Relying On An Old Man's Money

Tom Bates could have warned former Gov. John Kitzhaber about getting mixed up with Cylvia Hayes' finances.

Bates' father, Whitney Bates, was 46 years older than Hayes when he became enthralled and then financially entangled with her before his death in 2006.

Bates says his father, a retired history professor who taught at Portland State University, took Hayes to Paris and loaned her nearly $20,000. He also invested another $18,500 to help Hayes buy a house in Bend.

Tom Bates says he spent years after his father's death trying to get the money back from Hayes.

"She's really good at manipulating the truth," Bates says.

Neither Hayes nor Kitzhaber agreed to be interviewed for this story. 

Documents that Bates provided to WW detail a complicated and sometimes contentious financial relationship between Hayes and the Bates family.

Whitney Bates was a keen fisherman and gardener, and an ardent Democrat who ran unsuccessfully for the Oregon House in 1970. He met Hayes in 2002, when he was a widower and she was running for an Oregon House seat as a Democrat from Bend.

He was 81; she was 35.

"He was really smitten," says Charles M. White, a retired PSU professor who says he once had lunch with Hayes and Bates in Portland. "She talked a good game. He'd talk about her all the time, telling people how wonderful she was."

Hayes lost her legislative race but won a friend in Bates.

Tom Bates said his father had about 100,000 frequent-flyer miles on Alaska Airlines when he and Hayes met. Neither of them had ever been to Paris, so they decided to use the miles to go.

"There was nothing romantic between them," Tom Bates says. "But they went over there for a week or so."

Tom Bates recalls his father saying he wanted to loan money to Hayes, but he was unaware how much money Whitney Bates had given her until after the retired professor's 2006 death. Only then did Tom Bates find out his father had loaned Hayes nearly $20,000.

"I told my dad it was OK to lend her a few thousand. I had no idea he had loaned her so much," Bates says. "We got a lawyer involved and went round and round trying to get her to sign a promissory note—and she finally did."

Bates says Hayes slowly repaid the debt.

But he also learned his father had given Hayes another $18,500—money she told him was an investment in a house in Bend.

In 2004, records show, Hayes bought a home in Bend for $149,000. The property deed and a mortgage registered with Deschutes County show that Hayes claimed to be the sole purchaser of the house.

Hayes swore on her mortgage documents that nobody else had an ownership interest in the home. But records provided to WW by Tom Bates show that was not true.

Hayes had formed a partnership called Triple E Investments. (She never registered that business with the state Corporation Division.)

Records that Hayes sent to Tom Bates show Triple E Investments actually owned the house. Records show that Bates' father had given Hayes $18,500 for a 40 percent stake in the house.

Hayes didn't disclose any of this information on the mortgage documents or in county records.

The documents also show Hayes owned 30 percent, while two couples, Carol and Bob Tucker and Kathryn and Steve Gray, owned the remaining share of the house. (Neither the Grays nor the Tuckers responded to WW's questions.)

Tom Bates wanted Hayes to cash out his father's investment, but it proved difficult to get Hayes to agree.

"Obviously your offer is a great deal for me," Hayes wrote to Bates in a September 2008 email. "But I need to see if I can get the financing to work."

Six months earlier, however, Hayes had drained most of the equity in the house by taking out a $50,000 second mortgage.

That left only $10,000 in equity for all the partners combined. So even though the house had increased significantly in value, Whitney Bates' original investment had shrunk.

In September 2010, Tom Bates agreed to sell his late father's stake back to Hayes for $7,000—a significant loss.

Bates says even then Hayes didn't pay him. He says it was John Kitzhaber who wrote him a personal check.

Bates says he never shook the feeling that Hayes had taken advantage of his elderly father. He's also troubled that Kitzhaber knew about her debts and the house-investment scheme.

"I think the whole thing with the house was kind of a sham, not on the up and up," Bates says. "It does seem kind of strange that this was an investment—yet nobody’s name is on the deed except hers.” 

Also in this week's paper:

"What He Left Behind": What's in the emails Kitzhaber's office tried to have destroyed.

"Hit the Delete Button": Kitzhaber's office's explanation for requesting deletion of emails doesn't hold water.

"Ringing the Truth": Could Kitzhaber and Hayes benefit from spousal privilege if they married?

"Carbon Copy": A climate-change bill will test Gov. Kate Brown's independence.

WW intern Anna Walters contributed reporting to this story.

WWeek 2015