Skip to main contentIf the people of this city were to choose a new symbol, it would be no great surprise to see Sho Dozono replace Portlandia.
Over the past decade, the bearded, bespectacled owner of Azumano Travel has come to represent Portlanders' willingness to tackle nearly any challenge. In 1996, when the Portland Public Schools faced the layoff of hundreds of teachers, Dozono organized a 30,000-person march to rally support for funding. Less than a month after 9/11, Dozono, organized the "Flight For Freedom," which launched more than 1,000 Oregonians on a pilgrimage to Manhattan. And last winter, when the Olympic torch journeyed 14,500 miles from Greece to Salt Lake City, Dozono raised the cash to bring it through Portland.
This week, Dozono, 58, will receive the Tom McCall Award for his "spirit and service to Oregon" from the environmental group SOLV. The next day, he will fly to Hawaii to be named "Travel Agent of the Year" by his peers.
"For Sho, this has been a year of tremendous accomplishment," says Portland lawyer Nick Fish, whose City Council campaign committee was co-chaired by Dozono.
Former Republican gubernatorial candidate Ron Saxton says of Dozono, a Democrat who was one of his biggest supporters, "My experience is that he's been a great civic leader and a wonderful friend."
That is the public face of Sho Dozono.
But based on dozens of interviews, thousands of pages of documents and nearly eight hours of face-to-face conversations with Dozono, it is clear that there is another side to the man dubbed "Mr. Portland" by the local magazine Brainstorm NW.
For one thing, rather than running a thriving company, Dozono has captained a sinking ship, one kept afloat for more than a decade by a series of increasingly desperate bailouts.
While there is no evidence Dozono has broken any laws, an examination of his operations shows that in at least one instance, he has benefited from government contracts unavailable to others.
Most troubling, however, is that, according to documents and Dozono's own admission, he treated the trust fund of a deceased friend's young son as a personal piggy bank.
Over the course of four years, Dozono transferred a total of more than $1.25 million of the child's money to companies Dozono controlled, committing what legal experts say are serious breaches of his fiduciary duty.
Dozono does not deny using the boy's money for his companies' benefit. He has repaid it with interest--although he did so under duress--and disputes that any harm was done. "Did anyone suffer a penny's worth of loss?" he asks. "No."
But the boy's mother--who was herself the beneficiary of a trust Dozono controlled--tells a different story. "My son and I would be 10 times better off today if Sho had never been in our lives," says Lori Onho, a 33-year-old Northwest Portland resident. "He's been a piranha, just taking bites off us."
Dozono serves on boards and committees with some of Oregon's most powerful people, but the Azumano CEO has lived in the same modest westside home (assessed at $285,000) for more than 10 years. And rather than a Willamette River or Mount Hood view, his office at Southwest 3rd Avenue and Stark Street overlooks a surface parking lot.
Since becoming Azumano's top executive in 1987, Dozono has built the company that his father-in-law, George Azumano, founded in 1949 into Oregon's largest locally owned travel company. Azumano posted sales of more than $150 million in 2000 and currently employs about 250 people.
Part of Azumano's growth stems from Dozono's Japanese connections. (He was born in Japan and moved to Portland at age 10.) Under his leadership, Azumano has organized everything from an exchange program that brings Japanese students to Portland to publicity for the state through the Fuji Television series From Oregon with Love. More recently, Azumano arranged for thousands of Japanese baseball fans to fly to Seattle to watch Mariners sensation Ichiro Suzuki.
While Dozono has made Azumano synonymous with travel in Portland, difficult market conditions and the Internet have battered his industry. Crippled by perennial fare wars and catastrophic events such as 9/11, airlines have completely eliminated travel agents' commissions. According to the National Association of Travel Agents, the number of travel agencies in this country has declined about 37 percent from its peak of 24,000 in 1994.
Although Azumano does not release financial results, Dozono admits that his company has struggled nearly continuously for at least a decade. In 1991, the Gulf War devastated international travel, forcing Dozono to sell his international-airline-ticket wholesaling company, Pacific Gateway.
In 1993, Dozono agreed to sell Azumano to a subsidiary of Washington Mutual to reduce debt, but that deal fell apart. Two years later, Dozono says, he approached Capital Consultants Inc. chairman Jeff Grayson for the first of a series of three loans.
