Convicted union pension fund manager Barclay Grayson’s attorney and prosecutors argued for three hours May 30 that Grayson, who has emerged as the government’s lead witness in the Capital Consultants scandal, deserved to have his prison sentence eliminated. Thankfully, U.S. Dist. Judge Anna J. Brown (D. Or., Clinton) didn’t buy it. She sentenced the one-time president of Capital Consultants to eighteen months in federal prison for his role in the investment scam that cost the firm’s clients, including many union pension funds, about $355 million.
Grayson was initially sentenced to two years in Nov. 2001, but prosecutors asked that his sentence be reduced to probation and nine months home confinement based on the “substantial assistance” he’s been in the ongoing criminal investigation. His importance to the government increased earlier this month when his father, Jeffrey Grayson, suffered a stroke that has left him unable to communicate.
Brown agreed to cut Grayson’s sentence by six months. She credited him for the pivotal role he played in convincing his father, Capital Consultants’ ex-CEO, to plead guilty and cooperate with the government. She also acknowledged that Barclay Grayson has put himself at some risk by pledging to cooperate with investigators.
Midway through the hearing, Brown cleared the courtroom so that Grayson and his attorney, Steve Ungar, could elaborate in private on recent threats he’s received. “Barclay Grayson has been placed at risk in his opinion,” Ungar said. “Obviously, there are other targets and suspects in this case. Some are displeased that they might be implicated.”
Grayson, 32 and father of three, sat downcast, his head bowed, through most of the hearing. He did say in a statement to the judge that he’s “been on a different path in life since September 2000,” the month federal regulators seized control of Capital Consultants and ousted the Graysons. He added that he testified against his father and later persuaded his father to cooperate with investigators. “For me this was traumatic beyond words,” he said. “What carried me through was the knowledge that I was doing the right thing.”
Capital Consultants collapsed amidst charges that it was concealing huge losses by employing a Ponzi-like scheme involving various business entities. Barclay Grayson also played a key role in the civil litigation surrounding Capital Consultants’ collapse. A handful of defendants in those lawsuits have tentatively agreed to pay more than $109 million to settle the cases.
“I don’t doubt your remorse,” Brown said in response. However, she said, the seriousness of the Capital Consultants crimes demanded a prison sentence.
“Barclay is extremely disappointed and devastated by the court’s sentence,” Ungar said. Grayson is tentatively scheduled to report to the Sheridan federal prison on June 14. He could appeal the sentence. John D. Abbott, the ex-Laborers union boss who took nearly $200,000 in illegal payoffs from Jeffrey Grayson, already is serving a 15-month sentence at Sheridan.
Prosecutors will continue to rely on Barclay Grayson as their key witness. Investigators continue to look into the actions of twelve people involved with the Capital Consultants case. They include borrowers, union bosses, former employees, and attorneys and accountants involved in the transactions. [Oregonian 5/31/02]