Oregonian, The (Portland, OR)



May 3, 1992

$2-MILLION PAYDAY EXACTS A TOLL OF GRIEF 


Author: STEVE MAYES - of the Oregonian Staff 

Edition: FOURTH
Section: BUSINESS
Page: A01







Index Terms:
TOM BRIAN FRAUD Biography Profile


Estimated printed pages: 12



Article Text:

Summary: A state legislator is undergoing ethics and real estate inquiries after helping put together a $120-million deal

The envelopes stuffed with $100 bills made Tom Brian nervous.

Then the Japanese businessmen stepped forward.

``They said, `We have something for you, for your campaign,' '' said Brian, a state representative from Tigard, ``and . . . each individual handed me their envelope.

``I kept looking around for the Abscam cameras or something,'' Brian said in a joking reference to a 1978 investigation into congressional influence-peddling.

But there were no cameras. No FBI agents crouching behind the couch.

And barely a need for the contributions at all.

It was April 1990 and Brian was on the verge of becoming an instant millionaire.

Brian was part of a small team of real estate consultants handling the $120 million sale of a Tigard office park, Lincoln Center. He would be paid ! $2,035,000 for helping put the deal together.

That April, Brian also was running for a second term in the state House of Representatives. He was not yet a rich man. The contributions -- from Yoshimitsu Misawa, the man who bought Lincoln Center, and his business associates -- were an unexpected boon to Brian's re-election effort.

Though it seemed heaven-sent at the time, Misawa's money -- both the political donations and the multimillion-dollar fee from the Lincoln Center sale -- would prove hellish for Brian.

Less than five months after the sale closed, Misawa sued Brian and other consultants, claiming they padded the sales price by nearly $13 million. Nearly everyone named in the lawsuit, Brian included, settled with Misawa. Brian and a few others returned some of their fees to Misawa. Because the settlement terms are confidential, it isn't known how much Misawa got back; some familiar with the case say it was several million dollars.

! Brian is now under investigation by the Oregon Real Estate Agency and the state Ethics Commission. He is accused of using his elected position to influence the Lincoln Center deal and of conducting professional real estate business without a license.

Brian said he is the victim of a witch hunt and that the charges against him are bogus.

Beyond the formal allegations of wrongdoing, there is a more troubling side to the story.

It is a tale of greed and deceit.

The huge fees collected by Brian and others may have been paid with tainted money.

Misawa was jailed by Japanese police in January. Authorities believe he may have defrauded Japanese banks and finance companies of more than $600 million.

If the suspicions are true, it would explain why Misawa was willing to spend a fortune on Lincoln Center with little haggling and few questions asked.

Those involved in the deal didn't ask many questions about Misawa, either. Brian said he heard rumors of Misawa's involvement in money laundering and p! ossible connections to organized crime but discounted the reports.

Brian also said he and others handling the sale decided not to tell Misawa that he could have bought Lincoln Center for $4 million less than he paid.
- $2 million paycheck
Tom Brian sat in a Tigard restaurant sipping iced tea and talking about his short life as a millionaire.

``For seven months I had $2 million,'' Brian said on this warm day in early spring. He spoke in a matter-of-fact voice tinged with wistfulness.

He wasn't dressed fancily. A chamois shirt. Work pants. He could have been the guy in line ahead of you at 7-Eleven, waiting to buy a Big Gulp and a Megabucks lottery ticket.

In a way, the beefy ex-cop did win the big prize. He took home a $2 million-plus paycheck for helping arrange the Lincoln Center sale. Brian's main duties were to contact the seller and supply information about the property. Opinions vary about the role he played in the negotiations.

His mood shifted from exhilaration to exasperation as he discus sed the excitement and sadness the money brought him.

``Granted, it was a lot of money, and I don't know what you do about that. When the opportunity comes your way and you're not doing anything wrong, it's a tremendous blessing,'' Brian said.

Through the blissful summer of 1990, Brian believed his money worries were over. By his account, he would have had to work at his job as a real estate consultant for 30 years to make that much money.

Brian said he did not flaunt his new-found fortune. ``I didn't want it to affect my friendships or my kids.''

He paid off a car loan and landscaped his yard. He donated some to his church and sprang for a family reunion at Sunriver.

Then, in September 1990, Misawa filed a lawsuit alleging that Brian and others bilked him out of several million dollars. Misawa sought $57 million in damages, including punitive damages of more than $38 million -- three times the fees Brian and the others received.
! 

Then came the state investigations.

Court records, interviews and a sworn statement made by Brian help illuminate how he fell into one of the largest real estate deals in Oregon history.

