UNITED STATES ATTORNEY'S OFFICE
District of Oregon
PRESS ROOM

May 26, 2004

Grayson - Charges Dismissed
The United States Attorney's Office for the District of Oregon today filed a motion to dismiss all charges against Jeffrey Grayson due to his extraordinary mental and physical impairment. Court ordered reports by medical experts indicate he is not competent to participate in legal proceedings and will likely never recover.
In April, 2002 Grayson plead guilty to mail fraud and aiding preparation of a false tax return. The charges stemmed from a federal investigation of Grayson and Capital Consultants (CCI), a Portland investment management firm. Grayson agreed to cooperate with the continuing investigation by the United States Attorneys Office and agents of the Criminal Investigation Division of the Internal Revenue Service, the Federal Bureau of Investigation, the Department of Labor Office of Inspector General, Pension and Welfare Benefits Administration, and Office of Labor and Management Standards.
Grayson admitted he defrauded CCI clients, mostly union pension plans and benefit plans, by secretly taking financial benefits linked to his actions on approximately $160,000,000 in loans to Wilshire Credit Corporation (WCC). He later concealed the extent of WCC's problems repaying the loans by fraudulently orchestrating the sale of the loans to a third party, Sterling Capital, LLC (Sterling) in 1999. Grayson admitted funneling approximately $70,000,000 in additional funds to Sterling through other fraudulent loan transactions.
Grayson also admitted aiding John Abbott, a union trustee, in filing a false 1997 Individual Federal Income Tax Return which failed to report approximately $76,000 of gratuities received from Grayson. Grayson said he secretly paid Abbott nearly $200,000 between 1994 and 1998 linked to Abbott's influence with pension plan trustees.
In May, 2002, three weeks after his plea, Grayson, already confined to a wheelchair by multiple sclerosis, suffered a major stroke which left him paralyzed and unable to speak. He has required hospitalization or 24-hour care in a Portland area nursing home ever since. His medical costs are paid by family members since the bulk of his personal assets were transferred to the CCI Receiver for payment to victims of his fraud.
Since his stroke, the District Court in Oregon has ordered regular examinations of Mr. Grayson. Reports by medical experts conclude that Grayson is mentally impaired and unable to understand the nature and consequences of the proceedings against him or to assist properly in his defense. Grayson is a functional quadriplegic, unable to speak, and has difficulty breathing and swallowing. He is fed intravenously and requires continuous supplemental oxygen. His condition is deteriorating and is not expected to improve.
The government has also consulted with Dr. Shelley Stanton, Chief Psychiatrist for the Bureau of Prisons (BOP). She reports that care for Grayson in BOP custody, if it were ordered, would impose a heavy financial burden on the public, conservatively estimated at $200,000 per year at minimum. The cost of special medication, consultation with medical specialists, and likely frequent hospitalization in private facilities could result in costs far exceeding that amount.
Having considered all alternatives available in light of Mr. Grayson's extraordinary mental impairment and serious physical infirmity, and the fact that he cannot now, and likely will not in the future, be able to meaningfully participate in legal proceedings, the government today filed a motion to dismiss all charges against Grayson.
Questions may be directed to Assistant United States Attorney Lance Caldwell at (503) 727-1000.