publish copyrighted works for purposes of reporting news and a teacher can make multiple copies of certain works for classroom use without risking infringement. In order to determine if a use is fair or is an infringement, one must determine how much of the copyrighted work is used and the impact this use will have on the potential market for the copyrighted work. If large portions of a copyrighted work are used or if the use lessons the potential market for the work, there will be infringement.”

Still, I want to be clear: I do not wish to violate copyright law; I intend not to do so. Again, Gary, as a fellow journalist, I know you recognize my ethical obligation to balance your assertion of your paper’s legal rights against my duty to the public interest. (As you know, in the case of the River Park Square securities fraud case, your newspaper’s First Amendment attorney made a variety of highly dubious assertions of confidentiality rights that thwarted both the public’s and bond purchasers’ rights to know.)

So, I need to request additional assistance from you. In view of the information above, if you still believe that I am in violation of copyright law I ask that you provide me with a written specific legal opinion stating why, as well as any professional guidance of which you may be aware, such as from the Society of Professional Journalists, etc.

Meanwhile, I have another request of you to assist me in my continuing reporting about River Park Square. In your email you state that the S-R photos on the Girl From Hotsprings Web site were “brought to my attention.” Please tell me who brought them to your attention and who instructed you to request that I take them down. I will want to interview you further about this matter, as I feel it is relevant to the question of the Cowles family’s use of its media to cover its business affairs. For now your timely answers to these questions will be helpful. Thank you very much.

Best wishes, Larry Shook

On Tue, Mar 10, 2009 at 4:17 PM, Gary Graham <> wrote:


It has just been brought to my attention that the girlfromhotsprings
website has at least three of our photos posted on it. We never
authorized such use. It would appear that you are in violation of
copyright laws because all of our published photos and stories are
copyrighted each day.

I am referring to the 1991 photo of Rex Franklin and the two later
photos of the exterior of the parking garage.

I respectfully ask that you remove the photos from your site
immediately. If they are being used in a proposed book, they should be
removed. You do not have our permission to use the photos.


Gary Graham
The Spokesman-Review

From: Larry Shook <>
Date: Wed, Mar 11, 2009 at 9:27 AM
To: Gary Graham <>

Thank you, Gary. Again, if I wish to use S-R photos in my book I will do so only with your company’s express written permission. Best wishes, Larry Shook



     Thanks for your reply. Although I don’t agree with your justification, I’m not inclined to pursue the matter further at this time.

     From an ethics standpoint, I think you are on shaky ground. It’s common courtesy in newspapers and magazines to credit the source of photos. Happens every day. I couldn’t help but notice that you apparently used photos from a Washington business magazine without credit as well. That’s your technique. So be it.

     Should you decide to use the photos in a book, I believe you will need our permission. And of course there would be a fee for such use if we would decide to allow the use.

     Your request that I tell you who brought the use of our photos to my attention is laughable. Your site is in the public domain, isn’t it?  And I find it insulting that you suggest I was “instructed” to ask the photos be removed. Needless to say, I won’t be answering any of your questions.

     I’ve not dealt with you prior to this, so I didn’t know that your practice is to share your emails with so many people without giving me a heads up. Given your style in this manner, I’m not likely to respond to further messages from you. I’ll go ahead and copy my colleagues on this. It will save you time.

    Have a great day.


March 9th, 2009

“Crowd sourcing” to police the financial markets

To All:

It is apparent that the SEC was asleep at the switch regarding the Berne Madoff $50B Ponzi scheme.  The SEC in the preceding decade had multiple warnings and yet did nothing.  Why?

We are destined to have more of these financial cons that threaten to destablize our economy unless there is swift action by financial crimes units of law enforcement agencies to hold these people accountable for their illegal acts.  Did we learn nothing from ENRON?

See this related post by AJ Strata of The Strata-Sphere:

This Is The Story Of American Corruption

Perhaps instead of reactively responding once the “marks” have be scammed and the money is long gone, how about installing system mechanisms that allow self regulation and behavior?  In essence “neighborhood watches”  to “police” the neighborhood by folks that have a self interest that can act immediately independent of governmental oversight and action.  Government action often come too late to prevent successful cons.