And how $2 million bought trouble rather than tranquility.
- Multimillion-dollar surprise
Tom Brian had been a real estate consultant for 10 years when he met Beaverton real estate broker Frank Hasebe and one of his agents, Dale Addington, back in the fall of 1989.

One of Brian's friends and business associates, Tigard attorney Marvin Bowen, was working with Addington on land-use issues and asked Brian to help out. The team then did some consulting work for Misawa, who was investing in Washington County residential land.

Misawa also was in the market for big-ticket investment properties. He especially liked the look of Lincoln Center, a newly built 55-acre complex of brick office buildings.

The property on Southwest Greenburg Road was! owned by the Trammell Crow Co., and Brian knew company officials fro m his days as Tigard mayor.

Brian contacted Trammell Crow. The development company agreed to sell if it was assured it would receive a little over $107 million after all other expenses were paid.

But from Brian's viewpoint, there was a problem.

Bowen and Brian didn't have anything in writing that guaranteed the two of them would make any money on the deal.

Hasebe and Addington, on the other hand, ``had the relationship and the trust of the Japanese client,'' Brian said.

``We didn't trust them,'' Brian said. ``We didn't know if they were going to cut us out or hose us over or what.''

Bowen did not respond to telephone messages left at his home and office during the last two weeks by a reporter for The Oregonian.

Uncertain they would be compensated, Brian and Bowen told Hasebe and Addington the price was $111.6 million -- $4 million more than the actual price. Brian and Bowen figured they had $4 million worth of wiggle roo! m. They could pretend to negotiate the price down and stake a claim on whatever was left above Trammell Crow's asking price.

Then came the surprise.

Hasebe and Addington went to Japan and told Misawa that Lincoln Center was available for $120 million -- almost $13 million more than Trammell Crow's price. Unfazed, Misawa agreed to the price.

The real estate agents also informed Brian that he and Bowen would get a share of the commission. Hasebe and Addington thought there would be nearly $9 million to split up -- the difference between the $120 million Misawa would pay and the $111.6 million that Hasebe and Addington believed to be Trammell Crow's asking price.

Most of the commission, $5 million, would go to Yasuhiro Kozai, a Japanese middleman and friend of Misawa. Kozai, nicknamed Yas, acted as a matchmaker between the Americans and Misawa.

- Action presents problem
Misawa's quick action left Brian and Bowen, who handled negot! iations with Trammell Crow, in a sticky spot.

``Now we've got this problem of saying the price is $4 million lower without letting (Hasebe and Addington) know we didn't trust them,'' Brian said.

Eventually, Brian and Bowen told Hasebe and Addington that Trammell Crow dropped the price by $4 million.

That posed another problem.

Brian said Addington told him that Japanese investors are spooked when terms of a deal are altered. ``We were constantly being told the Japanese don't like changes,'' Brian said.

Misawa, after all, was happy with the deal and had agreed to pay $120 million.

The way the deal was structured, the sales documents Misawa received would not reflect the huge commission.

It boiled down to one simple question: Why mess with a good thing?

So, Brian said in a March 1991 sworn statement, ``I tell Dale, `There's $4 million there on the table. So what are you going to do with it?' ''

``And he said, `Well, we'll just split it.'

``And I said, `Who do you mean,! we? Do you mean like Yas and the four of us?' And he said, `Well, not even Yas. He's got $5 million. That's enough for him.' ''

And so the four divvied up $4 million.

But Bowen felt slighted, Brian said in the statement, which he made to Misawa's attorneys as part of his settlement agreement.

As Bowen saw it, Hasebe and Addington were about to become much richer without lifting a finger.

And as Bowen and Brian reflected on this, they decided they should be compensated for sharing the wealth.

Here is how Brian explained it in his statement:

``It was not in our original plan, but we essentially laid a million dollars extra in Dale's and Frank's laps.''

``Marv said, `They ought to pay us a bonus.' And I said, `Well, you know, it's kind of awkward. I mean, we're getting well paid if this happens.' ''

- Bonus question raised
About a week later, Bowen brought up the bonus again, Brian said.

``I remember be! cause I was looking at that point (of) needing a new car, and I said, `Well, geez, you ought to tell them if this all comes together, they ought to buy me a Voyager or something.' And he said, `Hell, it ought to be more than that. We just laid a million bucks each in their laps. They ought to buy us a beach house.'

``And I said, `Well,' and he said, `Well, they ought to. They ought to pay us $150,000, so we can buy a beach house or a house at Black Butte,' and I said, `Well, that's a little awkward,' and he said, `Well, you ought to ask them.'

``I said, `I'm not going to.'

`` `Well,' he said, `I'll ask them,' and I said, `That's fine, but I don't want to ask them.'

``And so he asked them.''