For two decades, the Capital Consultants boss was Portland's lender of last resort. He charged sky-high interest rates because borrowers often came to him when they couldn't get money anywhere else.
Dozono borrowed a total of $2.9 million from Grayson, at interest rates averaging 14 percent. When CCI collapsed in 2000 under charges that the firm had defrauded investors of $360 million, records show that Dozono had not repaid his loans. He has since made progress but says he still owes $1.3 million to the firm that bought CCI's portfolio.
While Dozono has struggled to stay afloat, it appears that Azumano and at least one of his other ventures have benefited from government kindness.
Azumano holds the State of Oregon's travel contract, which requires that all state employees book their airline travel through Azumano. Under the state's cooperative bidding law, other public-sector employers can, but don't have to, use the contract as well. In practice, Azumano has a lock on the local government market, booking travel for the City of Portland, Multnomah County, Washington County, Portland Public Schools and Oregon Health & Science University, among others.
Dozono says the deal results in sales of $8 million or $9 million worth of airline tickets annually. His firm earns a service charge of about 10 percent of the average ticket, essentially what the airlines paid before abolishing commissions.
Azumano won the state contract in 2000 in what was ostensibly a competitive bidding process; however, the process was anything but competitive. Records show that when the state solicited bidders, Dozono's company, which had held the state contract for the previous four years, was the only respondent.
Dozono correctly notes that it's not his fault that no other firm bid for the contract.
Tim Hay of the Oregon Department of Administrative Services explains that he mailed postcards publicizing the bid to travel agencies listed in the Salem phone book and advertised the contract in the Daily Journal of Commerce. Although Hay could not provide the names and addresses of the firms he notified, he claims that by mailing postcards, he exceeded the state's advertising requirements.
That may be true, but Hay also ignored most of the state's largest travel agencies, which are based in Portland. "I didn't know that the state went out to bid," says Kit Dennis, manager of Rosenbluth Travel, Portland's third-largest agency. "To my knowledge, we were not included."
"I can think of four or five operations that should have been bidding on the account, but it looks like the state didn't want other bidders," says Tom Higham, who has owned Salem Travel for 30 years and says he didn't receive a postcard notifying him of the bid.
The lack of competition might not be an issue if there were evidence that Azumano's service and prices are superior, but Hay admits that the contract has never been formally evaluated or audited. "That absolutely fascinates me," says Brad Teel of Teel's Travel Planners in Corvallis, who says he'd like a crack at the contract in the future. "No competition and no evaluation."
While the absence of competing bids for the state travel contract makes Azumano's deal difficult to assess, there is plenty of comparison for the lease of Bush Garden, a Portland restaurant that Dozono owns.
Located in the city-owned Smart Park building at 900 SW Morrison St., Bush Garden pays the city monthly rent of $10.92 per square foot, far lower than any other of the building's other tenants. (Peterson's newsstand, for example, pays $18.50 per square foot, and The Real Mother Goose pays $17.75).
Diane Holuka, who manages the city's real estate for the Bureau of General Services, argues that restaurants often pay less than other retailers do. Industry sources disagree with her. Bob Scanlan of the real-estate investment firm ScanlanKemperBard says restaurants usually pay more because they have such a high rate of failure, which presents landlords with greater risk. "I don't know anywhere downtown that anyone should be paying $10.92 a square foot," he adds.
Bush Garden has been on Morrison for 23 years, but its current rent was negotiated in 1999, when the economy was booming and downtown space was tight.
Its rent is about half of the $21.92 per square foot rent paid by Alessandro's, a restaurant located in another city-owned Smart Park at 301 SW Morrison St.
Holuka explains that another reason Bush Garden's rent might appear low is because the lease contains a "percentage rent" clause that yields the city more money if Bush Gardens' gross revenues exceed a mutually agreed amount. Records for the past three years show, however, the percentage-rent clause returned a total of only 33 additional cents per square foot annually.
During that time, the city has accepted Bush Garden's monthly statements of gross revenues without checking the figures. Holuka says her department has never audited Bush Garden's receipts.
Dozono denies he has a sweetheart deal, arguing that the restaurant's poor performance justifies the rent. "We've had a tough time making money there," he says.