Here’s a unique idea of using the Net, Blogos, the New Media and or “crowd sourcing” to force leverage scarce police resources in these high tech financial crimes.  This is a concept developed by law Prof. Glenn Reynolds (Univ of TN, Knoxville) in his book An Army of Davids.  The explanation of my analogy to law enforcement as sheepdogs guarding the sheep can be found here:

On Sheep, Wolves and Sheepdogs
(From the book, On Combat, by Lt. Col. Dave Grossman)

If you’re interested continue to read the below discussion thread.
Ron the Cop
AKA Det. Ron Wright (Retired)


———- Forwarded message ———-
From: rocketsbrain <>

Date: Mon, Mar 9, 2009 at 8:24 AM
Subject: “Crowd sourcing” to police the financial markets.

To: Reynolds <>


Prof Reynolds,

FYI – I’ve been off line for the last few days.  I don’t know if you saw this article in WIRED or someone has forwarded it to you.  I think this has merit.

BTW still could sure use a link on a related matter in a $100M bond fraud and manslaughter.  The “perps” own/control the local media.  The perps use their media as an instrumentality of their ongoing criminal enterprise to conceal their illegal activity from the public.  Shades of Madoff.

Det. Ron Wright (Retired)

Ron T. Cop takes on Spokane City Council


——— Forwarded message ———-
From: rocketsbrain <>
Date: Mon, Mar 9, 2009 at 8:09 AM
Subject: “Crowd sourcing” to police the financial markets.

If the MSM won’t police the markets to keep the wolves from raiding the flock then require open info/transparency so “crowd sourcing” can act as multiple sheepdogs:-)  Actually this is Prof Glenn Reynolds’ concept of an “army of davids.”  I was reading this article in this month’s issue of WIRED Magazine on my flight back to Spokane.



Tech Biz  :  IT   RSS

Road Map for Financial Recovery: Radical Transparency Now!

By Daniel Roth Email 02.23.09

The financial world doesn’t need new regulations. It needs radical transparency.
Photo: AP Photo/Mark Lennihan

Recipe for Disaster: The Formula that Killed Wall Street

On the morning of March 29, 1933, dozens of reporters filed into the Oval Office for a press conference with the new president. Franklin Roosevelt had taken office earlier that month amid the greatest economic crisis the US had seen: 5,700 banks had failed, 25 percent of the country was unemployed, and more than half of all mortgages were in default.

Hope for a recovery was dim; the public had lost faith in the entire financial system. The number of American investors had exploded, from a few hundred thousand before 1916 to more than 16 million. Yet few of them understood the investments they held, many of which had proven to be junk. Supposedly sound companies were exposed as pyramid schemes. Of the $50 billion in securities sold in the previous decade, half had become worthless.

And yet, as reporters huddled around his desk, Roosevelt sounded confident. “I have something on the Securities Bill today,” he announced. That day, members of his brain trust were on Capitol Hill, submitting a plan that would spark the creation of the Securities and Exchange Commission. One overriding concept lay at the center of the legislation: transparency. Louis Brandeis, before becoming a Supreme Court justice, had written an exposé of the financial system for Harper’s Weekly, and one passage in particular had lodged in Roosevelt’s brain: “Sunlight is said to be the best of disinfectants. Electric lights the most efficient policeman.” The proposed bill would require, for the first time, companies to file detailed accounts of their financial health and activity, and bankers would have to report their fees and commissions. As Roosevelt explained it to the reporters around him, the bill “applies the new doctrine of caveat vendor in place of the old doctrine of caveat emptor. In other words, ‘Let the seller beware as well as the buyer.’ In other words, there is a definite, positive burden on the seller for the first time to tell the truth.”

