No charges in Spokane River Park Square case

The complicated financial package to build the River Park Square shopping mall in downtown Spokane did not involve any criminal conduct and no charges will be filed, the U.S. attorney's office for Western Washington concluded Friday.

A yearlong FBI investigation was supervised by the Western Washington office at the request of U.S. Attorney James McDevitt, of Spokane, who was once a partner in Preston Gates Ellis, a law firm that represented a party in the mall project.

The $110 million mall and its garage were constructed by a combination of public and private funds, including $31 million in bonds sold to investors. It has been plagued by accusations of financial scandal since it was built a decade ago.

Assistant U.S. Attorney Robert Westinghouse said Friday that investigators concluded there was no intent to commit fraud or other crimes by the developers. The mall is owned by the Cowles Co., which also publishes The Spokesman-Review newspaper and has many other business interests in the area.

"No federal criminal charges are appropriate," Westinghouse told a news conference. "There will be no further federal involvement."

Former city Councilwoman Cherie Rodgers and independent journalist Tim Connor last year asked for an investigation to learn whether the project violated federal corruption laws.

"I'm disappointed," Connor said Friday, adding he still believed there was fraud in the sale of bonds that were based on faulty revenue projections.

Marlene Feist, spokeswoman for the city, which assumed responsibility for the bonds, said the decision was expected.

"It's a healthy thing that a thorough, independent investigation was undertaken," said Les Weatherhead, attorney for River Park Square. "There is no merit to the allegations circulated by a few individuals who have sought to diminish the great contribution River Park Square made to our city and its significant downtown revitalization."

River Park Square - anchored by a Nordstrom store, movie theaters and numerous upscale shops - is credited with sparking a business boom in downtown Spokane.

But the project also tore open old wounds in Spokane related to class and income, ended numerous political careers and brought plenty of criticism of the Cowles family.

Investors who were offered the $31 million in bonds for the mall's parking garage were told it was expected to generate enough revenue to cover the principal and interest on bonds, plus pay for operations and maintenance. But the garage was in financial trouble from the time it opened, and the bonds went into default.

That spawned a tangle of lawsuits, including a federal securities fraud claim involving the city of Spokane and the mall development companies. The Internal Revenue Service questioned the tax-exempt status of the bonds. Investigations also were conducted by the Securities and Exchange Commission and the U.S. Department of Housing and Urban Development.

But Westinghouse said none of the legal conflicts spawned a request for federal prosecutors to investigate until Rodgers and Connor made one last year.

As a result, many people had dim memories of the events of a decade ago, and many records were missing, Westinghouse said.

"This endeavor was not aided by the passage of time," he said.

Still, there was no evidence found that anyone acted with an intent to defraud, even though some business projections turned out to be wrong, he said

Investigators also concluded that no federal laws were broken in the 2006 death of Jo Ellen Savage, of Pullman, who died after her vehicle crashed through a wall on the fifth floor of the parking garage and fell to the ground. They referred the case to Spokane County Prosecutor Steve Tucker for his consideration, Westinghouse said.