People who know Dozono say that his greatest assets are his energy and his relationships.
Dozono's command post is a glass table strewn with correspondence and pink message slips, from behind which he talks in unpunctuated paragraphs peppered with rhetorical questions, frequent chuckles and self-deprecation.
Beyond his personality, Dozono's primary asset is an ancient, metal-covered address book with a mechanical alphabet finder that predates both computers and Rolodexes. When he calls, people listen.
Saxton, who co-founded the Portland Schools Foundation with Dozono, recalls that in 1996, Dozono telephoned late one Friday night, upset about looming teacher layoffs. He wanted a meeting with Saxton, then-schools superintendent Jack Bierwirth and Cynthia Guyer, now the foundation's director.
"Sho couldn't wait; he called a breakfast Saturday morning at Zell's," Saxton recalls. "He said, 'We're going to have a march a month from now with 30,000.' We suggested spending four to five months, after which we could maybe attract 2,000 people to a rally."
Dozono's refusal to accept conventional wisdom won the day. As he predicted, 30,000 people marched in an effort that inspired government and private supporters to save teachers' jobs.
Dozono's drive and connections came in handy in the '80s when a tsunami of Japanese money washed across this country. Bilingual and well-connected, Dozono was the ideal advisor for Japanese seeking investment opportunities here.
Besides his travel agency and restaurant, records show that from the mid-'80s onward Dozono was a corporate officer, partner or employee in several ventures with Japanese investors or a Japanese focus, including Oregon-Japan Development, Overseas Courier Service, Shogun Oregon Inc. (Japanese-language printing), Yamazoe International (a golf-course developer) and Seventh Mountain Golf Village in Bend.
While none of those companies set the world afire, Dozono had more luck, at least initially, with Daioh International, a company established here in 1985 by his close friend Tadamasa Ohno, a developer from Kobe, Japan.
Dozono's relationship with Ohno would catapult the travel-agency owner into the big leagues of property development but would also eventually lead to what Dozono has called the biggest mistake he ever made.
A keen piano player and golfer, Tad Ohno fell in love with the Northwest when he studied at Lewis & Clark College in 1975-76. Ohno also loved fast cars. In Japan, his garage held a Mercedes, three Porsches and four Ferraris. In this country, he drove a Porsche and a Ferrari and collected expensive homes as well, including a $3.2 million waterfront mansion in Seattle and a beach house in Los Angeles.
Although he had a wife and daughter in Japan, Tad Ohno spent an increasing amount of time in Portland with a Montana native named Lori Lanning. He set Lanning up in a house in Dunthorpe, and in 1991, at age 23, she gave birth to their child, a boy. Although the couple never married, Lanning changed her last name to Ohno in 1992.
In Portland, Ohno shared office space with Dozono, whom he first met when Ohno was at Lewis & Clark. Although he still ran the travel business, Dozono also worked part-time for Ohno, serving as a vice president of Daioh and receiving a salary.
Ohno, whom associates say had difficulty reading English, depended on Dozono for translation and counsel on a variety of matters, including personal finances and corporate investments. "Dozono was his only adviser," says Koki Asano, a Japanese businessman who was a close friend of Ohno's.
In return, on more than one occasion, Ohno came to Dozono's rescue. In 1991, Ohno bought the faltering ticket wholesaler Pacific Gateway from Dozono. Ohno also took an equity stake in Azumano and loaned Azumano at least $1.3 million, a debt that Dozono acknowledges has never been paid back. "He did funnel money in and out," Dozono says. (A Japanese business associate of Ohno's, Dr. Kosuke Kotera, also loaned Azumano $1 million, which Dozono says he is still in the process of repaying.)
For his part, Dozono helped Ohno put together the team that built the Oregon Golf Club in West Linn. Local golf pro Peter Jacobsen designed the course, and Lake Oswego homebuilder Don Schollander, a big name in Japan since he won four gold medals in swimming in the 1964 Tokyo Olympics, was in charge of residential development.
Dozono, who was a partner in the project although his investment was limited to "sweat equity," says the plan was to build a high-end club. Ohno and other investors pumped about $28 million into the development.
The golf course, which has spectacular views of the Cascades, opened to great acclaim in 1992 and became the new home of the Fred Meyer Challenge. But there was a fatal flaw in Ohno and Dozono's business plan.
