Financial Troubles Besiege Mayor Fails To Make Support Payment, Defaulted On Line Of Credit

Spokane Mayor Jack Geraghty is wrestling with personal financial troubles that are heading for court next week.

Geraghty is being called into court for the third time in a year for failing to pay his estranged wife $1,640 a month in mandated support payments.

The court also will consider his request to lower his payments and sell the family home. The hearing is scheduled for next Friday.

Geraghty declined to talk in detail about his financial problems when contacted Friday in Washington, D.C., where he is attending the U.S. Conference of Mayors.

“That is a personal matter,” Geraghty said. “It’s a matter of my personal finances. I have no comment on it. I’m working my way through all of this. We’re trying to resolve all of these matters.”

Geraghty earns $36,000 a year as mayor and also runs a public relations consulting business.

Records filed in Spokane County Superior Court show he defaulted on a $165,000 line of credit from Washington Trust Bank and owed $15,000 in credit card bills as of last October.

Washington Trust wrote Geraghty a letter in October saying the bank charged off the loan as a loss, but threatened to sue him and his estranged wife if the debt is not settled.

Married for almost 39 years, Marlene and Jack Geraghty raised four children. They separated in April 1994. She petitioned for legal separation on Jan. 10, 1996.

Last March, Jack Geraghty was ordered to pay his wife $1,640 a month until a permanent settlement is reached. Geraghty was late with payments in May and September, paying only after being ordered to explain in court why he wasn’t in contempt.

Geraghty apparently covered the late payments before the court dates.

His missed December payment will be considered at next Friday’s hearing. Geraghty doesn’t plan to attend the hearing, but his lawyer will be there to argue the case.

Court papers paint a dire picture of the mayor’s finances. His business is pulling in hundreds of dollars a month less than he expected. In October, Geraghty said his monthly net income was $940.89 after paying his wife, his taxes and his business expenses. He said he owed $4,296 a month in other bills.

In court records, Geraghty said he can’t afford the $1,640-a-month support payment because his consulting income is less than he predicted last February.

“The principal reason why I have earned less from public relations and consulting is because of the time commitment required to be mayor of Spokane,” Geraghty wrote.

He’s not the first area politician who’s suffered financial problems.

The family farm of U.S. Sen. Larry Craig of Idaho was liquidated in the 1980s after filing for bankruptcy protection.

Former City Councilman Chris Anderson filed for personal bankruptcy in 1993 after using high-interest credit lines and his own credit card to finance his failing consulting business.

Four council members on Friday said the financial problems haven’t affected Geraghty’s performance as mayor.

“You really would not know he’s having these problems outside,” Councilman Orville Barnes said. “I think everybody is aware that because of the time he’s spent on the council, it’s had a deleterious effect on his business. To what degree, I don’t know.”

Geraghty said Friday he has no plans to file for bankruptcy. “Over the long haul in all these kind of situations, they can be worked out,” he said.

Court records show he owes much more than he earns.

As of last October, he owed $15,000 on three credit cards and hadn’t made a payment since last January. He said his most pressing debt was an unsecured line of credit with Washington Trust Bank. He owed almost $165,000 on two loans.

On Friday, Geraghty said those loans were not used for politics. “To some extent, they’re related to my business,” he said.

Bank Vice President Dale Sebo declined to comment about Geraghty’s loans.

But in an Oct. 10 letter included in the court documents, Sebo told Geraghty about the “serious delinquent status” of the loans. The bank charged off his loans as a loss. He owed $31,552.76 on one loan, and $133,106.82 on the other.

“It is normally our practice to bring suit to recover the full amount owing following a charge off,” Sebo wrote. “This is not only necessary to protect our shareholders, but also to satisfy regulators that we exercise prudence in our banking function.

“I bring this to your attention in hopes that you can make arrangements prior to this occurring. I would think the embarrassment of this action would be something we would both like to avoid.”

In court papers, Marlene Geraghty said she wasn’t aware of the second, smaller loan, and said she hadn’t signed on either loan.

The mayor wants to sell the couple’s home, with a market value he estimates at $225,000. That money could pay off the $60,000 still owed on the home mortgage and a chunk of the Washington Trust loans, Geraghty wrote in court papers.

Marlene Geraghty pays $1,000 a month on the home mortgage, obtained in 1992, out of the money she receives from her husband.

“It was basically a bill-paying loan, consolidating debt plus the fact that his business had started to decline at that point,” she said Friday. She still lives in the home.

She said she no longer works at the part-time job she had held at the Catholic Diocese since May. She said she pays her bills with the help of her parents, her personal property and her husband’s support payments.

“I will absolutely resist any effort to sell the family home,” she wrote in court records.

, DataTimes ILLUSTRATION: Color Photo