February 21, 2009 in City

Ormsby nominated to be U.S. attorney for East Side

Critics cite role in River Park Square controversy
Bill Morlin And Jim Camden Staff writers
 
Steve Thompson photo

Ormsby
(Full-size photo)

Michael C. Ormsby, who won a political office when he was 18 and has spent ensuing years in public service positions, has been nominated to be the next U.S. attorney for Eastern Washington.

The office of U.S. Sen. Patty Murray, D-Wash., confirmed Friday that Ormsby’s name had been formally forwarded to the White House, where President Barack Obama would make the appointment.

After review by the Office of White House Counsel, Ormsby would undergo an FBI background investigation and the nomination would be subject to confirmation by the Senate.

If confirmed, he would be the chief federal law enforcement officer for Eastern Washington – one of 90 such U.S. attorney positions that the president will fill.

“I have long been interested in public service in this community,” said the 52-year-old bond and municipal law attorney, who was elected to the Spokane School Board as an 18-year-old undergraduate at Gonzaga University. He got his law degree in 1981 from the university’s School of Law.

“I would personally be very honored to be considered for that, but I’ve heard nothing from anyone in the White House about anything,” said Ormsby, a senior member of K&L Gates, an international law firm.

“This is an exciting time in this country,” the Spokane native and longtime Democratic activist said.

“I think any opportunity that any of us would have to serve this president and to serve in the Department of Justice, I would very carefully want to consider that,” he said.

Ormsby’s nomination drew a sharp response Friday from critics of his role as an attorney in the River Park Square controversy.

Tim Connor, a former investigative journalist and longtime critic of the mall project, said Ormsby was a “central figure in the fraudulent RPS garage transaction” and was cited in an IRS report detailing tax-exempt securities violations.

“For him to be considered as U.S. attorney for the Eastern District of Washington makes about as much sense as Bernie Madoff being considered for Treasury secretary,” Connor said. Madoff, a New York investment broker, is under indictment for alleged securities fraud.

Ormsby’s nomination also drew praise from the current U.S. attorney, Jim McDevitt, appointed by President George W. Bush.

“He’s a good lawyer, he’s ethical and he’s hard-working,” McDevitt said of Ormsby, whom he’s known for more than 20 years and once worked with at the same firm. “He would be an outstanding successor.”

Ormsby served on the board of directors of Spokane Public Schools from 1975 until 1983.

Since then, he developed a lengthy list of professional and civic activities: He has been president of the Spokane County Bar Association and served on boards for Eastern Washington University, Spokane Valley Chamber of Commerce, the Inland Northwest Foundation and the Spokane Regional Chamber of Commerce.

Ormsby also was one of the attorneys involved in developing the public-private partnership that led to the River Park Square renovation in the 1990s and a series of lawsuits earlier this decade.

He served as the attorney for the Spokane Downtown Foundation, which was set up by the mall’s developer to sell some $31.5 million worth of bonds backed by parking revenues of an expanded River Park Square garage. Ormsby’s firm, then known as Preston Gates & Ellis, supplied a letter included in the prospectus to investors that the bonds qualified for certain tax breaks under IRS rules; the IRS later ruled the bonds did not qualify for tax-exempt status because of the way the mall deal was structured.

The firm eventually paid some $1.4 million in penalties and taxes assessed by the IRS as part of a settlement with the city of Spokane over the garage litigation. Ormsby and another of the firm’s attorneys who signed the letter in the prospectus were investigated by the IRS Office of Professional Responsibility, which sought to determine whether they performed due diligence on the deal. The firm and the IRS reached an undisclosed settlement that involved changes in the way future bond sales are reviewed.

After the garage was expanded but before it was purchased by the downtown foundation, a dispute arose between the Cowles development companies that owned the mall and one of its key tenants, AMC Theatres. The development companies are subsidiaries or affiliates of the parent company of The Spokesman-Review.

When the theater chain threatened to pull out, Ormsby suggested the development companies lower the sale price of the garage. Instead, the developers offered to cover any lost revenue if the chain didn’t open, but only if the foundation and the public board that would operate the garage would keep that offer secret.

The foundation and the board agreed, AMC eventually reached an agreement with Cowles development companies and the garage was purchased for $26 million. Critics have said Ormsby should have told the foundation it should not buy the garage at a price they contend was inflated by an unusual form of appraisal and instead demanded the price come down or the deal be dropped.

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