Talks in the criminal case hold up the bankruptcy hearing of the Capital Consultants president
By Jeff Manning and James Long of The Oregonian staff Thursday, March 8, 2001
Former Capital Consultants President Barclay Grayson is negotiating a deal with federal prosecutors investigating the company's loss of more than $200 million, a federal bankruptcy judge disclosed Wednesday.
Judge Randall Dunn revealed the plea bargaining at a hearing on a personal bankruptcy petition that Grayson, 31, filed in February. He and his father, Jeffrey L. Grayson, 58, the founder and chairman of Capital Consultants, surrendered the company to a federal receiver in September after the U.S. Securities and Exchange Commission and the Department of Labor filed lawsuits accusing them of defrauding clients.
The hardest-hit clients were union pension funds, including unions representing Oregon laborers, office workers and plumbers. The SEC called the scheme the biggest fraud involving a money manager in U.S. history.
The Graysons and others are targets of a federal criminal investigation. Lance Caldwell, an assistant U.S. attorney in charge of the investigation, declined to comment on Barclay Grayson's dealings with his office. However, Steven Ungar, Barclay Grayson's criminal defense lawyer, told The Oregonian, "I can confirm that negotiations are ongoing."
Last week, John D. Abbott, a former top official of the Oregon laborers union, pleaded guilty to taking $195,000 in payoffs from Jeffrey Grayson and filing a false income-tax return. Abbott's deal may allow him to serve only 15 months in prison in return for testifying against other union officials and Jeffrey Grayson.
Because of the criminal negotiations, Dunn noted, Barclay Grayson could assert Fifth Amendment rights against self incrimination in his bankruptcy proceedings, and the lack of his testimony would hamstring the process. Dunn postponed the bankruptcy process for 90 days in hopes Barclay Grayson's negotiations would be completed by then.
Barclay Grayson's bankruptcy case won't free him entirely of financial responsibility in the criminal fraud case, however. If he reaches an agreement with prosecutors, the deal normally would include restitution for victims, Ungar said.
Ward Greene, Barclay Grayson's bankruptcy lawyer, told Dunn that his client has found a new job and is anxious to begin paying his debts and "start a new life." The nature of the job wasn't revealed, but according to documents filed in U.S. District Court, it pays $100,000 a year.
Jeff Manning can be reached at 503-294-7606 or by e-mail at firstname.lastname@example.org.
James Long can be reached at 503-221-4351 or by e-mail at email@example.com.