And Hasebe and Addington each agreed to cut their commissions by $75,000 and give the money to Brian and Bowen.

``Nah,'' Dale Addington said in a late April interview, ``there was never any discussion like that.''

While many of those involved in the Lincoln Center deal generally agree with Brian's chr! onology of events, Addington is not one of them.

``Tom Brian isn't telling the truth in many cases,'' Addington said.

``It was always understood that (Brian and Bowen) would be compensated,'' Addington said.

Furthermore, Brian's version of the conversation about splitting up the additional $4 million never happened, Addington claims. ``I didn't even know there was an extra $4 million'' until after the lawsuit was filed, Addington said.

Once Misawa signed an agreement to buy Lincoln Center, Hasebe and Addington took a backseat, and Bowen and Brian took over the negotiations with Trammell Crow, Addington said.

``We were kind of kept in the dark about what we were going to get until the thing actually closed,'' Addington said.

But the fact remains that when the payoff came, Brian and Bowen each received $2,035,000, and Hasebe and Addington were paid $1,885,000, according to court records. That jibes with Brian's claim that Hase! be and Addington each agreed to pay a $75,000 bonus from their shares. 

When asked in an interview why he asked for even more money when he stood to clear almost $2 million, Brian turned and looked out the restaurant window.

He stared at the cars on Pacific Highway.

``It probably was greed,'' he said quietly. ``I got sucked into a black hole.''
- Irregularities in Japan
Tom Brian agreed that sudden wealth is intoxicating.

As the $120 million sale of Lincoln Center closed in spring 1990, Brian realized he really was going to make $2 million.

Brian was giddy.

``I said something like, `Gee, this is incredible. It's kind of a life changer,' '' he recalled.

Brian went to his credit union after the deal closed and deposited a check for $683,000 -- an amount so unexpectedly large that the teller helping Brian had to fill out a deposit slip three times because she didn't write in enough zeros.

And, Brian remembered thinking, ``I have two more checks just like it in my pocket. What ! a feeling.''

Although Brian prides himself on being a family man, a churchgoer and one sworn to uphold the law, he developed a blind spot when it came to Misawa and the Lincoln Center deal.

Brian knew there were irregularities. For example, there was:

*Misawa's willingness to pay top dollar for a property with few questions asked.

``It is very unclear, and it will probably always remain unclear, but the bottom line is, nobody would argue with the fact that Misawa made absolutely no effort to negotiate the $120 million price,'' said Phillip Querin, Hasebe's attorney.

*Misawa's unwillingness to assume the existing mortgage on Lincoln Center -- an obvious, financially prudent move. Instead, Misawa was adamant about arranging the financing himself.

Addington said Misawa was told ``numerous times'' that he could save several million dollars'' by assuming Trammell Crow's mortgage on Lincoln Center.

``I can remember in the ! last meeting that we had with Mr. Misawa and Marv Bowen brought it up . Mr. Misawa got very upset, and when he gets upset, he would jump up from the table, go out to the restroom and get a cigarette and come back in. And he would say in his broken English, `I'll bring cash.'

``He had many opportunities to assume financing, but he absolutely wanted to bring cash from Japan,'' Addington remembered.

*The rumor that Misawa was engaged in money laundering or organized crime.

Brian said he did not find the accusations against Misawa to be credible.

A Trammell Crow official who speaks Japanese did some checking on Misawa, said Brian, and concluded he was genuine. That boosted Brian's confidence in Misawa.

After all, Misawa's company owned more than 30 commercial buildings worth perhaps $1 billion in the rapidly appreciating Japanese market.

``He seemed like a big-time player,'' Brian said. ``It didn't seem like anything was wrong.''

Still, Brian said, ``when someone makes a $120 million offer wi! th no contingencies, you don't know where his money is coming from . . . ,'' Brian said. ``It was enough to make me wonder.''

Japanese authorities did more than wonder about Misawa. They put him in jail in January.

Police claim Misawa and the others conspired to defraud a Tokyo lender, Daiei Finance, out of $39 million last summer.

Police said Misawa obtained loans by using fradulent certificates of deposit as collateral. The certificates allegedly were forged by officials at an agricultural cooperative. Three former cooperative officers also were taken into custody.

Government officials believe the cooperative issued more than $600 million in false certificates of deposit on Misawa's behalf since early 1990.

A few days before Christmas 1991, a subsidiary of Tokyo-based Sanyo Finance Co. Ltd. quietly purchased Lincoln Center from Misawa for $102.7 million -- around $17 million less than Misawa paid.
- Misawa strikes back
To! m Brian was right about his cache of cash being a life changer.

On the plus side, he no longer had to worry about scraping together money to pay his bills.

