The Oregonian

 

 

 

Ex-Capital Consultants Salesman Agrees To Play For Trust Funds' Team

 

 

JAMES LONG and JEFF MANNING

08/09/01

 

Dean Kirkland, Capital Consultants' former chief salesman to union trust funds, has been dismissed from lawsuits by 17 funds that lost millions in the collapse of the Portland investment management firm.

 

Kirkland agreed to cooperate with the trust funds in their lawsuits against Capital Consultants and its former chairman, Jeffrey Grayson, and others, said Richard L. Grant, Kirkland's attorney.

 

The funds reportedly are near a $40 million settlement with American International Group, a liability insurer for Capital Consultants and the former Wilshire Credit Corp. Wilshire's failure to repay $160 million in loans to Grayson's firm precipitated Capital Consultants' collapse last year.

 

Under Kirkland's employment agreement, Capital Consultants, and hence AIG, were liable for his actions as a salesman "if he had reason to think his actions were proper," Grant said.

 

"This is a great day for me and my family," said Kirkland, a 33-year-old former professional football player who said he raised about $500 million for Capital Consultants before he quit the company in September. He held the title of vice president.

 

After the Securities and Exchange Commission forced Capital Consultants into federal receivership Sept. 21, former clients sued to recover the $160 million in unpaid loans to Wilshire Credit.

 

A federal criminal investigation also is under way against Grayson and Wilshire Credit's former top officials, Andrew Wiederhorn and Lawrence Mendelsohn, and others.

 

The various parties involved in the civil lawsuits have been in private mediation since May to try to reach a settlement.

 

Kirkland was drawn into the legal imbroglio largely because of big-game hunting and fishing trips -- including an African safari -- that he hosted for pension fund trustees who invested members' money. Federal pension laws require those with control over trust funds to act solely in the interest of beneficiaries. Both Capital Consultants and the trustees were covered by the laws.

 

Kirkland blamed his former boss --Grayson -- and various attorneys for giving bad advice about the propriety of the trips.

 

"I went out and worked hard for that guy," Kirkland said of Grayson.

 

Kirkland said he and his family have suffered financially and emotionally from the Capital Consultants debacle and the ensuing bad publicity.

 

"Around $2 million of my family's own money including my own money were in Jeff's investments," Kirkland told The Oregonian.

 

Grayson, reached by e-mail, said that he, as well as Kirkland, had been misled by lawyers.

 

"We religiously relied on their legal advice to make sure that we were not in violation of any securities or pension laws," Grayson said. "As far as I am concerned Dean Kirkland did an excellent job, worked extremely hard and we were friends."

 

Kirkland, the son and grandson of prominent Oregon labor officials, acknowledged that Grayson may have hired him partly because of his family name. He worked for Capital Consultants almost a decade beginning in 1991, some of it part time while playing offensive line for the Buffalo Bills and other teams.

 

Kirkland, whose salary and commissions totaled about $500,000 a year when he quit Capital Consultants, said he didn't recall how much of the $500 million he brought in to the firm over a decade was from unions and their trust funds.

 

He now runs his own investment company, Granite Investment Partners. He and a handful of fellow Capital Consultants alumni specialize in small-cap stocks and bonds.

 

Among the pension trusts that named Kirkland as a defendant was the 401(k) retirement fund of the Office and Professional Employees International Union Local 11, whose trustees include Kirkland's father, Gary, also head of Local 11.

 

The Local 11 lawsuit alleged only that Dean Kirkland misrepresented the security of the loans. But a class-action suit by some Local 11 members against Gary Kirkland and other trustees cited the Kirklands' kinship and Gary Kirkland's participation in hunting and fishing trips at Capital Consultants' expense.

 

Dean Kirkland scoffs at the notion that his father or other trustees who accepted the outings in places such as Alaska would have been influenced unduly to favor Capital Consultants.

 

The U.S. Department of Labor, he said, has no clear standards on trustee gifts and entertainment. "Other money managers do the same sort of thing with golf, meals and gifts," he said.

 

"Nobody says anything about golf," he added, saying he put aside the golf clubs in favor of hunting and fishing because his clients liked it better.

 

"Go hunting and fishing and puke next to 'em for 72 hours," Kirkland declared, "and you'll bond."

 

You can reach James Long at 503-221-4351 or by e-mail at jimlong@news.oregonian. com. You can reach Jeff Manning at 503-294-7606 or by e-mail at jmanning@news.oregonian.com

 

You can reach James Long at 503-221-4351 or by e-mail at jimlong@news.oregonian. com. You can reach Jeff Manning at 503-294-7606 or by e-mail at jmanning@news.oregonian.com

 


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