The Oregonian

Grayson Files To Postpone Trial

JEFF MANNING and JAMES LONG
03/22/02

Jeffrey Grayson is seeking to postpone his criminal trial on fraud and conspiracy charges.

The trial is scheduled to begin Tuesday. Instead, Grayson said in a motion filed Thursday in U.S. District Court in Portland that he wants to put off the trial and enter a plea to new criminal charges.

Grayson, the former investment manager accused of losing $355 million of his clients' money on failed and fraudulent investments, asked for an April 23 hearing on the new charges.

What those new charges will be and what Grayson's plea will be are unclear. Harvey Silets, Grayson's lawyer, would not elaborate beyond the three-paragraph motion. Silets and Lance Caldwell, assistant U.S. attorney in charge of the case, confirmed late last month that Grayson, former CEO of investment firm Capital Consultants, had reached a tentative plea deal with the government.

A federal grand jury last October indicted Grayson on 22 counts of fraud, conspiracy, money laundering, witness tampering and paying illegal gratuities to a union pension fund trustee. The indictment charged Grayson with making nearly $200,000 worth of secret payoffs to John Abbott, former co-chairman of trust funds affiliated with the Oregon and Idaho Laborers Union.

Abbott, who in turn steered tens of millions of dollars from the Laborers to Capital Consultants, has pleaded guilty to accepting the illegal payments and will begin a 15-month prison sentence in May.

Barclay Grayson, Jeffrey Grayson's son and former president of Capital Consultants, is due to begin a 24-month prison sentence, also in May, after pleading guilty to one count of fraud.

Jeffrey Grayson pleaded not guilty to all charges after his indictment. But as his trial neared, he offered to assist prosecutors in exchange for a plea agreement. In a Feb. 22 e-mail, Grayson told friends his failing health and his love for his son convinced him to work with prosecutors.

Grayson, who suffers from multiple sclerosis, is hoping his assistance will win a reduced sentence for Barclay, according to the e-mail and statements by attorneys.

Prosecutors continue to explore possible charges against other players in the Capital Consultants scandal. Last fall, they notified Portland businessmen Andrew Wiederhorn and Lawrence Mendelsohn that they were targets of a grand jury investigation. Wiederhorn and Mendelsohn headed the former Wilshire Credit, which plunged Capital Consultants into financial disarray when it defaulted on a $160 million debt.

In his e-mail, a copy of which was obtained by The Oregonian, Grayson told friends that he would "fully cooperate in an effort to identify any allegations of wrongdoing by others who were formerly connected to Wilshire or Capital Consultants."

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

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