On the minus side, allegations that he engaged in unethical behavior and deceptive business practices keep popping up in newspapers and on television and in the reports of state investigators.

First came Misawa's lawsuit. The Japanese businessman sued just about everyone involved in the Lincoln Center deal.

Misawa alleged he was deceived and overcharged.

Misawa claimed he was told that the commissions would total around $2 million. That is a reasonable amount for a $120 million transaction, according to industry standards.

Brian said Addington told him Misawa was aware of the $13 million in commissions ``and was OK with it.''

For a supposedly sophisticated real estate investor, Misawa's behavior didn't make sense.

``One must wonder why such obvious issues as the payment of commissions would not have been addressed before closin! g,'' Querin said. ``It just flies in the face of everything Misawa presumably had accomplished in Japan.''

But, according to Brian's statement, Misawa was trying to resell Lincoln Center in Japan for $150 million. Misawa took out a short-term loan to buy Lincoln Center. When no buyer appeared and the note came due, he may have scrambled to find cash to extend the loan and cover payments.

Misawa also alleged that Hasebe, Addington and Kozai falsely claimed they had a major pension fund waiting in the wings to buy Lincoln Center for $150 million. No such buyer ever materialized.

Brian settled with Misawa and gave back some of the money in late 1990. A confidential settlement agreement prevents him from saying how much. A knowledgable source said Brian returned around $1.35 million, leaving him with around $700,000.

It has been 19 months since the suit was filed. Yasuhiro Kozai and his wife Erica are now the only defendants.
- State inve! stigations
Tom Brian's big problems began with Misawa's lawsuit.

The high-profile court brawl led to an Oregon Real Estate Agency investigation of the Lincoln Center transaction. Brian, Bowen, Hasebe, Addington and others are under scrutiny for allegedly violating state real estate laws. State investigators are looking into charges that Brian conducted professional real estate activities without a license.

Brian argued that it is a technicality. He said he has a real estate license but it was inactive at the time of the sale.

``Much of the activity that I was involved in was not real estate activity,'' Brian said.

Brian said he did not read the real estate statutes until after Misawa filed his lawsuit. He said he was ``disappointed at how thorough and specific'' the rules were.

The Oregon Government Ethics Commission is investigating two charges against Brian.

The alleged violations involve Brian's use of House of Representatives stationery and a $10,000 check he received from Misawa's com! pany, Seiyu International Corp.

If the commission concludes that Brian used his public position for personal gain, he could face a penalty equal to twice the amount he earned -- a fine of more than $4 million.

State investigators uncovered two letters to Misawa -- printed on Brian's House of Representatives letterhead and supposedly signed by Brian -- describing the Lincoln Center complex and its value.

Brian said he didn't remember printing one of the letters on his legislative stationery. He claims that he did not sign the other letter. Someone could have forged the letter to impress Misawa, Brian said.

During a January interview, Brian ``showed himself to be evasive, less than candid and inconsistent'' and ``displayed a very, very faulty memory,'' state ethics investigator James Pons said in an affidavit.

The second allegation -- that Brian used his office for personal gain -- involves a $10,000 check to him from Misawa. Brian ! said Misawa told him the check was to be used both for his re-electio n campaign and for real estate advice.

Brian said he declined a separate $50,000 campaign contribution from Misawa in 1990.

The commission is considering whether Brian accepted a gift from an entity with an interest in influencing legislation. Some on the Ethics Commission are skeptical that Seiyu International -- simply because it is a large landowner -- fits that description.

Brian said he used $2,500 for campaign expenses and deposited the rest in his personal account. That is legal under Oregon's election laws.

Last month, the Ethics Commission deadlocked 3-3 over whether to drop its investigation into the campaign contribution.

Brian has filed a legal challenge to the commission's investigation in Washington County Circuit Court, arguing that the commission had no evidence the Seiyu contribution had violated ethics standards. The Ethics Commission agreed to suspend its investigation pending the outcome of a court hearing Thurs! day.

Rece Bly, Brian's attorney, said there's no evidence that Brian committed any violation. ``We're going to end up prevailing on both sets of charges,'' he said.

Brian said the Ethics Commission investigation has taken far too long, and he wants his day in court.

He said he's tired of being left hanging.

So he spends his time preparing his case and waiting.

And reflecting on how a once-golden opportunity now weighs like lead on his future.

``Sometimes,'' said Brian, ``I wish it had never happened.''

Caption:
Color photo -- TOM BRIAN
Photo -- YOSHIMITSU MISAWA - Buys Tigard office park Graphic/Photo -- Lincoln
Center office complex in Tigard.





Copyright (c) 1992 Oregonian Publishing Co.
Record Number: 9205030183