By Douglas A. Schafer, Attorney
The following is a summary article that has been distributed to law firms and court houses throughout Pierce County. This document is ©1998 by Douglas Schafer and is being reprinted, with permission, to encourage a watchdog mentality regarding judicial powers in local government. [The foregoing was written by the publisher of the then Tacoma Voice, now the Tacoma Reporter, Jeff Daniel.]
Introduction. I have been a Tacoma lawyer for 19 years, but a business lawyer—not a trial lawyer. Due to an indiscrete comment made to me by a former client, William L.Hamilton, in August 1992, I began in December 1995 looking into the handling of a probate estate by a lawyer, Grant L. Anderson (not to be confused with an honest Tacoma lawyer named Grant B. Anderson), shortly before he became a Pierce County Superior Court judge. I found, from public records, overwelming evidence of serious misconduct and possible crime by Judge Anderson. In early February 1996, I shared that evidence with the Commission on Judicial Conduct (“CJC”), the Washington State Bar Association Office of Disciplinary Counsel (“WSBA”), Pierce County Prosecutor John W. Ladenburg, the Washington Attorney General’s Office, the Federal Bureau of Investigation, and the Internal Revenue Service Criminal Investigation Division. Only the CJC has responded appropriately, though it took them 18 months to bring charges as to one aspect of the misconduct. The WSBA supposedly investigated, but concluded on 8/15/96 that there was no evidence of misconduct. Prosecutor Ladenburg supposedly investigated, but concluded on 5/2/96 that there was no evidence of any crime. The Attorney General’s office had no interest in such matters. Neither the FBI nor the IRS have taken any public actions of which I am aware.
Hoffman Estate. Charles Hoffman, a client of lawyer Grant L. Anderson, died in March 1989, and his Will immediately was admitted to probate in the Pierce County Superior Court. Anderson was named as PR of the Will and trustee of the trust to be established under the Will. Hoffman directed his entire estate be held in trust to provide for his ex-wife, Millie, if she needed assistance, and upon her death to be divided: 90% to Ocean Beach (Public) Hospital in Pacific County, 10% to his estranged son, Ed Hoffman. Millie died in late January 1993 without, in Anderson’s judgment, having needed any financial support from Hoffman’s estate, for she received none.
Hoffman’s estate consisted almost entirely of two wholly-owned corporations: Hoffman- Stevenson, Inc. (“HSI”) and Pacific Lanes, Inc. (“PLI”). The latter owned the business personal property of, and operated, Pacific Lanes in Tacoma. HSI owned the bowling center’s land and building, plus a resort called “Surfside Inn” on the Long Beach Peninsula in Pacific County on the southernmost Washington coast.
Anderson administered the Hoffman estate for 3 years and 10 months. He closed it on 1/6/93 by appearing alone before court commission Dave Johnson, who summarily approved all of Anderson’s actions, his nomination of his partner Stephen W. Fisher as successor trustee of the Hoffman trust, and Anderson’s requested $112,000 PR’s fee. Within a week, Anderson was one of the 18 superior court judges to whom Johnson reported; for the judges, by majority rule, can hire and fire their court commissioners. Anderson had been assured his judgeship from 9/15/92, when he won the 2-candidate primary election.
Pacific Lanes. Four days after the primary election, Anderson signed a 3-page agreement to sell Pacific Lanes to his long-time friend William L. Hamilton (former CEO of Western Community Bank, then CEO of Sound Banking Company). The price was $1 million dollars—$300,000 for the business personal property, payable $50,000 down and $250,000 under a 10-year promissory note; and $700,000 for the land and building, payable $50,000 down, and $650,000 payable under a devious 10-year lease/purchase option under which the monthly rent applied to reduce the option purchase price (similar to a non-recourse real estate contract).
The Pacific Lanes sale to Hamilton (actually, to Hamilton’s new corporation, Pacific Recreation Enterprises, Inc.) closed on 12/4/92. The CJC’s public ethics charges filed 8/4/97 allege that Anderson at some point reduced the price of the business assets component from $300,000 to about $200,000, allegedly due to a delay in closing the sale. The CJC also charges that Hamilton made about $31,000 of the payments on Anderson’s new Cadillac that he bought 12/26/92.
