Mastro to fight regulators' charges

Bankrupt Seattle real-estate magnate Michael R. Mastro said Wednesday that he will fight regulators' charges that he misled investors in violation of state securities law.

Mastro's request for a hearing to contest the allegations was received by the state Department of Financial Institutions' securities division today, said Mike Stevenson, the division's director.

The division charged earlier this month that Mastro made false statements and omitted important information in representations to so-called "Friends & Family" investors from whom he raised more than $100 million.

It proposed that he be fined $100,000 and prohibited from accepting more money from individual investors.

Mastro spoke Wednesday during a break in a public meeting with creditors in U.S. Bankruptcy Court. He was forced into bankruptcy this summer by three banks that said he was not paying his debts.

Mastro has since filed documents indicating he has more than $580 million in liabilities.

His Friends & Family investors, mostly Western Washington residents, are among the unsecured creditors who will be last in line to collect when Mastro's assets are liquidated.

They're not likely to get much, James Rigby, the court-appointed trustee in charge of that liquidation, repeated at the Wednesday meeting.

Some Friends & Family creditors want to replace Rigby with Brian Ward, a Mercer Island attorney and real-estate broker who until last year ran a private-equity fund that invested mostly in apartments.

An election for the position was conducted at Wednesday's meeting, but the outcome won't be known until next week.

After the balloting, Rigby spent more than three hours questioning Mastro under oath about his complex finances.

Eric Pryne: 206-464-2231 or epryne@seattletimes.com