Trial of Cap Consultants Exec & Union Pension Trustees Continues in Ore.

Federal prosecutors and lawyers for now-defunct Capital Consultants salesman Dean Kirkland began dueling in federal court on April 21.  Leading the case against Kirkland, Ore. Asst. U.S. Attny Neil Evans presented evidence that in 1999, union pension trustees were uncomfortable with their funds being moved into the investment firm that eventually collapsed in 2000.  Evans also presented testimony that Kirkland continued to arrange hunting trips with union trustees who supported Capital even after he was advised that such trips likely violated anti-kickback provisions of fed. pension law.  After U.S. Dist. Judge Anna Brown (Ore., Clinton) rejected defense lawyers’ motions to dismiss the case, they began their defense, claiming that in spite of the appearance, Kirkland was only arranging the trips to rebuild a relationship with his father, Gary, frmr. CEO of Local 11 of the Ofc. & Prof. Employees Intl. Union in Portland.


Gary Kirkland is also facing trial, along with Robert Legino, frmr. chairman of the 8th Dist. Electrical Pension Fund in Aurora, Colo.  They are charged with exchanging the long-distance hunting trips for the funneling of pension funds into the Capital investment firm throughout the late 1990s.  Dean Kirkland is also charged with wire fraud and obstruction of justice for allegedly burning his records in Sept. 2000, after the firm’s collapse, and the beginning investigation by the U.S. Depts. of Justice and Labor.


Eighth Dist. pension administrator Bill Greenwood testified that in 1999, an attny. for dissident trustees of the fund wrote to him and all the trutess, incl. Legino, that the trips could well be illegal.  Despite the approval of new guidelines prohibiting the acceptance of such gifts, Legino and the Kirklands hunted elk in New Mexico, ducks in Mexico and antelopes in Argentina.  The trustees also became concerned in early 2000 by the bankruptcy of Wilshire Financial Services, which had received loans from Capital with 8th dist. pension money.  Yet, in Feb. of that yr., a majority of the trustees voted to place another $5 million in Capital.


Later, the ex-president of Cap Consultants, Barclay Grayson, testified that he hid damaging information about the firm’s loans to Wilshire from OPEIU Local 11 with the knowledge of Local 11’s CEO, Gary Kirkland.  In his report on the Local trust fund, an auditor revealed that Capital had forgiven personal loan guarantees by Wilshire executives.  Local 11 funds were a significant part of the $160 million in Capital loans to Wilshire.  Grayson testified that he and Gary Kirkland agreed to remove the information from the auditor’s report.


After federal prosecutors rested their case, Dean Kirkland took the stand in his own defense.  He painted a picture of a son with a strained relationship to his father, Gary, who had largely been absent during his childhood.  In his search for father figures, Dean described Legino as one, who suggested the hunting trips as a way of emotionally reconnecting with the elder Kirkland.  By stressing what they consider the personal motivation for the trips, defense lawyers are hoping to capitalize on the U.S. Sup. Court’s 1999 reversal of an illegal gratuities conviction against Sun-Diamond Growers.  In that case, the High Ct. ruled that fed. prosecutors had failed to show a clear link between the company’s gifts of dinners, tennis tickets, luggage and a crystal bowl to frmr. Agric. Secy. Mike Espy, and regulatory decision he made that were perceived as beneficial to Sun-Diamond.  Defense lawyers hope to show an emotional motive behind the trips that overshadowed the apparent link between the gifts to the union trustees and their shifting of pension assets to the failing investment firm. [The Oregonian, 4/21, 4/23, 4/29/ 5/3 / 5/4 / 5/6, 2004]