People describe Greg Jeffreys as one of the smartest men they know. A persuasive salesman. A tireless worker. An aggressive negotiator and sophisticated dealmaker of uncommon boldness.
He was also someone whose audacity could turn threatening.
But mostly – according to federal prosecutors, attorneys in civil cases against Jeffreys and former investors – Jeffreys was prone to exaggerate, embellish, mislead and lie, whether he was boasting about his net worth, putting together fraudulent real estate deals, concocting a scheme to poison himself in order to sue McDonald’s, or holding bankers at bay while spending their money in Las Vegas casinos.
Federal prosecutors have charged Jeffreys in a 73-count felony indictment including allegations of theft, bank fraud, money laundering and wire fraud. Also charged is his wife, Kim Jeffreys, and girlfriend, Shannon Stiltner.
The federal case against Jeffreys is enormously complex – an assistant U.S. attorney estimated it would involve 400,000 pages of documents in discovery.
The range of accusations in the indictment is dizzying and focuses on a series of transactions from 2011 and 2012.It does not reach into several financial transactions surrounding properties in Airways Heights that have produced lawsuits in state court from investors claiming they were duped. It does not reach into the mind-boggling series of deals in the Ridpath Hotel, in which investors have lost huge sums of money and made similar allegations in separate lawsuits as did the Airway Heights investors.
Jeffreys has said, in court documents and interviews, that the investments went sour in a lousy economy. In some cases, he has blamed a partner who he said defaulted and left town. He has consistently denied wrongdoing in civil cases and pleaded not guilty in the criminal case. His attorney in the criminal case, Mark Vovos, has said that banks and investors went into deals with Jeffreys understanding the investment risks.
But federal prosecutors allege that Jeffreys scammed innocent, in some cases naïve, people of millions of dollars in what amounted to a real estate Ponzi scheme. Many others allege in civil lawsuits that the number of victims in Jeffreys’ wake is larger, noting that his deals have left a trail of bankruptcies, financial losses and ongoing financial obligations for investors.
They wonder how the organizations meant to vet the deals and protect the parties – banks, appraisers, attorneys – repeatedly supported the deals.
“I just feel bad for all the people who got involved in the whole thing,” said Dave Largent, a local homebuilder who invested with Jeffreys in Airway Heights and in the Ridpath. “None of this should have happened.”
A growing business
Jeffreys grew up in Spokane, graduating from University High School in 1978. His wife, Kim, also graduated from U-Hi, and they were married in 1982. Shannon Stiltner, who became his girlfriend in the past few years though he remains married, is also a U-Hi graduate.
According to a 1999 profile of Jeffreys in the Spokane Journal of Business, he began framing houses while still in junior high school, and he started his own business, G.J.’s Framing Co., the same year he graduated from high school.
Jeffreys’ business boomed, growing from residential construction to large commercial projects. In the 1980s, according to the article, he expanded into general contracting and began taking on huge projects in other states. He specialized in designing and building auto dealerships, and this brought him into contact in the 1990s with Marshall Chesrown, the ambitious, high-profile developer whose later projects in Spokane crashed after the economic collapse.
Chesrown was also a U-Hi graduate, and he initially called in Jeffreys to fix a troubled Denver project. That spun out into a longer-term relationship. Jeffreys told the Journal of Business, “Exposure in the automotive industry has led to a lot of different things. That affiliation really helped springboard us to where we are now, and where we’re heading. I owe a lot of that to Marshall Chesrown.”
In a deposition he gave in a civil lawsuit in 2011, Jeffreys said, “By 1995, we were operating in six states and were developing and constructing large commercial projects and several automotive facilities. By year 2000, we were one of the nation’s largest constructors of automotive facilities and were building in over 30 states.”
Chesrown and Jeffreys continued to be friends after both returned to Spokane, owning neighboring properties on Lake Coeur d’Alene. At the time of the Journal of Business article, Jeffreys portrayed himself as a businessman caught in a “whirlwind” of growth, and said his company, G.J.’s General Contractors, was on track to bring in revenue of $500 million by 2005.
He also spoke of an upcoming local project called Pillar Rock Plaza, a planned business park on land Jeffreys owned just east of Airway Heights.
The piece did not mention that Jeffreys’ company emerged from a $1.3 million, three-year bankruptcy in 1996 that forced him to sell property to settle debts. Nor did it note that he and his company had run into other setbacks as well, including losing a lawsuit over the construction of a palatial Denver home and being penalized in Nevada for operating without a license.
In the midst of these problem years, in 1994, federal prosecutors allege in court documents that Jeffreys went to a local store and purchased strychnine, saying he needed it to “kill a dog.” Instead he put the poison in a soft drink from McDonald’s as part of a scheme to sue the fast-food chain, prosecutors wrote.
He would end up hospitalized in the intensive care unit and “the FBI opted not to pursue the matter further,” according to court records.
By 2005, Jeffreys had sold G.J.s’ General Contractors and was focused on several real estate deals in a booming economy. One of those involved the Pillar Rock property near Airway Heights, which would become the site of a flurry of transactions in the years to come.
In 2006, Jeffreys and a partner, Brian Main, began seeking investors for four separate land deals near Airways Heights.
Jeffreys was also making deals at the Ridpath in the years that followed. The historic hotel closed in 2008; a series of failed attempts at reopening, disputes among owners, and an increasingly complicated series of sales that followed its closure broke the hotel into separate units. Jeffreys and a Las Vegas man, Doug DaSilva, purchased different parts of the hotel complex. At one time, Jeffreys owned the Ridpath annex, while DaSilva owned the Ridpath tower. Today, the hotel is owned in 30 separate pieces by several owners, with different banks involved, and the ownership is complicated by lawsuits, foreclosures and bankruptcies.
