Skip to main contentIn his rookie campaign for office, Republican gubernatorial nominee Chris Dudley has repeatedly said that, if elected, he will compensate for his lack of political experience by surrounding himself with top people.
"I will bring in the best and the brightest," the former Portland Trail Blazer and 16-year NBA veteran told KGW in a May 1 interview.
Dudley's promise makes a recent campaign staffing decision puzzling. Here's the back story:
After winning the May primary, Dudley produced the first TV ad of the general election on June 18. That ad featured testimonials from four people who'd attended a summer camp run by Dudley's nonprofit foundation for diabetic kids. (Dudley is diabetic.)
In a June 23 news release, the Democratic Party of Oregon complained Dudley was improperly using his nonprofit for political purposes. The Dudley campaign took those concerns seriously enough to seek legal advice, according to emails WW obtained.
On June 28, Dudley's spokesman, Leroy Coleman, emailed William Schaub, a Portland lawyer, seeking guidance: "William, the DPO put out this press release [regarding the foundation] last week," Coleman wrote. "Is there any validity to their argument and how do we respond to their argument if asked by the press?"
Two hours later, Schaub responded in an email, "You are 100% within the law. 'Raised eyebrows' by partisan democrats, looking for something to criticize, is not a violation."
Schaub then outlined a response if the press did call.
"Thanks for your help, William. Much appreciated," Coleman responded.
Then later that day, Schaub emailed more advice. "The campaign should investigate the charges and make sure the foundation executive director or spokesperson is prepared to answer the questions related to the foundation if the press does call. It is best if they do it, rather than you," he wrote in an email to three Dudley staffers.
So just who is this Dudley adviser?
A review of public records, combined with Schaub's employment history, suggest he's far from one of those "best and brightest" Dudley referred to in May.
Schaub was previously a high-level adviser to two of the most notorious figures in recent Oregon history.
From 1988 to 1996, Schaub was general counsel for the now-defunct investment firm Capital Consultants, Inc. Schaub's boss, CCI founder Jeff Grayson, perpetrated what federal officials said in 2000 was among the largest pension fund frauds in U.S. history.
In 1997, Schaub went to work as senior counsel for Andy Wiederhorn, whose complex financial dealings with CCI played a major role in CCI's downfall. Wiederhorn's company, Wilshire Financial Services Group, went bankrupt. In 2003, Grayson pleaded guilty to two felonies related to looting his clients' funds, but ill health saved him from prison time. In 2004, Wiederhorn also pleaded guilty to two felonies, including paying an illegal gratuity to Grayson, and served more than a year in federal prison.
Schaub was never charged with a crime. But a 3,400-page State Bar investigation of various lawyers' roles in the pension fund fraud dealt harshly with him.
In a 2008 review of one fraudulent, multimillion-dollar transaction CCI engineered on Schaub's watch, bar investigators wrote, "there is probable cause to charge Schaub with a violation of [a bar rule] assisting or counseling CCI in conduct known to be illegal or fraudulent."
The bar chose not to charge Schaub, however, citing the long passage of time since the loan was made.
Public records show Schaub has fallen on hard times since leaving Wiederhorn's company in 2000. A bank foreclosed on Schaub's West Hills home in 2004. The Internal Revenue Service and the Oregon Department of Revenue have both filed liens against Schaub for unpaid taxes. He owes the feds for five separate tax years and the state for eight years since 2000. The liens exceeded $120,000.
Last year, Schaub's landlord twice initiated eviction proceedings against Schaub. Schaub later paid his rent.
Stephen English, a lawyer who represented many of the pension funds CCI defrauded, expressed surprise that the Dudley campaign turned to Schaub for legal guidance.
"[Schaub's] an enjoyable individual," English says, "but perhaps an interesting choice for such a role."
Schaub is advising the Dudley campaign for free; the Washington law firm Patton Boggs has provided paid services. Schaub did not return calls seeking comment, and Dudley spokesman Leroy Coleman provided this statement: "[Schaub], as well as others, has provided pro bono counsel for this campaign. So far he's done a great job. Chris has no knowledge of his personal affairs, nor will he comment on them."
In March, Schaub's wife filed Chapter 7 bankruptcy. She reported the couple had pawned jewelry and borrowed from their daughter to make ends meet. She also noted the IRS had frozen the couple's joint bank account and that Schaub's net income from his law practice in 2008, 2009 and the first quarter of 2010 totaled less than $12,000.
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