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Union lawsuit whittles away at Sizemore's credibility
By DON McINTOSH, Associate Editor
Leaders of Oregon's two biggest teachers' unions saw on Sept. 13 what they'd waited years to see: the state's most notorious anti-union activist, damaged by the testimony of a former employee, called to the witness stand in a $2.76 million civil lawsuit.
The suit, filed in December 2000, alleges that Oregon Taxpayers United (OTU), headed by Bill Sizemore, violated the Oregon Racketeer Influenced and Corrupt Organizations Act (RICO) by fraudulently gathering signatures to qualify numerous ballot measures, which cost unions millions of dollars to defeat.
The plaintiffs, Oregon Education Association (OEA) and American Federation of Teachers-Oregon (AFT-Oregon), are seeking damages equal to three times the amount they spent fighting Sizemore's measures.
The plaintiffs are represented by Greg Hartman of the law firm Bennett, Hartman, Morris and Kaplan, LLP, and Gene Mechanic of Goldberg, Mechanic, Stuart & Gibson, LLP, both of Portland; OTU is defended by Greg Byrne, the Sizemore-backed attorney who lost a 2000 race for Oregon Supreme Court.
Because filing a lawsuit gave the unions the power to subpoena mountains of documents and compel testimony from witnesses, the case has shed enormous light on Sizemore's political operation.
Hartman and Mechanic hope to convince a jury of 12 that Sizemore committed numerous violations of election laws and tax laws in order to qualify his measures for the ballot, hide the identities of his donors, and conceal the extent to which he profited personally from his campaigns.
They knew they'd be able to make that case on the basis of the documentary evidence. But on day four and five of the trial, Becky Miller - Sizemore's former second-in-command - delivered an unexpected bonanza of testimony that may end up sinking Sizemore legally and politically.
Miller, a true believer in the anti-tax and anti-union cause, says she left Sizemore's operation after becoming disgusted with his personal dishonesty, shady accounting, and rampant illegal and unethical practices.
Because Miller's testimony would incriminate her as well, the plaintiffs asked for and won immunity from prosecution from federal and state authorities for her cooperation. The state attorney general's office is watching the trial closely, and evidence in the civil trial may later be used in a criminal prosecution. Miller said she knew that what Sizemore ordered her to do was illegal. She said she thought she'd be fired if she refused to obey.
Miller said Sizemore both knew and expected her to falsify expense reports the organization was required to submit to the secretary of state's office. She also said she told Sizemore that signatures had been forged on the sponsorship petitions for several ballot measures, and that he ignored her concerns.
Miller began to cry at one point in her testimony, as she described her growing sense that Sizemore's entire operation was a scheme to make money for himself.
Hartman described Sizemore's operation as a racketeering enterprise with multiple parts, all with the same address and the same employees: Oregon Taxpayers United (OTU) is at the center. Next to that is the OTU Political Action Committee (OTU-PAC) and numerous subsidiary groups set up to collect money for individual ballot measure campaigns. Then there's OTU Education Foundation (OTU-EF), a tax-deductible non-profit that is supposed to stay clear of direct involvement in politics. Finally, there's Sizemore's company, I&R Petition Services, Inc. (I&R), and its sub- contractors, Klein Campaigns and NFP.
As executive director of OTU, Sizemore hired I&R, his own company, to oversee signature-gathering efforts performed by Klein Campaigns and NFP.
Miller said she became angry that Sizemore was draining money from the cause "so he could live a luxurious lifestyle."
"He was abusing his position at OTU to be able to funnel money into his own company to spend however he wished," Miller testified. "He was constantly asking people for money to buy signatures, while huge amounts were spent by his company for his personal gain."
During the 2000 election cycle, not only did Sizemore collect a $65,000 salary from OTU, but I&R paid Sizemore directly about $50,000, and may have paid about as much as $170,000 indirectly, including:
$6,000 to his wife Cindy; up to $25,000 to Molalla Tractor for construction work on his property; $20,000 in American Express bills; a $123,919 loan to Sizemore's failing radio station; plus payments on his automobile and payment to various contractors for work on his house.
Miller also said Sizemore wrote personal checks to himself for large amounts from OTU-PAC and OTU-EF. Miller also described at least three methods used by Sizemore to launder contributions in order to circumvent laws that require disclosure of donors.
* He collected checks from Oregon donors made out to a Washington, D.C., group, Americans for Tax Reform. Then he would send those checks in batches, and have the group send back a check for the total amount.
* He used donations to the OTU Education Foundation to support his political campaigns, in violation of tax laws that prohibit tax-deductible funds from being used for politics. When the Internal Revenue Service audited the foundation, Sizemore had Miller "clean up" the minutes of the foundation's board meetings by retyping them, with all references to political strategy discussions removed. This was to disguise the fact that the "educational foundation" was a political organization and the board was involved in political strategy.
Miller, who was an employee of the education foundation, testified that the she and the other employees spent as much as 75 percent of their time on political work. Miller said she spent a month working on Sizemore's 1998 campaign for governor, for example. She said Sizemore had her falsify the foundation's tax returns, reporting expenditures that hadn't occurred and fabricating lists of educational work conducted and materials produced.
Later, when the Oregonian began demanding to see these materials, she had to scramble to produce them. On day five of the trial an accountant estimated the value of the foundation's contribution to Sizemore's political campaigns at between $250,000 and $350,000.
* Sizemore arranged for Robert Randall, a wealthy donor, to buy "stock" in I&R.
Miller said Sizemore told her Randall would help the campaign by buying stock - to avoid reporting the money as a contribution. On the witness stand, Sizemore insisted the purchase was a legitimate business transaction, though he could recall very few details of their business relationship. Apparently, Randall, a successful real estate developer who died earlier this year, agreed in 1997 to pay $150,000 for 10 shares in I&R. The company had no assets other than Sizemore's "expertise" and several contracts to gather signatures for initiative campaigns. Randall was to get a share of any profit after expenses were paid. [Later, Randall invested an additional $25,000, though no paperwork was generated in the transaction, and Sizemore couldn't say how many additional shares this purchased.]
Sizemore claims Randall was shown a business plan, which included an arrangement whereby Sizemore would be paid as "consultant" to his own company. There was no written agreement about what services Sizemore would perform as a consultant or what he would be paid and Sizemore said he couldn't remember any details of the arrangement.
I&R never paid anything to Randall.
In the end, Sizemore said, Randall sold his shares back to Sizemore for $100, "because the company had not been profitable." Sizemore couldn't recall when this had occurred.
While Sizemore acknowledged that the law required I&R to file tax returns, he said the company never filed because it never made a profit.
Nor did I&R ever have any employees. The company contracted out the signature gathering to two firms owned by Sizemore associate Saul Klein. Klein employed individuals that Sizemore himself described as "unsavory." Sizemore met Klein when the latter was an assistant to Parker Bell, a signature gatherer Sizemore used to employ. Sizemore said Bell cheated him, charging him for more signatures than were delivered. So Sizemore arranged for Klein to form two new companies in February 1998 - Klein Campaigns and NFP - which then got Sizemore's contract to continue the signature-gathering operation.
Sizemore admitted it was his responsibility to oversee Klein; they met once or twice weekly, yet multiple cases of fraud and forgery occurred in the signature gathering, some of which resulted in criminal convictions. Klein disappeared in December 2001 and his whereabouts remain unknown.
Ultimately, the lawsuit is not just about money, said OEA President Kris Kain. "It's about reforming the initiative process, returning it to the citizens and taking it back from a private business."
The trial, overseen by Judge Jerome LaBarre is expected to last through Sept. 23.