Following Millie’s death in late January 1993, it appears that the public hospital expressed some interest in receiving its bequest from the Hoffman estate. Negotiations and financing arrangements ensued, and Hamilton purchased the Pacific Lanes land and building on 10/12/93 for $508,096, according to the deed and real estate excise tax affidavit signed by Anderson, who then still was president of HSI. The same day, First Interstate Bank recorded a deed of trust securing its mortgage loan to Hamilton of $900,000 on that property, which would have required a formal appraisal of about $1,250,000. The real property was assessed for tax purposes at $988,000 from 1992 through 1994.
Hamilton reportedly first discovered a broken roof truss in the Pacific Lanes building in July 1993. He had it fixed and other trusses beefed-up, and submitted a $125,000 claim to the insurance company from which he—on 10/1/92—had purchased a casualty insurance policy. His prominent insurance agent and close friend (fellow bank director and head of Bratrud Middleton Insurance agency), Robert M. Pierce, assured him from the outset that the loss would be fully covered. The insurer resisted, a lawsuit was filed, and with Pierce’s very strong support Hamilton won a startling summary judgment from Judge Brian M. Tollefson on 9/25/95. Somehow, the damages grew to almost $500,000 by early 1996 when the case settled while on appeal. Hamilton and Anderson had lunch together on 9/25/95 (and probably many other days), and Anderson’s courtroom is in very close proximity to Judge Brian Tollefson’s, so one can only speculate whether Anderson secretly influenced Tollefson. The insurer’s attorney knew nothing about the cozy relationship between its agent Pierce, Hamilton, and Anderson.
Judge Anderson has been residing, since about December 1996, in Hamilton’s former residence (3538 71st Ave. W. in University Place), which remains in Hamilton’s name. Anderson reported that address as his residence on his December 1996 marriage license application, and in October 1997 admitted it on his voter registration record. That is, at least, where his Cadillac is parked at night. Possibly Anderson is paying Hamilton fair market rent, but I have doubts (partly because Hamilton told the county assessor/treasurer in March 1997 to mail property tax bills to a box at the tiny postal station that Anderson visits every morning).
Surfside Inn. The Surfside Inn resort consisted of a 48-unit, 3-story condominium, and a convention center structure. The inn had 6 two-bedroom units and 42 one-bedroom units, which were being sold in week-long timeshare interests—48 timeshare weeks per year per unit. Ten of the units, however, had been sold years earlier by Hoffman to (or at least were in the names of) single owners, all of whom apparently were eager to sell out. Fewer than half of the timeshares in the other units had been sold. Anecdotal reports indicate that the resort may have suffered over the years from poor management and neglect.
After becoming PR of the estate, Anderson continued marketing the timeshare units, and attempted to market the entire resort. Prior to September 1991, he had several meetings with officers of Trendwest Resorts, a multi-state timeshare vacation club enterprise headquartered in Kirkland, about buying the resort, or as much of it as could be sold. A deal was cut—Trendwest would pay $40,000 for one-bedroom units, $55,000 for two-bedroom units, and buy the fee interest in much of the resort’s land. So, in a series of transactions beginning in September 1991, Anderson sold to Trendwest title to the resort’s real property and 15 of the condo units (which were completely unsold or were freed-up by swapping a few timeshare holders to other units) for a total price of $731,400.
Anderson also contacted the holders of the 10 wholly-owned units, and he offered to find them a buyer in return for a 10% sales commission. All apparently accepted, and Anderson presumably earned about $40,000 for arranging the sale of their 10 units to Trendwest for $430,000. (Personally profiting, in a manner such as this, from one’s fiduciary position is considered misconduct under general trust law. See, Restatement (Second) of Trusts, Section 170, Duty of Loyalty.)
Trendwest officers contributed to Anderson’s 1992 superior court and 1994 supreme court election campaigns, and (holding 25 of the 48 condo units) elected Anderson and Fisher to head the Surfside Inn condo owners’ association. Trendwest’s prospectus from its initial public offering of its stock in August 1997 reports (at page F-31) its acquisition cost of Surfside Inn resort as $1,441,659, though that may have included some re-hab and furniture costs.
