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Spokane, Washington  Est. May 19, 1883
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Spin Control

RPS critics try to scuttle Ormsby nomination

A former Spokane mayor and other critics of the River Park Square project are opposing the nomination of a local lawyer to be the next U.S. attorney for Eastern Washington because of his involvement in the mall renovation some 10 years ago.

Former Mayor John Talbott and three others sent a five-page letter to President Barack Obama and key members of Congress asking that Mike Ormsby not be named to the district’s top federal law enforcement spot because of his role in helping to secure financing for the controversial project. They claim the project was rife with fraud, despite federal investigators’ determination last September that no fraud occurred in the mall’s financing.

Ormsby called the letter an “effort to demonize me as a part of this project” and said some of its statements were false or misleading.

“The letter far overstates my importance to and involvement in the project,” he said. “I very much look forward to defending my reputation, performance and ethics in the vetting process.”

Ormsby must be vetted by the Federal Bureau of Investigation before Obama makes the formal nomination, which is subject to a hearing by the Senate Judiciary Committee and a full vote of the Senate. 

River Park Square is owned by Cowles Co., which also owns The Spokesman-Review.

Ormsby served as the attorney for the Spokane Downtown Foundation, a nonprofit organization set up in the mid-1990s by development arms of Cowles Publishing Co. when company officials were discussing a public-private partnership with the City of Spokane to renovate the aging mall.

The foundation eventually sold $31.5 million worth of bonds that were described in their prospectus as tax-exempt, and used by the foundation in 1999 to buy the mall’s expanded garage from the development companies for $26.5 million. Critics of the project said the price of the garage was improperly inflated by an unusual appraisal method, and the IRS later challenged the tax-exempt status of the bonds because of the way the mall deal was structured.

 Investors who bought the bonds eventually sued the city, the development companies, the foundation, Ormsby’s firm and others connected with the project for fraud. The suit was settled out of court, with the city buying up the outstanding bonds from investors and reaching settlements with most of its other co-defendants. Ormsby’s law firm eventually settled a complaint with the IRS that he and another attorney did not perform the “due diligence” necessary on the project before bonds were sold to investors.

Critics also say Ormsby should have advised the foundation to cancel the purchase, or demand a lower price, when AMC Theatres, a key tenant, was threatening to pull out of the mall over a parking dispute, and should not have agreed to sign a non-disclosure agreement about a backup plan the Cowles development companies were offering if they lost AMC.
Washington’s senior senator, Democrat Patty Murray, said through a spokeswoman she still fully supports Ormsby for the job.
“We forwarded Mike Ormsby’s name because he is well-qualified for the post,” Murray spokeswoman Alex Glass said.
Ormsby brought up River Park Square himself in discussions with Murray’s staff and said he was “happy to talk to the White House about it,” Glass said.
The letter from Talbott, former City Councilwoman Cherie Rodgers, former Pend Oreille County Sheriff Tony Bamonte and Tim Connor, a journalist who has written extensively about the mall for an online magazine, contends Ormsby had “central involvement … in the fraudulent River Park Square garage transaction.”

“At a time when it’s vital that the Justice Department send a message that it will not tolerate private fraud and public corruption, Mr. Ormsby’s appointment would send the opposite message,” they wrote.

In 2007, Rodgers and Connor asked for a federal investigation into the involvement of the current U.S. attorney, Jim McDevitt, in the mall project. McDevitt was a partner at the same firm as Ormsby when the mall deal was being structured. He recused himself, and federal attorneys from Western Washington, some of whom specialize in white collar crime, spent about a year looking at documents Rodgers and Connor provided, as well as other evidence.

But the federal investigators concluded there was no fraudulent activity in the various aspects of the mall’s renovation and financing.

“After examining thousands of records from the civil case and using the tools available to the grand jury, we determined there was no case of criminal wrongdoing,” said Robert Westinghouse, criminal chief deputy for the U.S. attorney’s office in Western Washington said.

They did forward to the Spokane County prosecutor information about a fatal accident of a woman whose car went through a garage wall and crashed onto the ramp below. Prosecutor Steve Tucker has yet to decide whether any criminal charges will be filed in that death.

The Spokesman-Review's political team keeps a critical eye on local, state and national politics.