Settlements cost state board $500,000

lawsuits: Accountant said reputation hurt by regulators’ investigation

The Olympian | • Published October 21, 2009

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The State Board of Accountancy is paying $500,000 to settle seven lawsuits and 15 public-records disputes that grew out of an investigation into a Redmond accountant in 2005.

The accountant, D. Edson Clark, said the settlement exonerates him, clears his business partners and shines light onto the obscure accountancy board, which he said is in need of an independent investigation and reform.

The complaint against Clark alleged conflict of interest.

“Their whole ploy has been to vilify me as a nut case, a rich nut case. … My reputation has been tarnished in professional circles. It’s going to be restored because of this decision,’’ Clark said this week in a telephone interview from Hawaii, where he was vacationing.

But the board’s executive director, Rick Sweeney, admits no wrongdoing and called the settlement a business decision. Accountants’ licensing fees will cover the cost and taxpayers won’t be affected, he said.

Board Chairman Edwin Jolicoeur of Spokane did not return calls seeking comment. But board Vice Chairman Gerald F. Ryles of Kirkland said the agency never intentionally withheld records and that the settlement was a decision about where best to put resources.

“Yes, to the naked eye, that is a lot of money. We didn’t come up with it lightly. On the other hand, you do try to weigh, where are we, how much longer does this go on? What things aren’t getting done as a result?” Sykes said Tuesday. He said he was impressed by the board and Sweeney’s professionalism in handling the complaints.

Even so, the long-running case has raised third parties’ questions about the conduct of the board’s top staff members. Thurston County Superior Court Judge Tom McPhee noted in June that the case was in court because of the board’s “incompetence’’ when it failed to answer requests for documents.

A King County judge, Douglass North, also called the board’s supervision of its top staffers troubling and questioned what he called Sweeney’s misrepresentations in his handling of a settlement offer to Clark in 2007.

Clark accused the board’s staff of corruption and has a complaint pending against the agency’s top staffers that could let him seek restitution from Sweeney if he prevails. Clark contends his out-of-pocket costs were $800,000 before the settlement.

Those costs include legal expenses for the court cases and records requests related to his defense of what he considers a retaliatory, out-of-control investigation into his actions; his attorney says the agency failed to release records that would have exonerated him.

But Mary Tennyson, assistant attorney general advising the board, said the statute exempts board staff members from sanctions under the accountancy act that governs certified public accountants in the field.

Sweeney has served as the executive director for the board since Gov. Chris Gregoire appointed him effective July 1, 2005. He said the board settled because it needed to put the costly case behind it and he had no misgivings about how the agency had acted.

Sweeney said the Board of Accountancy reviewed some of the allegations against him, stemming from King County Superior Court Judge North’s order that sent the case back to the board in May this year. The board ruled in September – after a hearing convened by Ryles – that found no basis for claims that he had “lied, cheated or extorted,” Sweeney said.

But Greg Overstreet, an Olympia-based public-records lawyer who is part of Clark’s legal team, called that an “odd thing to rely upon.” The Clark settlement nullifies the board finding and tosses out the investigation it was tied to, Overstreet said.

The settlement amount is enormous for a records case and for an agency as small as accountancy, which has 10 employees, Overstreet said.

He said the records disclosure was key in this case, because Clark “was trying to find out information to defend himself. It was the records he obtained – with the board kicking and screaming – that ultimately allowed him to prove he was right.”

Overstreet said the agency was ordered by Thurston County Superior Court Judge Gary Tabor in May 2008 to turn over records by June, so the judge could review them privately in his office and decide whether they should be released to Clark. A year later, some records still were surfacing and being turned over to Clark’s team, according to Overstreet.

“Not turning over records that were ordered to be turned over to the judge is a magnitude above sloppiness,’’ Overstreet said.

Clark and Overstreet also say the board had an inactive complaint against Clark that it brought to life after Clark brought a complaint against another accountant. They say Clark also suffered scrutiny in retaliation for the pressure he put on the board’s top staffers.

The board’s lawyer disputes that.

The settlement agreement ends several investigations the board had going against Clark; his firm, Clark Raymond & Company; and business partners Andrew D. Raymond and Rachelle Benbow. It also requires the board to issue licenses without conditions to Clark, Raymond and Benbow; closes a complaint against another former business partner, David B. Baumgart; and amends two previously closed cases involving Clark from 1996 with “no finding of violations.”

Clark is still pressing for a third-party investigation into the board’s actions, Sweeney and its top investigator, Thomas Sadler. The settlement leaves the board free to do that.

Ryles, the board vice chairman, said he does not know what direction the board will take when it meets Thursday at SeaTac.

Tennyson, the board lawyer, said that the board could hire an outside investigator under a contract.

The Board of Accountancy is a stand-alone agency, unlike many professional licensing and disciplinary boards that are independently funded by licensees’ fees but operate under the arm of the Department of Licensing, Department of Health or Department of Labor and Industries. It has a staff of about 10 and operates on a budget of $3 million for the 2009-11 period. The budget is larger than typical because, Sweeney said, he had expected additional litigation costs related to the Clark case.

Brad Shannon: 360-753-1688

bshannon@theolympian.com

www.theolympian.com/politicsblog