The Oregonian

 

Business News

Ex-Union Leader's Deal Nets Shorter Sentence

JEFF MANNING and JAMES LONG

11/22/01

 

 

A federal judge sentenced former Oregon labor leader John D. Abbott to 15 months in prison Wednesday. Abbott got the shortened sentence in exchange for promising prosecutors he will finger other union pension trustees and testify against Jeffrey L. Grayson in the Capital Consultants financial scandal.

 

Abbott, 54, pleaded guilty to income tax evasion and accepting illegal payments of $195,400 from Grayson. At the time, he was business manager of the Oregon, Southern Idaho & Wyoming District Council of Laborers and an official of five Laborers' retirement and benefit trusts, making him one of the Northwest's most powerful labor officials.

 

"I owe an enormous number of people an apology, first of all my union," Abbott said in court. "I owe my family an apology. My daughters have been through hell. I owe the memory of my late wife an apology."

 

He reached his sentence-reduction deal with the U.S. attorney's office last February after Capital Consultants collapsed amid losses now estimated at $355 million. Much of the money belonged to union retirement and benefit trusts, including the Laborers' trusts. The Laborers lost about $25 million, said Lee D. Clinton, Abbott's successor.

 

Abbott's sentencing came 24 hours after U.S. District Judge Anna Brown sentenced Barclay Grayson, Capital Consultants president, to 24 months imprisonment for mail fraud.

 

Lance Caldwell, Assistant U.S. Attorney, told Brown that Abbott's testimony has been crucial in building the government's case against Capital Consultants Chief Executive Officer Jeffrey L. Grayson, Barclay Grayson's father. The elder Grayson, a prominent Portland businessman who founded Capital Consultants in 1968, is due for trial March 26 on a 22-count indictment charging him with conspiracy, witness tampering, money laundering, mail fraud and making illegal payoffs to Abbott.

 

Jeffrey Grayson assisted Abbott in 1998 when he was in trouble with his parent union for allegedly pocketing office funds and failing to make restitution.

 

Abbott, according to an audit released in March of that year, took at least $172,000 from office funds including $150,184 in personal charges on his union credit card. As Abbott was being pushed to explain what the audit uncovered, Jeffrey Grayson arranged the sale of Abbott's late wife's catering business, netting the union chief $60,000.

 

Abbott repaid the unauthorized credit card charges and promised the international union that he would pay back the rest of the money, nearly $32,000. But he failed to make payments, and in September 1998, the union gave him the choice of resigning or being ousted from the union.

 

Abbott chose to quit and promised once more to reimburse the money he owed. Meanwhile, he organized a consulting company, Kaylano Consulting, and signed a contract with Jeffrey Grayson that promised to pay Kaylano at least $805,000 over five years.

 

Not everyone thought Abbott's 15-month sentence was sufficient. Gayland German, a retired Oregon Laborers member who attended the hearing, later called Abbott "a Judas" and predicted his fellow union members "will be extremely disappointed" with the length of Abbott's sentence.

 

Forrest Rieke, Abbott's lawyer, portrayed his client as just one of 10 trustees with no more and no less clout than the rest. He called Clinton, Abbott's successor, to the stand, to testify that he saw no evidence of Abbott favoring Grayson in the placement of union money.

 

But Clair Anderson, another former Laborers official who served on several trusts with Abbott, disagreed, telling The Oregonian after the sentencing that Abbott effectively controlled the trusts as well as the union.

 

"He ruled with a strong hand," Anderson said. "He had influence with every damn local in the state."

 

Abbott's sentence requires him to pay $195,400 restitution and back taxes, in addition to serving prison time. Rieke told Judge Brown that his client "simply has no money," and the judge agreed that he could work out a payment plan.

 

Clinton estimated that Abbott receives between $8,000 and $10,000 a month in union pension payments.

 

Brown ordered Abbott to report to authorities on May 1, 2002. That will give him time to testify at Jeffrey Grayson's trial, scheduled to begin March 26.

 

Jeff Manning can be reached at (503) 294-7606 or by e-mail at jmanning@news.oregonian.com.

 

James Long can be reached at (503) 221-4351 or by email at jimlong@news.oregonian.com


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