The Trendwest sales left the estate holding the unsold timeshares in partially sold units—one two-bedroom unit (Condo #132) and several one-bedroom units. In late October 1992, retail buyers who had visited Surfside Inn actually paid $7,250 for two timeshare weeks in Condo #132, or $3,625 per week. In December 1992, Anderson sold for $1,000 per week timeshare interests in Condo #132 to his Tuell, Anderson, Fisher & Koppe law firm partners, associates (including Sheri, now his judicial assistant), office staff, his election campaign treasurer, a staffer at the state Board of Education office (where Anderson was a board member), and HSI employees. Anderson himself also got four timeshare weeks in Condo #132 at that same $1,000 per week price.
In February 1993, trustee Fisher sold substantially all the remaining unsold timeshares (all in one-bedroom units) to another vacation company, Pacific Resorts International, Inc., for $832 per week, the full price being $122,336.
Reportedly, Trendwest and others were dissatisfied with the Surfside Inn’s convention center/restaurant structure. In January 1995, Fisher sold the convention center to a pair of Pacific County developers (Swensen/McHugh) for $550,000. It was destroyed in an arson fire a few months later. The insurer (the same one that paid for the damaged Pacific Lanes trusses) paid for the loss, and a new convention center has since been built and a new swimming pool installed.
The Money: How Much, and Where? The documented real estate sales from Surfside Inn just to Trendwest, Pacific Resorts, and Swensen/McHugh were for about $1,400,000. The Pacific Lanes deal with Hamilton initially was for $1,000,000, though Anderson may have cut it down to about $700,000 . The Pacific Lanes operation was rumored to be a “cash cow” (principally from liquor and gambling revenue), which rumor is supported by Anderson’s claim that he cut the sales price by $100,000 to reflect profits from Pacific Lanes while being managed by Hamilton in October and November of 1992 before the sale closed on 12/4/92. The estate operated Pacific Lanes for the 42 months from 3/89 until 9/92, so it should have earned substantial profits.
The Hoffman estate’s probate court file shows an inventory reporting its assets were worth $917,794 as of March 1989, but the inventory was not filed by Anderson until December 1992. A creditor’s claim in that file reports an outstanding $440,000 Small Business Administration loan to HSI, PLI, and Hoffman, $200,000 of which was repaid on 12/9/92.
The CJC charges assert that Anderson’s law firm was charging management fees from PLI. Presumably, the firm also charged management fees to HSI, and also billed both corporations for legal services provided during, and probably after, the almost 4-year period that the estate was open. None of the management or other fees charged by the law firm to PLI or HSI were reported in the estate’s probate court file.
Ocean Beach Hospital reported in November 1997 that it had received from the Hoffman estate and trust only $626,000. Its chief financial officer verbally reported that Fisher had told him that the only significant asset remaining in the Hoffman trust is a contract with a remaining balance of about $120,000. The hospital now is represented by Seattle law firm of Ogden, Murphy & Wallace, which on 12/17/97 petitioned for a full accounting of estate and trust administration by Fisher and Anderson. The case now has been assigned to visiting Thurston County Superior Court Judge Gary R. Tabor, who will hold a hearing on the petition on 1/26/98.
Judge Anderson’s CJC trial is scheduled for January 12-21, 1998, at Tacoma’s federal courthouse. In a CJC telephone hearing on 12/19/97, Hamilton’s attorney said that he would be claiming the Fifth Amendment privilege against self-incrimination because he is under investigation by a Federal grand jury for bank-related crimes. The CJC’s attorney said the Federal investigators are also interested in the Hoffman estate and had requested the CJC’s files last August, but were told to wait until the first day of Anderson’s trial, when the files would become public.
I had thought that Anderson could be persuaded by his friends and colleagues
to accept discipline and resign his judgeship rather than subject himself
and his co-conspirators to the humiliation of a full, public trial, but
it now (5 days before trial) appears that he will not. If his primary motivator
is money, as it appears it is, he will appeal any CJC disciplinary action
to the state supreme court and will continue to collect his $101,000 salary
and benefits until the bitter end. By the way, the Pierce County taxpayers
have had to pay some of his legal defense costs, thanks to a 1987 county
council resolution giving each judge a $15,000 budget to defend ethics