In both the Airway Heights and the Ridpath deals, investors lost huge sums of money and some went bankrupt, according to attorneys, court records and investors. In most cases, investors had put up relatively small sums initially for the promise of fast profits in a booming market. But they also guaranteed loans Jeffreys took out for the properties and were therefore liable for ever-growing sums as the deals soured and fellow investors began defaulting. Jeffreys would wind up with huge cash payments, little or no liability, and control of the investment groups, according to attorneys involved in the cases.
One of the Airway Heights suits is proceeding to trial; others have been settled. Jeffreys has lost judgments for defaulting on loans of more than $3 million, including one alleging that he improperly diverted a government payment from Washington Trust Bank to his personal account. That allegation forms the basis of several criminal charges outlined in the indictment.
While Main was named in August as a target of a federal investigation into Jeffreys’ dealings, he was not named in the recent criminal indictment.
Attorneys John Black and Bob Dunn, who pursued the first civil actions in 2009 against Jeffreys over the Airway Heights deals, said Jeffreys constructed elaborate deals that made it impossible for investors to fully understand them.
“They’d be introduced to a small piece of the puzzle and told what the puzzle looked like, but never got to see the pieces of the puzzle itself,” Dunn said.
Taken together, the deals and the parties involved form a mind-numbing web of details. Black spent hours and hours simply trying to piece together the relationships and responsibilities of the parties in the transactions.
“It was super-sophisticated,” he said.
Key to the deals were friendly appraisals, they say. For example, in one Airway Heights deal, Jeffreys put down $4,000 in earnest money on a purchase of 39 acres for $300,000. Three days later, he obtained an appraisal of $4.25 million for the same parcel, based on “sham transactions” used as comparable sales, according to court records. He sold the parcel to investors at a “discount” price of $1.6 million.
“The thing we found that’s really intriguing … is how interconnected all of the various players were in the various projects sold to investment groups,” Dunn said. “It soon became obvious to us that what he was actually doing was running a Ponzi scheme.”
Largent became involved with several of Jeffreys’ projects, both in Airway Heights and at the Ridpath, and has sued him over them.
“When I was introduced to him, he was this big developer from Denver who was worth a couple hundred million dollars, coming back to Spokane,” Largent said.
He described Jeffreys as very confident and persuasive. Largent was involved in three deals surrounding the Airway Heights properties; each of those had investment groups of 10 people, he said.
The investors’ guarantees on bank loans left them open to huge liabilities. For example, Jeffreys lost a $1.3 million judgment to Washington Trust Bank based on some of the same allegations that led to the criminal indictment. Campus Group LLC – which is Largent and several other investors – wound up having to cover the judgment in order to sell that land and get away from the deal, Largent said.
He feels that, given the level of professional assistance Jeffreys had in making the deals, it is patently unfair that only investors suffered financial losses.
“He can put these deals together, but without the bank signing off and the appraisers coming up with the values, it would not happen,” he said. “It would not happen in today’s world.”
Learjets and pleasure boats
For many years, Jeffreys lived what the indictment describes as a “luxurious life.” He built a massive, gated three-story home in the Spokane Valley with panoramic views and a standalone four-car garage. He owned a condominium in downtown Spokane where he used to display a beautifully restored 1947 Indian motorcycle. He also has owned homes in Arizona and elsewhere, as well as several boats. Prosecutors say he has traveled all over the world.
The home and condo are now listed for sale. The motorcycle was seized and turned over to a bank as part of a default on a $1.8 million loan.
At one point, an aviation company under his name had a Learjet registered to it for his use; he claimed in the 1999 Journal of Business article that he typically flew to three cities in the course of a typical business day.
More recently, Jeffreys has made frequent trips to Las Vegas for nonbusiness purposes; prosecutors say in the indictment that he and Stiltner have stayed for extended periods in the Mandalay Bay casino during the past two years – “all funded by fraud proceeds.” It alleges Jeffreys “often accumulates hundreds of thousands of dollars in gambling debts.”
Before his arrest, he and Stiltner were living in a Las Vegas rental, where they were falling behind on the $6,000 monthly rent, court records say.
When prosecutors argued against releasing Jeffreys from jail, they cited his frequent travels as one reason. Another was “his long history of threats to injure or kill himself, potential witnesses or adversaries.”
He has, they say, threatened to kill people who have lost money and then turned on him, threatened to hurt people if they stood in the way of his deals at the Ridpath, and threatened people who decided not to go through with a purchase with him. When federal agents searched his home in July, Jeffreys said he could “take” them, according to court records.
During that search, agents found 70 firearms, including numerous handguns and a silencer. Among the weapons was an unregistered sawed-off shotgun, for which he has been charged with a felony.
Jeffreys is being held without bail in Spokane County Jail; his wife and Stiltner were arrested and released on bond.
For many people involved with Jeffreys, the indictment was a long time coming. Among some people with ties to the Ridpath and other Jeffreys deals, knowledge of a federal investigation fueled monthslong speculation about whether, and when, he would be charged criminally.
Others say they were caught by surprise. One local man, who has worked alongside Jeffreys in several deals, said he knew Jeffreys was inclined to “push things” but was shocked by the allegations.
Federal prosecutors allege in the indictment that Jeffreys defrauded banks, including Washington Trust and Wells Fargo, which lent him millions for the construction of a federal government project on the West Plains and other endeavors. They say he defrauded at least 27 investors from around the country using fictionalized financial statements and promises of high returns.
Investors sent amounts ranging from $25,000 to $250,000 to buy into projects including a warehouse in Denver, a government processing center in Denver, an apartment complex in Coeur d’Alene, an office building in San Francisco, an office complex in Seattle, a pair of expensive luxury condos in San Francisco and an eight-unit condo project in Mullan, Idaho.
Prosecutors say none of those projects exist.