Onho and Dozono based their financial projections on obtaining zoning for five-acre residential parcels adjacent to the course. Clackamas County officials, however, stuck to a 20-acre minimum. In 1993, as the Oregon Golf Club rolled toward a financial bunker, air was already leaking from the Japanese real-estate bubble. But far worse, Tad Ohno died of liver cancer that November at the age of 41.
After Ohno's death, Sun Life of Canada paid $3.5 million to Ohno's company, Daioh International; $500,000 into a trust fund for Lori Ohno; and $1 million into a trust fund for their son, then 2 years old. The trustee for both was Dozono. "I wish it had been anybody else," Lori Ohno says. "I haven't had any peace for nine years."
In trust law, the power of a trustee is nearly absolute. The trustee holds legal title to the beneficiary's assets and must, above all, make sure those assets are invested prudently.
The trustee's responsibilities are nearly as great as his power. "The trustee has an absolute duty of loyalty to the beneficiary," says Susan Gary, an associate professor at the University of Oregon law school who specializes in trust matters.
Almost from the moment of Tad Ohno's death, Lori Ohno questioned just where Dozono's loyalties lay.
For one thing, Ohno had concerns about Dozono's failure to provide an accounting of how he was handling trust assets. After repeatedly failing to get answers, she suggested that Dozono quit. "We ask that you resign as trustee of both trusts no later than November 1, 1995," her attorney Garr King (now a federal judge) wrote to Dozono in October of that year.
Ohno was also concerned by Dozono's aggressive sale of some of Daioh's corporate assets. Although Tad Ohno left no will, Dozono took charge of liquidating his U.S. assets. In 1995, for instance, Dozono negotiated the sale of the 610 Broadway building for $1.47 million, about half the price that property records show Tad Ohno had paid for it eight years earlier. He also helped to arrange for the sale of the Oregon Golf Club for about $11 million, less than half its cost. (Dozono says that Tad Ohno's Japanese empire was collapsing under massive debts and that he was under pressure to liquidate American assets quickly.)
Lori Ohno was also alarmed because she knew of Azumano's perilous financial condition. "In 1998, after I sold my house, Sho was constantly calling me and saying that he needed money to make his payroll," she recalls.
Dozono acknowledges he approached Ohno for help in meeting his payroll once or twice, but says that "constantly" is an overstatement.
In March 2000, John Kennedy, another lawyer working on Ohno's behalf, finally succeeded in getting Dozono to provide a full accounting of the trusts--but only after Kennedy threatened to file a civil lawsuit.
The results, prepared by the Portland accounting firm Maginnis & Carey, confirmed Lori's worst fears. Documents showed that three of Dozono's companies--Azumano, Pacific Gateway and Oregon-Japan Development--had taken a series of 16 separate loans from Ohno's son's trust between 1994 and 1998 totaling $1,005,000. Some of the loans were short-term, but others had been outstanding for more than three years.
Dozono doesn't dispute that he made--and received--the loans, but he says they went to bail out his companies, not for personal use. "I needed to borrow money," he says. "[In retrospect], it was not a correct action for me to take."
He failed to provide collateral that could compensate the trust if his cash-strapped companies couldn't repay the loans.
Dozono says he didn't think such a precaution was necessary. "It never occurred to me that I was risking the beneficiaries' money," he says.
A trustee borrowing from a trust is a huge no-no, according to Professor Bernard Vail, a trust-law expert at Lewis & Clark's Northwestern Law School. "That is called 'self-dealing,'" Vail says. "There is an absolute prohibition on self-dealing, including borrowing from the trust, unless explicitly authorized," Vail adds. "And a kid that young [Ohno's son is now 10] isn't capable of giving authorization.
(Vail also says that while Dozono appears to have violated his duty to the trust, his actions probably do not constitute a violation of criminal law. Almost without exception, trust disputes are dealt with in civil court.)
At the time of the accounting in 2000, most of the loans had already been repaid, but Dozono's companies still owed the Ohno boy's trust just under $300,000. Dozono agreed to a repayment schedule at that time and has fulfilled those payments.
