Lawsuit claims landlords falsified rental records to hide money

When a Western Washington real estate owner died in a skydiving accident in Texas last year, his children felt his Spokane assets were in good hands.

The couple in charge of Rex Williams’ assets had worked for him for eight years, and his family needed someone trustworthy to handle things as they dealt with his unexpected death.

But the couple, George Bagwell, 42, and Kathy Bagwell, 36, now stand accused of trying to dupe Williams’ family out of tens of thousands of dollars in an alleged scheme that triggered a civil lawsuit and a criminal probe.

No charges have been filed in the case. The couple’s lawyer, Stephen Matthews, said he’ll present his clients’ side of the story in court.

“We’re investigating the matter and we’ll defend it vigorously,” Matthews said.

Williams, who died at 59, lived in Tacoma and kept his accounting books by hand. Thirteen months after his parachute failed to open and he fell to his death during a skydiving excursion, his daughter Chaundra Williams noticed a sharp drop in cash flow from Williams’ Spokane properties — $30,000 to $50,000 a month since at least April.

She traveled here from Western Washington last month to try to revitalize the business when she noticed the Bagwells accepting rent payments in cash without depositing the money, according to a search warrant filed by Detective Stacey Carr of the Spokane Police Department. Deposit slips were off by thousands of dollars compared with monthly rental reports, Carr wrote in the search warrant.

“It’s a horrendous amount,” Carr said.

A lawsuit filed in Spokane County Superior Court on July 6 accused the Bagwells of falsifying accounting records to conceal the missing money.

Two days after the lawsuit was filed, police raided the Bagwells’ bank and credit records and searched their house, where they took two computers, paperwork and five gambling identification cards.

The Bagwells are frequent gamblers at Northwest Quest Casino and travel to Las Vegas twice a year, according to the search warrant.

Rental schemes are common but usually on a smaller scale, housing experts say.

“I just can’t see how this could happen,” said Tony Drost, treasurer for the National Association of Rental Property Managers and president of First Rate Property Management in Boise. “Somebody just wasn’t paying attention or did not have the system in place to identify the problem.”

The Williams family owns three apartment complexes in northeast Spokane with 304 apartments: the Lyons Crest, the Lyons Glenn and the Lyons Ridge apartments.

Detectives are looking at evidence seized from the Bagwells’ house now. The criminal probe could last several more weeks.