Famous for Fraud -- A few years back, little old Spokane made the front page of the Wall Street Journal, but it wasn't for reopening the Davenport Hotel or for being a figure skating hotbed in the making. No, the city landed on the front page for the alleged fraud related to the River Park Square parking garage fiasco.
Now Spokane's back in the headlines for another fraud (alleged, that is). In Sunday's New York Times, the lead story of the business section is all about the implosion of Metropolitan Mortgage. The story, which is available online at www.nyt.com, characterizes the company as seeking the path of least regulation, which drew the attention of state regulators who had been kept out of the picture by new federal legislation aimed to sideline nosey parkers like New York AG Eliot Spitzer. State regulators alerted the SEC, which ultimately cracked down on the venerable Spokane firm -- but only after nearly $100 million more in debentures were sold. The Times suggests it's just another case study in why deregulating financial markets is a dicey proposition. But for us, you've got to wonder if we're getting a national rep for fraudulent behavior -- even if it is only alleged at this point.
Trial Money Flies South -- As for the River Park Square case: A few weeks back, our Robert Herold opined on the downside of moving Spokane's trial of the century to the Tri-Cities. Here's another cost: economic impact. We're always calculating the impact of, say, a figure skating competition on the local economy; so what about the impact of this trial? For six to eight weeks, Spokane will be missing out on dozens of lawyers and witnesses eating in local restaurants and staying in local hotels. (These lawyers love the Davenport, we hear.) And for the final irony, perhaps they'd even park in the River Park Square garage.
Not Quite Vindicated -- Still on the RPS front: As reported in the Spokesman-Review, "Les Weatherhead, an attorney for the developer, said the ruling vindicates the company." Weatherhead was referring to presiding Judge Edward Shea's ruling that when Betsy Cowles appeared before the Spokane City Council in 1996 and 1997 she was merely "lobbying" instead of actually testifying to facts. Therefore, the city cannot argue that the developer misled it. Undeniably it's a clever bit of lawyering and a win for the Cowles side. But to say it's vindication may be a stretch. Had Judge Shea let the Cowles out of the case entirely, then, perhaps, vindication could have been declared. And, in fact, they had argued for that a few weeks back.
Correction -- In last week's profile of Sterling Savings, we misspelled the name of one of the bank's founders; it's William Zuppe.
Publication date: 03/04/04