WW Reader Contest: Hai2k A new century. Fabulous prizes await! Only three weeks left. As the millennium looms, send us your thoughts about Portland--for better or verse--in haiku form (5 syllables, 7 syllables, 5 syllables) by Dec 22. We'll print the best entries in our Dec. 29 issue and bestow lavish gifts on the winners. Send your verse to WW Hai-2K Contest, 822 SW 10th Ave., Portland OR, 97205; fax: 243-1115; email: jschrag@wweek.com Corrections Bill Sizemore's proposed ballot measure ("Tax Fraud," 500 Words, WW, Nov. 23, 1999) would do more than increase the deductibility of federal taxes on Oregonians' tax returns. It would make all federal taxes deductible here. Thus, the richest 5 percent of Oregonians would reap 60 percent of the benefit--instead of the richest 20 percent getting 57 percent of the benefit, as we erroneously reported. Also, an item in the Nov. 17 Scoreboard incorrectly stated that a judge described Bruce Harrington as being an "excellent parent" to his deceased girlfriend's two sons. Columbia County Circuit Judge Steven Reed actually used that phrase to describe the boys' father, Randi Daum. WW regrets the errors. Chief Complaints After whittling her search for a new police chief down to two, Mayor Vera Katz is now facing criticism for excluding any local candidates from her list. "It's the biggest insult to the Portland Police Bureau by a government official" in recent years, says Chuck Duffy, who was Police Bureau liaison under Mayor Bud Clark. Bureau sources interviewed by WW shared Duffy's view, though they did not want to go on record with their complaints. Duffy says Katz has been giving nothing but lip service to the bureau, praising the success of community policing and then snubbing top officers when it came time to pick a chief. "So do commanders think that they're not good enough when they go to work now?" he says. "That's what she's saying. There's no getting around it." The flap began last week when Katz announced the two chief finalists: Mark Kroeker, a retired Los Angeles deputy police chief; and Ronald Monroe, an assistant chief in Washington, D.C.'s Metropolitan Police Department. Many within the bureau had expected Assistant Chief Mark Paresi to be among the finalists. Katz declined to talk to WW about the selection process. Mayoral aide Elise Marshall, however, says her boss had no choice but to go with the two names given to her by the 18-member selection committee she put together. Those familiar with process say it's not quite that simple. The panel originally forwarded three names to the mayor: Kroeker, Monroe and Colorado Springs Police Chief Lorne Kramer. Some panel members, however, were lobbying for Paresi's inclusion, so the committee gave Katz the choice of announcing four finalists. Paresi's chances for inclusion seemed to grow when Kramer withdrew his name Nov. 18. But Katz chose to stick with the original three, which by default became two. "All we've ever said is we'd interview three finalists," says Marshall, who serves as Katz's liaison to the police bureau. Portland Police Association president Greg Pluchos, a member of the selection committee, is sanguine about the outcome. "The committee gave the mayor latitude to choose between two and four," he says. "She stuck with the two who were left." As a result, for the first time in 25 years, Portland police officers will be taking orders from someone who didn't serve among their ranks. On the one hand, the choice may not matter much to an officer cruising Old Town at 4 am. Police chiefs are more politicians than cops. Still, the rank and file always prefer a chief they know, and, more important, one who knows their world. Absent that, they at least want someone who spent enough time on the street to know when the realities of policing should overrule political pressures. In that respect, Kroeker seems to have the edge. Sources in Los Angeles say that many officers within the LAPD regret losing Kroeker in 1997 after he was passed over for the chief's job. And in an interview with WW, Kroeker said he well remembers the 1960s, when street cops practically had to conceal their identities off-the-job. He said he recognizes "the enormity" of the prospect of coming to the bureau as an outsider. Monroe, on the other hand, was not well-known to D.C. sources contacted by WW. His résumé indicates that most of his experience is in handling budget matters. Both candidates will be in Portland Dec. 4 to answer questions at a community forum and to meet with Katz, who is expected to pick one of them by the end of next week. --Philip Dawdy Seven Deadly Omissions Last week, The Oregonian published a seven-part series about Andrew Wiederhorn, the founder and former CEO of the Wilshire Financial Services Group. Written by Tom Hallman, Jr., The Oregonian's award-winning features reporter, the series chronicled Wiederhorn's Gatsbyesque rise and flame-out. The package is chock-full of detail, thanks to the remarkable access Wiederhorn gave Hallman. Readers learn that even as Wilshire spiraled into bankruptcy, Wiederhorn spent $620 for a suite at New York's St. Regis Hotel, just so he could take a shower. Hallman shares the notes that Wiederhorn's wife, Tiffany, stuck in the financier's briefcase to buoy his spirits as his empire crumbled and describes the couple's anguish when they're told their unborn child may suffer from severe birth defects. Despite all the