A new federal indictment against jailed developer Greg Jeffreys and his wife accuses the couple of defrauding a local bank to buy pieces of the troubled Ridpath hotel.
A second indictment filed in U.S. District Court in Spokane accused him and co-defendant and girlfriend Shannon Stiltner of conspiracy and criminal contempt for violating a federal judge’s order prohibiting the pair from communicating.
The conspiracy threatens to ensnare members of Stiltner’s family as the indictment details the involvement of Stiltner’s daughter, mother and sister, along with Jeffreys’ sister. Federal agents referred to the women, who have not been charged, as co-conspirators who helped Jeffreys talk on the phone with Stiltner and arrange the sale of guns, jewelry and other assets.
Jeffreys has long been blamed for the derelict Ridpath’s tangled legal mess. Until now, however, no criminal accusations had been leveled related to his Ridpath dealings.
Jeffreys, wife Kimberly Jeffreys and Stiltner were initially named in a 73-count federal indictment in January that alleged they engaged in a Ponzi scheme involving complicated real estate transactions. Federal prosecutors said they defrauded investors of millions of dollars.
In the new indictment filed Sept. 18, the U.S. attorney for Eastern Washington alleges that Greg Jeffreys and his wife agreed to buy two floors of the Ridpath, then obtained an inflated appraisal for the property to help secure a loan from Spokane-based RiverBank. The couple have pleaded not guilty to the new charges.
“The loan application documents and financial statements contained numerous false and fraudulent statements,” according to the indictment.
Among those claims, federal prosecutors allege: The Jeffreyses said they owned $93.6 million in bonds, $32.7 million in Denver real estate and had about $62 million in their personal accounts that included cash and certificates of deposit.
None of it was true, prosecutors say in court documents.
Based on those statements, however, RiverBank loaned the couple $1.1 million in October 2008. About $850,000 went toward the purchase of the 12th and 13th floors of the Ridpath, which had closed in 2008 and was being sold off in pieces. About $250,000 went toward paying off a line of credit at RiverBank on behalf of a third party, listed in court documents as “B.M.”
The Jeffreyses made some mortgage payments to RiverBank using money made in their other “fraud schemes,” court documents say. Ultimately, however, they stopped paying on the loan, causing it to go into foreclosure.
The loan to Jeffreys was one of the problems that led federal banking regulators to demand that RiverBank raise more capital, which the bank successfully accomplished by securing a $5 million investment.
Bank executives did not return a phone message Thursday.
Greg Jeffreys is being held without bail, but Kimberly Jeffreys is free on a $150,000 bond. Greg Jeffreys’ attorney, Mark Vovos, declined to comment on the new bank fraud allegations.
In the second indictment naming Jeffreys and Stiltner, the two are charged with conspiracy and multiple counts of criminal contempt. Both pleaded not guilty, and Stiltner was released on a $220,000 bond.
Named as co-conspirators are Stiltner’s daughter, Kayla Green; Stiltner’s sister, Sherri L. Mullet; her mother, Gail Stiltner; and Jeffreys’ sister, Lori Ann Osborne.
Court documents say Jeffreys and Stiltner disobeyed a judge’s orders prohibiting them from contacting each other or a list of potential victims or witnesses. In addition, Jeffreys allegedly violated the judge’s order not to contact Stiltner’s daughter. The documents say they talked on the phone and exchanged messages through their family members from January through mid-May this year.
They also conducted business, the indictment alleges.
Jeffreys had Green call one of the people on the victim/witness list and report back about that person’s “business and debt issues,” court documents say.
He also told Stiltner, through her daughter, that he wanted her to sell his $22,000 watch and “to ensure that the funds are sent to Shannon Stiltner via cash hidden in a magazine,” the indictment alleges.
Jeffreys also told Green that “things were not going to be as stringent” when he was transferred to a cell in Benton County, Wash., and the indictment alleges that he used other inmates’ phones to call Stiltner and her daughter.
In one call, Jeffreys and Stiltner “discussed how their call(s) violated their judicial no-contact orders, which they also disparaged,” the documents say.
Jeffreys asked his sister to get in touch with one of the people subject to the no-contact order and ask for a loan, the documents allege. His sister, Osborne, also was asked to solicit money from investors, but that business arrangement apparently soured because Jeffreys believed his sister wasn’t “cut out” to help them, the indictment says.
Stiltner provided addresses of those on the no-contact list, the documents allege, and she and Jeffreys exchanged many letters, some of which Stiltner was instructed to pass along to others.
The potential penalty for the bank fraud charges is 30 years in prison and a $1 million fine. The potential penalty for the conspiracy and contempt charges is five years in jail and a $250,000 fine.