The court orders the removal of comments and opinions from a preliminary statement in the Capital Consultant's case
By Jeff Manning and James Long of The Oregonian staff Wednesday, November 1, 2000
The judge overseeing the court-ordered liquidation of Capital Consultants LLC ordered his receiver Tuesday to remove comments and opinions from his preliminary report.
In the report, the court-appointed receiver said Capital Consultants deceived clients en route to losing some $243 million of their investments.
"My concern is that the receiver is an officer of the court and that his statements may be given more weight than if they were made by a lawyer" in the case, said U.S. District Judge Garr M. King.
King appointed receiver Thomas F. Lennon to take over the Portland money management firm Sept. 21 after the U.S. Securities and Exchange Commission and U.S. Department of Labor filed lawsuits accusing the company of bilking its clients.
Although King told Lennon that he would not accept the report until the opinions were removed, the judge made it clear that he wasn't taking issue with the report's substance. The 81 page document contained detailed information about Capital Consultants' loan and investment losses that led government regulators to seek the firm's liquidation.
Most of the losses will affect labor union retirement funds.
Former Capital Consultants President Barclay Grayson, meanwhile, filed a motion with the court through his lawyers to gain access to his personal funds, which King had ordered frozen. Grayson said he needed about $43,696 a month -- $40,000 of it just for monthly legal expenses.
Grayson reported, in the motion, that he and his wife and a family business had assets totaling $2,179,419. These included a $1.2 million residence, a $475,000 second home, $152,639 in real estate, $141,337 in marketable securities, $15,000 worth of art work, and $48,000 worth of jewelry $34,000 of it belonging to Nicole Grayson, his wife, and $14,000 belonging to Barclay Grayson.
In an affidavit accompanying his plea for expenses, Grayson said he had been unemployed since Sept. 20, 2000 -- the day before he and his father, Jeffrey Grayson, Capital Consultants' chairman, left the firm and turned it over to government regulators.
"I have been forced to borrow money from family members to pay my bills," Barclay Grayson said in his affidavit. "I have been unable to make the mortgage payment on our home and have surrendered the car which was being leased for my use by Capital Consultants."
Besides the $40,000 he said he needed for lawyers, Grayson submitted a budget that proposed the court allow him living expenses of approximately $3,696 a month. That amount, he said, would let him keep up maintenance on his home but not meet the monthly mortgage payments or property taxes.
Grayson asked King's permission to sell the family home on Southwest Hewett Boulevard and give half the proceeds to his wife, who jointly owns the property. Grayson agreed that the other half should go to the receiver.