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Saturday, August 24, 2019  Spokane, Washington  Est. May 19, 1883
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News >  Spokane

County monitoring Harley Douglass fraud investigation

Spokane County Commissioner Al French said Friday that he and his fellow commissioners are keeping an eye on a criminal fraud investigation involving a settlement paid by the county to a local developer, but commissioners will not take action to recover the money unless a conviction is obtained.

Court documents say developer Harley Douglass submitted false invoices to bolster a $685,000 settlement paid by the county after the county illegally blocked Douglass’ final plat for a subdivision in the Mead area in 2008.

Any effort by the county to recover money lost in the civil case is on hold for now, French said at a news conference outside his office.

“We will continue to monitor this process,” French said.

Sheriff Ozzie Knezovich said his detectives continue to work on a criminal investigation.

Evidence of fraudulent invoices surfaced after Douglass sued his business partners and their Ace Investments LLC, the owner of the subdivision, in an effort to gain control of the full settlement amount.

Business partners Lanzce and Stacey Douglass, the brother and sister of Harley Douglass, filed a counterclaim seeking their share of the money and restitution. They discovered the invoices during their own private investigation.

A civil engineer working on the project said in a sworn declaration that he was asked by Harley Douglass to submit new invoices matching checks paid by Harley C. Douglass Inc. on a different project, court records show. The amount came to $68,000. Allegedly doctored checks were also discovered.

That information was submitted to the county in February and was passed to the Sheriff’s Office.

French said that part of the claim was paid by the Washington Counties Risk Pool and that the risk pool director does not want to reopen the claim for fear that it might result in a larger settlement to Harley Douglass and Ace Investments.

The county paid a $500,000 deductible from taxpayer funds, and the risk pool picked up the $185,000 balance.

French, a Republican, said the commissioners do not want to take the risk of greater losses without backing from the risk pool. The original claim against the county was for $2.3 million.

Lanzce Douglass dismissed the news conference as “making excuses,” adding, “they’ve been monitoring it since Feb. 22.”

He called the commissioners’ inaction “a cover-up.”

Lanzce Douglass said he and his attorney submitted a letter to the county on Thursday asking for an independent investigation.

Lanzce Douglass said the county could obtain triple damages and a $250,000 penalty if it pursued restitution as a civil matter.

Commissioners have professional and political connections to Harley Douglass and his father, Harlan Douglass, which raises questions of an appearance of fairness, Lanzce Douglass said.

Harlan Douglass contributed nearly $25,000 to the state Republican Party this year. Lisa Bonnett Douglass, wife of Harley Douglass, also donated $10,000 to the state GOP.

GOP Commissioner Todd Mielke, who is seeking re-election, obtained $25,000 from the state party earlier this year, money that Mielke said was provided to his campaign to offset his legal costs for challenging the residency of his opponent, Democrat John Roskelley. Mielke lost the challenge in court last spring.

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