inside scoop, however, several members of Portland's business community were surprised at what the 17,725-word series left out. More striking than the series' worshipful tone and lack of any critical sources, they say, is its near-complete failure to acknowledge the real story, as told clearly and powerfully by a voluminous public record: Andrew Wiederhorn is a wizard at spending other people's money, but he's less adept at paying it back. Here are seven things the Oregonian series didn't tell you. 1. In part four of the series, readers see an emotional Wiederhorn grappling with the pain of laying off 30 employees on Dec. 14, 1998, because there's no money to pay them. What readers aren't told is in that same year, when Wilshire lost $202 million, the company's board, which Wiederhorn controlled, responded by paying Wiederhorn his first-ever bonus: a cool $1.5 million on top of his $300,000 salary. 2. In his description of how Wiederhorn made himself rich, Hallman makes an essentially simple business seem wildly complex. In reality, Wiederhorn ran a financial scrapyard, buying mortgages and securities that nobody else wanted, dressing them up and reselling them. While Wiederhorn soared through the skies in Wilshire's jet, his collectors beat on debtors' doors. At the end of 1997, for example, Wilshire owned $170 million worth of foreclosed real estate. He was, in effect, a repo man with a Gulfstream. 3. In part three of the series, Hallman makes much of the fact that when the chips were down, Wiederhorn pledged his personal assets to guarantee loans from local money manager Jeff Grayson of Capital Consultants Inc. Yet public records show that in the same week that Wiederhorn borrowed the last chunk of money from Grayson, he transferred four pieces of property--including his 25-room West Hills home--into his wife's name, thereby putting them out of the reach of creditors, including Grayson. 4. Wiederhorn had a record of financial mismanagement that predated Wilshire's prominence, a fact that Hallman overlooked. The First Bank of Beverly Hills, which Wiederhorn controlled, was in persistent trouble with the federal Office of Thrift Supervision. First Bank operated under a "cease and desist" order, which essentially prevented it from taking new deposits, for much of the time Wiederhorn ran it. The OTS also chastised Wilshire for not following earlier instructions to refrain from related-party transactions--i.e., to stop raiding the piggybank. 5. In part six, one of the series' most detailed episodes describes Wiederhorn's ability to charm Texan Tim Ewing, whose company was the second-largest investor in Wiederhorn's Wilshire Real Estate Investment Trust. Ewing was angry about the lousy performance of his investment, Hallman reported, and came to Portland for an explanation. According to the article, however, by the time the Texan left, Wiederhorn had convinced him everything was fine. "Everything seems solid, Ewing finally said. Better than solid," Hallman writes. Ewing, who was down about $6 million on his investment when he met with Wiederhorn, says Hallman got it wrong. In the first place, Ewing told WW, Hallman wasn't present at the meeting, nor did the reporter ever speak to him. Second, Ewing says that while Wiederhorn gave him an explanation for the poor results, he didn't leave Portland feeling things were "better than solid." Ewing says he stands by the Securities and Exchange Commission filings he made prior to his Portland visit. In the lengthy filings, which are public records, Ewing demanded that Wiederhorn and Wilshire president Larry Mendelsohn resign from Wilshire Real Estate Investment Trust's board immediately because of what he considered questionable dealings between various companies Wiederhorn controlled. The dealings, he said, created conflicts that were "fundamental and irreconcilable." Now that the two have been fired from their positions at Wilshire Financial Services Group, those conflicts no longer exist, but Ewing remains critical of their stewardship of WREI. "Given management's poor record," Ewing says, "we remain skeptical of its ability to earn back as much as it has lost on behalf of its investors." 6. Hallman repeatedly portrayed Wiederhorn as a financial wizard. "Within the inner circles of the nation's high-level financial institutions, Wiederhorn was considered one of the smart ones," Hallman says, paraphrasing an anonymous source. One key statistical measure from Wilshire's own documents, however, suggests that wasn't the case. An investor who bought $100 worth of Wilshire shares at the initial public offering in December 1996 would have lost everything in less than two years. According to the company's 1998 annual report, however, a similar investment in the group of companies Wilshire considered its peer group--Advanta Corporation, Amresco Inc., Countrywide Credit Industries Inc., Green Tree Financial Corporation and Ocwen Financial Corporation--also suffered but would still have been worth $66 at the end of 1998. 7. In all the personal background provided about Wiederhorn, from his humble start as a busboy to his Gearhart beach compound, Hallman neglects one telling item. The man who lost hundreds of millions of dollars--and the trust of thousands of investors--was once an Eagle Scout. --Nigel Jaquiss - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Willamette Week | originally published December 1, 1999