Now, here we are again, 76 years later, facing another crisis of trust that threatens the entire financial system. This time, the issue is no longer a lack of transparency. Since the 1933 Securities Bill, corporate America has been required to disclose a deluge of information in a multitude of ways—10-Ks and 10-Qs, earnings calls and Sarbanes-Oxley-mandated 404s. Between 1996 and 2005 alone, the federal government issued more than 30 major rules requiring new financial disclosure protocols, and the data has piled up. The SEC’s public document database, Edgar, now catalogs 200 gigabytes of filings each year—roughly 15 million pages of text—up from 35 gigabytes a decade ago.


AKA Ron the Cop

March 5th, 2009

The Case Against Mike Ormsby’s nomination for U.S. Attorney


 Tim Connor recently appeared on the Mike Fitzsimmons Radio Show on KXLY 920AM.  Mike’s opinion is that there has to be someone better qualified than Ormsby.  Mike advised his listeners to call Sen Patti Murray (here) and Sen Maria Cantwell (here) and ask them to withdraw Ormsby nomination.  Mike also said to contact US Representative Cathy McMorris Rogers (here) to express concern about Ormsby’s nomination.


Ron the Cop



The Case Against Mike Ormsby’s nomination for U.S. Attorney


By Tim Connor, former Senior Editor, Camas Magazine


Spokane attorney Mike Ormsby, the brother of state Representative Timm Ormsby, has been nominated by Senator Patty Murray to be the next U.S. Attorney for the Eastern District of Washington. If he’s confirmed, Ormsby will succeed Jim McDevitt, a Republican who, coincidentally, worked alongside Ormsby in the Spokane offices of Preston, Gates & Ellis (now K&L Gates) in putting together the fraudulent River Park Square garage transaction in 1996 to 1999. 


The beneficiary of the corrupt RPS transaction was the family that publishes Spokane’s only daily newspaper, the Cowles family.  


This backgrounder looks at Ormsby’s roles. It draws heavily upon my reporting and Larry Shook’s reporting at Camas Magazine but, as you’ll see, the primary source I’ve relied on here is the lengthy 2004 report by the Internal Revenue Service’s Tax Exempt Bond Unit. The IRS-TEB report names and criticizes Ormsby repeatedly for his role in organizing and facilitating activities that violated federal tax rules in order to deliver $10 million or more in illicit bond proceeds to the Cowles family.


The Bond Buyer publication reported in December 2007 that the IRS TEB subsequently referred Ormsby’s name to the Service’s Office of Professional Responsibility for disciplinary action because of his role the RPS transactions. IRS-OPR responded with four separate allegations of unethical and “disreputable” conduct that resulted in a settlement with Ormsby and another Preston attorney David O. Thompson. As part of the settlement, according to the Bond Buyer, IRS publicly named Ormsby and Thompson.


The consequences of the River Park Square frauds fell most heavily on the City of Spokane because of a successful federal securities fraud action brought by Nuveen, Vanguard and other RPS garage bond purchasers. Even though Ormsby and McDevitt’s firm settled their liability for $1.3 million (with an agreement to also cover the tax liability for bondholders) the City of Spokane was nonetheless stuck with approximately $40 million in principle and interest payments to finance the settlement with garage bondholders. 




Public corruption was at the heart of the River Park Square transaction. The beneficiary was the Cowles family, which publishes Spokane’s only daily newspaper, owns its NBC-TV affiliate, and has vast private holdings in the Spokane-area, including valuable real estate in the City’s downtown core.


In 1995, the Cowles family approached Spokane officials to seek their help in expanding and rebuilding the family’s River Park Square shopping center adjacent to City Hall and Riverfront Park. Embedded in this public/private partnership was an unlawful scheme to remodel a downtown parking garage owned by the Cowles family, manipulate its value by rigging new appraisals, and then transfer the garage to a public entity (backed by the City of Spokane) so that upwards of $10 million in illicit profits would flow to the family-owned development company. 


Mr. Ormsby’s role was to broker the garage transaction. As bond counsel and lead attorney for the entity that financed the sale with a $31.5 million tax exempt bond issue, Ormsby helped put the deal together and played a pivotal role in proceeding with the transaction when it was clear that he and others knew, privately, that it wouldn’t work. He then helped to try to cover it up by signing a confidentiality agreement in which he promised to keep secret a document that was clearly a public record under Washington’s open public records law. City officials and developer Betsy Cowles repeatedly defended the garage transfer as an arms-length transaction. But the evidence is overwhelming that it wasn’t.


