The Torch Passes to Mike Ormsby

Mike Ormsby succeeds his one time law-partner, and River Park Square collaborator, as U.S. Attorney for Eastern Washington.

Mike Ormsby, a long-time Spokane bond lawyer nominated by President Obama to be the U.S. Attorney for Eastern Washington was confirmed Thursday (September 30th) by the U.S. Senate.

New U.S. Attorney Mike Ormsby

Ormsby comes from a well-connected family of Eastern Washington Democrats. His brother Timm is a popular state representative and his late brother Patrick was a former close advisor to both former Speaker of the House Tom Foley and Senator Patty Murray. By all accounts, it was Sen. Murray’s office who pushed Ormsby’s controversial nomination.

Ormsby’s reputation has been sullied by his role as the lead attorney for what the U.S. Internal Revenue Service eventually concluded was an illegally constituted non-profit organization, the Spokane Downtown Foundation (SDF). With the help of Ormsby and his law firm, Preston Gates (now K&L Gates) the SDF sold more than $30 million in tax-exempt bonds to fund the 1999 purchase of the River Park Square garage. Within months after the Foundation bought the garage for $26 million from Cowles family real estate companies (who’d previously, and unbeknownst to members of the SDF board, had employed Ormsby), the garage began to lose money. The financial meltdown of the RPS garage triggered a political revolt in Spokane, led to the IRS investigation, and led to a successful federal securities fraud suit against the City of Spokane, the SDF, Ormsby’s firm, and Cowles real estate companies, among others. As part of the settlement in the RPS garage case, Preston Gates agreed to pay $1.3 million.

Ormsby’s direct involvement in the transaction led the IRS’s Tax Exempt Bond Unit to refer his name to the Service’s Office of Professional Responsibility for investigation of unethical and disreputable conduct. In December of 2007 the IRS issued a short press release announcing the settlement of the complaint, and the agreement by Ormsby and another K&L Gates lawyer to fully comply with the firm’s due diligence procedures and to submit their work for internal review for an 18-month period. Neither Ormsby nor the firm admitted to any wrongdoing.

Discovery in the RPS civil fraud case revealed that both Ormsby and his law partner, James McDevitt, were involved in secretive negotiations to close the RPS garage transaction in the face of mounting public opposition in Spokane. Those opponents included then-mayor John Talbott and former Spokane city councilwoman Cherie Rodgers. Talbott, who now lives in Pasco, is one of many who publicly objected to Ormsby’s nomination.

Ormsby’s confirmation by the U.S. Senate comes only two weeks after Duane Swinton, another key figure in the RPS scandal, was given the 2010 James Anderson Award by the Washington Coalition on Open Government.

One of the most damning revelations in the RPS controversy was a confidentiality agreement drafted by Swinton and signed by Ormsby in which Ormsby agreed on behalf of the Spokane Downtown Foundation not to disclose, or even publicly discuss, an agreement that was subject to disclosure under the state’s open records law. If Ormsby’s client was found to have illegally withheld the document (as the agreement required), then the agreement obliged Swinton’s client–the same family corporation that publishes the city’s daily newspaper–to pay the statutory penalties and attorney’s fees.

Ormsby’s supporters, most notably McDevitt, a Republican, have applauded him for his civic service and legal experience. Ormsby served on the Spokane Public School district board from 1975 to 1983, and has also presided over the Spokane County bar association and been a member of the Board of Trustees for Eastern Washington University.

–CFJ