by Ted S. McGregor Jr.

It's been a long couple of years for Erik Skaggs, former vice president at Metropolitan Mortgage. In August 2003, he was called up for a year's duty by the Army to serve overseas as part of Operation Enduring Freedom -- not a huge surprise, since he volunteered for a special operations unit just after 9/11. Then in February, he found out that he had lost his job as part of the massive bankruptcy of Met Mortgage. As a result, he lost his car and almost his house. Now, after landing a job as Spokane County's new director of economic development, he claims he's been defamed in a front-page story that ran in the Oct. 28 Spokesman-Review.

In the story, an attorney involved in a class-action lawsuit against Met Mortgage was quoted saying that Skaggs was directly involved in the kinds of fraud being alleged in the suit. "Based on the information we have, he directed sales programs at Metropolitan that targeted elderly and retired people, sales programs that were found later to be abusive and fraudulent," Mike Shaffer told the Review. Skaggs is a named defendant in the suit.

Skaggs says the charges are false, and if the Review had contacted him prior to running the story, he would have told them just that. "These are lies that are just thrown out to the community about my reputation," says Skaggs. "I've been defamed, and I am going to pursue it to the fullest extent possible." Whether that means legal action remains to be seen. (Proving libel is among the toughest charges to prove, since newspapers are protected by the First Amendment.) In the meantime, Skaggs says he has asked the Review to retract its story.

Steven A. Smith, editor of the Review, says he has no plans to retract the story. "It's a legitimate news story, and he's a legitimate player in the news," says Smith. "Of course, like everyone else, he is entitled to seek remedy in the courts. Frivolous lawsuits happen, and we defend [ourselves against] them."

Skaggs says he was not involved in directing Met's sales effort at all: He is not a licensed broker, and he says his duties were restricted to community affairs and lobbying. He says he is unsure of why he was named in the suit, although he points out that prominent members of Met's former board of directors have also been named. Skaggs adds that he can relate to the thousands of victims of the bankruptcy because he's one, too: His wife lost her entire retirement savings in the bankruptcy. Skaggs himself still holds some preferred shares, but they have lost most of their value.

County Commissioner Phil Harris, who along with Kate McCaslin hired Skaggs, says the fact that Skaggs and his wife moved their retirement money into Met funds contradicts the notion that he knew the company was in trouble. Harris stands by the hire, and says the dispute with the Review is a private matter. "It's not my business, and the county won't be involved in that. But I can tell you that Erik has connections all over that will be very valuable to this county."

Skaggs worries that the story could be political payback; from 1997 through 2002, Skaggs was one of the key players in the battles between Met owner Paul Sandifur and the Cowles family. Issues like the Lincoln Street Bridge, River Park Square and the candidacy of John Talbott were on the front lines of the fight. Skaggs was even named in a lawsuit brought by the Cowles family related to the River Park Square project -- a lawsuit that was later dismissed.

"I challenged the establishment in many different areas," says Skaggs, who developed a reputation as a tough political fighter during those years. "I challenged the leadership of the community. Regrettably, I left a big wake, but long-term, I believe Spokane is better for the debate on the Lincoln Street Bridge and Valley incorporation."

Smith, who has been at the Review for two years, rejects the charge that the story was any kind of payback. "Hogwash," he says. "Mr. Skaggs' role [in the Met bankruptcy] will be elucidated in future litigation."

Still, Skaggs is not quite convinced. "I hope that this is not a case of what happens to people who speak out. This story made me out as some kind of self-serving, bad person, and that's not who I am. I am very committed to my community and my country," continues Skaggs, who served in combat zones and was decorated for his service in the war on terror. "It was especially painful, because it was such a lie."

Publication date: 11/04/04

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About The Author

Ted S. McGregor Jr.

Ted S. McGregor, Jr. grew up in Spokane and attended Gonzaga Prep high school and the University of the Washington. While studying for his Master's in journalism at the University of Missouri, he completed a professional project on starting a weekly newspaper in Spokane. In 1993, he turned that project into reality...