The Oregonian


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Jeffrey L. Grayson Pleads Not Guilty







Jeffrey L. Grayson, the Portland investment manager accused of bilking his clients out of hundreds of millions of dollars, pleaded not guilty to all charges Friday.


U.S. District Judge Anna J. Brown scheduled Grayson's trial for March 26.


Federal prosecutors have charged Grayson with 22 counts of mail fraud, witness tampering, conspiracy, money laundering and making illegal payoffs to John Abbott, a former union pension fund trustee.


Grayson entered his plea 13 months after federal regulators shut down his company and accused him of running a "Ponzi like scheme" to conceal massive losses. Capital Consultants lost an estimated $355 million of its clients' money in failed and allegedly fraudulent investments.


Grayson, former CEO of Capital Consultants, was represented at Friday's arraignment by Harvey Silets, a Chicago-based criminal lawyer. Silets' involvement was in question due to Grayson's financial trouble. But U.S. District Judge Garr King ruled that Grayson could get additional funds from his estate to pay the lawyer.


Grayson's assets were frozen in September 2000 when federal regulators shut down Capital Consultants.


Silets began working for Grayson last May but balked at working through a trial "without an assurance of payment." Silets agreed to lower his fees to $295 per hour.


The ruling disappointed victims of Capital Consultants' failed investments, who had argued that every dollar spent on Grayson's defense will mean one less dollar returned to investors.


King had already allowed Grayson to spend $328,747.63 on legal fees over the last 15 months for his four other lawyers – Wilson Muhlheim and Pamela Singer of Eugene, and Norm Sepenuk and James Collins of Portland.


Like Silets, Sepenuk is a criminal defense attorney. But Sepenuk was barred from representing Grayson in this case because he formerly represented Abbott.


Abbott pleaded guilty to accepting Grayson's secret payments last February. Prosecutors are recommending a 15-month sentence for Abbott. Barclay Grayson, Jeffrey Grayson's son and former president of Capital Consultants, pleaded guilty to mail fraud. He agreed to cooperate with prosecutors in return for an 18-month sentence. The two are scheduled to be sentenced in November.

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