News

Sins of the Donor

University alumnus Jeffrey Grayson could be looking at a hefty fine and a lengthy jail sentence. Could the hall that bears his name be looking at a change?

By Molly Pumper

Knight Library. As students of the University of Oregon, we know this name well. Inevitably, we also know the story behind it. Phil Knight, owner of Nike and namesake of the library donated a gross amount of money to help furnish the building, and as a token of appreciation, the University named the edifice in his honor. Ironically enough, Knight Library isn't the only building on campus named after a wealthy donor. It's just one of the few that people are aware of. Then again, Phil Knight probably isn't facing criminal charges any time in the near future. Apparently, if one gives enough money to the school, the issues of legality and ethics are likely to become much more obscure.

Jeffrey Grayson, 58, a UO graduate and wealthy Portland financier is also the namesake of another building on campus--ever heard of Grayson Hall? Over the years he has donated approximately 2.5 million dollars to the University. However, it is with probable cause that he does not share the same pedestal as Knight. For more than 30 years, Grayson has been in the business of making money. He has gained a noteworthy reputation for making other people rich and taking a cut of their profits. His career has thrived by making loans to companies that traditional lenders tended to ignore. As one of Portland's leading pension-fund managers and owner of his own company, Capital Consultants LLC, Grayson single-handedly built himself an empire sustained by wealth and confidence- -too much confidence perhaps.

After partaking in a series of bad loans and investments, Grayson is now facing the consequences of his actions. In 1995, he was forced by the federal Department of Labor to repay Oregon Laborers-Employers Pension Trust $2 million for overcharging in fees. The next year, his company, then Captial Consultants Inc. (CCI), was sued by AGC-International Union of Operating Engineers Local 701 for making careless investments. Nonetheless, the most recent and consequential allegations that Grayson faces make his past record look like that of a saint.

In 1993 Grayson started making a series of small loans to a young financier named Andrew Wiederhorn. Over the years the two financiers became friends, and by 1998 Grayson's small loans had grossed $160 million (it has been reported that CCI was allegedly earning nearly $5 million annually on the loans). Nevertheless, later that year things started going downhill for the two and by March 1999, Wiederhorn's company, Wilshire Financial Services Group (WFSG) was forced to declare bankruptcy. This liquidation left Grayson and his clients with $160 million invested in a profitless company.

Grayson is now under serious investigation for these activities. Representatives of the Department of Labor and the U.S. Attorney's Office want to know why he made the loans. Despite what others may think, Grayson claims that the money is still safe. "This kind of problem, it goes with the type of investments I make," he said. (Willamette Week. July 9, 2000).

The government isn't the only body interested in Grayson's alleged scandals. His alma mater, the University of Oregon, is also curious. As well as being a prominent donor to the University, Grayson was also an active alumni. In fact, he co-led the Oregon Campaign (the most successful private fundraising campaign in the history of the University and the state of Oregon) from 1992- 1998.

So what does the University plan to do? According to Duncan McDonald, Vice President for Public Affairs and Development, "we have to wait to see the outcome of the situation." If it turns out that Grayson is indicted, the University has a foundation policy on gift acceptance that deals with "tainted money," and "notorious donors." Of course, this would be the first time that the policy would be exercised. This is the school's first encounter with a philanthropist whose donations might be questionable.

Molly Pumper, a junior majoring in Journalism, is a staff writer for the Oregon Commentator