“It is clear from the facts of this case,” IRS investigators wrote in their June 2004 report, “the [RPS] developer had, and continues to have, a particular relationship with the City of Spokane and the Issuer/Foundation such that it was in a position to control or influence its activities.”


Mr. Ormsby was at the forefront of enabling the “particular relationship” so that the Cowles family could reap millions in illicit profits from the deal, at public expense. Bondholders got their money back because they sued, successfully, for securities fraud. Spokane taxpayers were not so lucky and remain on the hook for the tens of millions of dollars it took for the City to settle claims against it by bondholders. 




Here are the basic facts as gathered by Camas Magazine, KXLY-TV, the Internal Revenue Service’s Tax Exempt Bond Unit, and lawyers representing Nuveen, Vanguard and other RPS garage bondholders who successfully sued the City of Spokane and other parties for securities fraud in 2001. 


*In 1994 to 1996, the financial ground rules for the River Park Square project were conceived, in secret, by members and political/business allies of the Cowles family. In addition to the $22.65 million federally-backed loan the City extended, the family also wanted tens of millions in cash for the garage, even though the actual costs were less than $13 million and an appraisal commissioned by the City put the market value at just $12 million. The garage’s market value, by the IRS’s calculation, “at best was $15 million.”  Yet, the Cowles family insisted on receiving at least $26 million for the garage, plus continued, grossly inflated payments of “ground rent” on the facility. The financing of the fraudulent garage transaction was via proceeds from tax-exempt bonds. The bonds were sold in 1998. The garage changed hands in late 1999.


*As the U.S. Internal Revenue Service reported in June 2004, the River Park Square garage project violated numerous provisions of federal tax law, including restrictions that limit the enrichment of private developers with tax exempt bond proceeds. IRS found that the transaction was also replete with “concealment” and “public deception,” the purpose of which was to “unjustly enrich and profit” Cowles family real estate companies. 


*The overpayment for the garage and land rent was generated by fraudulent appraisal practices that were, according to IRS, “a notch in the post of public deception” and structured so that no matter how the transaction unfolded, the Cowles family would take millions of dollars in excessive profits while the city and taxpayers would be left with the risks. As the IRS put it in its report, “the casino was rigged.”


*Mike Ormsby played several key roles in the River Park Square transaction. 


1) In August of 1996, Ormsby was contracted by the River Park Square project director to work directly for RPS on the garage project, advising RPS on bond financing issues related to the garage transaction. 


2) The Spokane Downtown Foundation (SDF) was created as a Washington state Nonprofit Corporation in November of 1996 by lawyers working for River Park Square. The sole purpose of the SDF was to issue bonds and buy the River Park Square garage, “on behalf of” the City of Spokane, from the Cowles family. As the IRS noted in its report, Cowles family representatives recruited Ormsby to be the SDF’s lawyer. In addition, Ormsby’s firm, Preston, Gates & Ellis, was hired to be bond counsel to the SDF and, thus, had primary responsibilities to the SDF and to securities buyers for ensuring the bond issue complied with Securities Exchange Commission (SEC) and IRS rules governing the transaction.  


3) When Spokane Mayor-elect John Talbott raised questions about the wisdom of the $22.65 million HUD-backed loan to the Cowles family in late 1997, Ormsby lobbied the office of U.S. Senator Patty Murray to encourage her support for the loan. He did this with a lengthy December 3, 1997 memo to the Senator’s Eastern Washington representative, Judy Olson. The memo did not disclose Ormsby’s role in the River Park Square garage transaction and the fact that he and his firm expected to receive more than $83,000 in bond proceeds for his work and the firm’s work on the garage transaction.