Although Lori Ohno's suspicions about Dozono were vindicated, the reports also revealed that she benefited from Dozono's loose interpretation of his fiduciary duty. In addition to the $1,005,000 that Dozono loaned to his own companies, he loaned another $507,000 from the boy's trust fund to a company owned by Lori Ohno. (Ohno says that she is currently in the process of selling her house to repay the money.)
Dozono exacted a price for the loans. Records show that he borrowed $250,000 back from Lori Ohno's company for Pacific Gateway, which he'd earlier sold to Ohno, then repurchased after Ohno's death. (He later repaid the money.)
Vail says the fact that Ohno benefited from her son's trust fund does not mitigate Dozono's imprudence in making loans to her. "The excuse that she doesn't have clean hands doesn't let the trustee off the hook," he says.
On July 13, 2000, Dozono finally resigned as trustee, nearly five years after he was first asked to do so. But that's not the end of the story.
A document filed in Multnomah County Court this July on behalf of the successor trustee, Lori Ohno's brother Allen Lanning, argues that Dozono is liable for the stock-market earnings that the trust missed out on when Dozono had use of trust assets.
Vail says there is ample precedent for such a claim. "A trustee in this situation is responsible for the income that the funds should have earned while he held them," he says.
Dozono has not responded formally to the legal filing, which seeks a total of $800,000 in lost earnings for the two trusts as well as unspecified damages for "excessive" fees paid to Dozono and the trust's accountants and lawyers.
He says if it can be proven that the trusts were harmed on his watch, then he'll make them whole. But he doesn't believe that was the case. "I think that you'll find that the team [which includes the trust's lawyer and accountant] and I did the best that we could under difficult circumstances," Dozono says.
After nearly eight hours of interviews, spread out over three days, Dozono acknowledged that if he had the chance to turn back the clock, he would do things differently.
"Do I wish that I had not done it?" he says of his borrowing from the trust. "The answer is 'yes.' Is it behavior that I'll repeat? Not a chance."
As tough as it is for Dozono to admit that he may have made mistakes, it's equally difficult for his supporters, of whom there are many, to reconcile the civic-minded man they know with the man who used his friend's child's money for his own purposes.
For example, on the eve of this story's going to press, two of Dozono's most influential supporters, Saxton and Len Bergstein, a top Portland lobbyist, came to WW's offices to put Dozono's actions in what, they say, is a larger context.
"He's a wonderful human being who does wonderful things for the community," said Saxton, who has acted as Dozono's attorney in the past but said he was unfamiliar with Dozono's actions as trustee. "He isn't always as sophisticated as he could be when it comes to his business dealings."
Bergstein lamented the timing of this article. "This is a unique week for Sho," Bergstein said, noting that former Govs. Neil Goldschmidt and Barbara Roberts, among others, are due to sing Dozono's praises at the SOLV awards banquet Friday. "He'll be receiving a big honor, and a story like this can make it a difficult time instead of a time of triumph."
Lori Ohno, however, thinks that Dozono has gotten a free ride for too long. "When I see him on TV or read in the paper about what a great guy he is, it really disgusts me," she says. "People don't know Sho."
Dozono was born in Japan and became a naturalized U.S. citizen in 1968. From 1971 until 1976, when he joined Azumano Travel, he was a social- studies and Japanese teacher at Grant High School.
A former Port of Portland commissioner and chairman of the Portland Chamber of Commerce, Dozono currently serves on the state's International Trade Commission and on the boards of the Portland Art Museum, the YMCA and the Portland Schools Foundation.
In September, Dozono organized
, an exhibit honoring Portland's Japanese- American community at the Portland Art Museum.
As much as anyone, Dozono, who co- chaired a committee charged with returning international air service to Portland, was responsible for last week's announcement that Lufthansa will commence service between here and Germany in March.
Dozono's daughter, Elisa, is a former press aide to Mayor Vera Katz. She is now a spokesperson for the Port of Portland.
In April 1998, records show that Dozono loaned $50,000 from the Ohno child's trust to Oregon-Japan Development. Records show that Oregon- Japan's business registration lapsed a year earlier-- i.e., it was out of business. Dozono did not repay the $50,000 until May 2000.
Dozono has incurred personal debt that he was apparently unable to pay. Records show that a 1997 judgment of $76,000 against him in favor of the Perkins Coie law firm remains unpaid.
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