4) As bond counsel for the bonds issuer, Ormsby and his firm had clear duties to disclose all material facts regarding the garage transaction. But key material facts known to Ormsby were not disclosed. Among them:


a) The bond issuer, the SDF, was created by agents acting at the behest of RPS developer Betsy Cowles. 


b) Ormsby’s work directly for River Park Square (the seller) before becoming the lead counsel for the SDF (the buyer) was not disclosed. (Indeed, in October 2003, the SDF board filed papers in federal court alleging that Ormsby had not disclosed–even to them–his prior work for River Park Square on the garage transaction.)


c) The official statement for the bond issue indicated that the SDF had participated in negotiations over the purchase price of the garage. But, as IRS noted in its report: “the price was determined prior to the issuer [the SDF] being created.” 


5) Ormsby had been working closely on the RPS garage transaction for three years when a dispute between RPS and a major mall tenant, AMC Theatres, threatened to blow up the whole deal. In short, AMC had just learned that its customers, as part of the garage transfer, would no longer be allowed to park for free in the garage. This was critical because about half the garage revenues, beginning in 1999, were expected to come from AMC customers. Indeed, the garage purchase price of $26 million was predicated on AMC customers paying $1.50 an hour to park. To solve crisis, the new public entity operating the garage decided, with encouragement from RPS, to slash evening parking rates to placate AMC. But this solution presented a huge cash flow problem, putting the investment of garage bondholders at risk. It also clearly put City taxpayers at risk because part of the inner workings of the complicated garage transaction was a lien against City parking meter revenues that was needed to give the bonds an investment grade rating from Standard & Poors. A plan was worked out whereby Ormsby would make an appeal to the RPS developer to adjust the $26 million purchase price downward, to compensate for the severe drop in forecasted garage revenues caused by the evening rate reduction. As Betsy Cowles bluntly reported in her deposition in the RPS securities fraud proceedings, her answer was “no.” And, yet, Ormsby and Preston Gates went ahead with the transaction anyway, without notifying the public or garage bond purchasers.


6) Ormsby also directly participated in a cover-up to help ensure that the public, and RPS critics on the Spokane City Council, did not learn of the AMC crisis before the garage transaction was completed in the fall of 1999. On behalf of the SDF, Ormsby secretly agreed to a reimbursement agreement whereby RPS would compensate for the loss of parking revenue but only if AMC “vacates the premises covered by the lease.” There was no provision in the secret agreement to compensate for the expected $1.2 million annual loss of parking revenue caused by the the rate reduction. Simultaneous with the reimbursement agreement, Ormsby signed a contract with RPS promising to keep the agreement secret, provided that RPS agreed to pay any court fees and penalties associated with the withholding of the document in violation of the state’s open public records law.


Here’s how the IRS characterized the overpayment and the secrecy agreement in its June 2004 report: “The direct result of the payment, the concealment (confidentiality agreement) and the certification by the developer on the purchase agreement unjustly enriched the developer with $10 million or more dollars of the Issuer/Foundation assets.” 


Again, IRS unequivocally concluded that Ormsby played a central role in the payment and the concealment.


It’s regrettable that Mr. Ormsby wasn’t prosecuted, criminally, for fraud given the well-documented evidence of his involvement in the RPS garage transaction. (I continue to believe that his former law partner’s appointment as U.S. Attorney in 2001, discouraged a meaningful and timely criminal investigation.) 


According to the Bond Buyer publication (December 2007), however, the IRS Tax Exempt Bond Unit did refer Mr. Ormsby and David Thompson, another Preston Gates attorney, to the IRS Office of Professional Responsibility for disciplinary actions related to the RPS transaction. The Bond Buyer reported that IRS-OPR subsequently alleged that Ormsby and David O. Thompson of Preston Gates committed four ethics violations involving lack of diligence, conflict of interest, failure to uphold standards for tax return positions, and incompetence and disreputable conduct.


The allegations, according to the Bond Buyer, were settled with an agreement that the two lawyers would be publicly named and that they would agree to added oversight and documentation of their due diligence activities on transactions. Although IRS described the agreement to the Bond Buyer as “groundbreaking,” it appears not to have been “groundbreaking” enough to have removed Mr. Ormsby from consideration as a U.S. Attorney.


Documents cited in this piece, including the 2004 IRS report on the RPS garage fraud, are available upon request from the author.