Former high-roller developer and lender Thomas Hazelrigg III found guilty of tax evasion; could face prison

A federal court jury has found former Bellevue-based developer Thomas R. Hazelrigg III guilty on two counts of tax evasion, and the Olympia native with financial ties to bankrupt King County developer Michael R. Mastro faces up to five years in prison on each count and potentially $1 million in restitution orders.

Acting U.S. Attorney Annette L. Hayes in Seattle announced the verdict Friday after a nine-day trial ended late Thursday after 3 1/2 hours of jury deliberation. In a news release Hayes said Hazelrigg, 68, of Redmond, spent millions of dollars “on gambling, thoroughbred horse racing, private aircraft, country club fees, a Bellevue penthouse, and two Palm Springs, California, homes’’ while failing to pay back taxes he’d agreed to.

“This trial laid bare Mr. Hazelrigg’s wide-ranging deceit and manipulation — all in the service of greed,” Hayes said. “The failure to pay taxes — especially by someone with this defendant’s financial means — tears at the fabric of our public trust. When Mr. Hazelrigg chose not to pay his fair share, he effectively cheated everyone.”

Hazelrigg’s court-appointed lawyer Stephan Illa of Bainbridge Island did not immediately respond to a request for comment.

The defendant was a friend and business associate of Mastro, who faces separate court proceedings related to bankruptcy and also was indicted last year in Seattle on bank fraud and tax evasion charges. Mastro and his wife have avoided extradition to the U.S. from France.

The Internal Revenue Service’s criminal investigation arm led the probe against Hazelrigg. Prosecutors said evidence at trial showed Hazelrigg “agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt” despite what it called his lavish lifestyle.

Prosecutors said he also evaded taxes for 1994 and that evidence at trial showed he illegally funneled money from his businesses during 1997-2007 while keeping it secret from the IRS and continuing to live well — buying two Chihuly chandeliers worth at least $460,000, two luxury homes in California and keeping a butler.

In the indictment against Hazelrigg, prosecutors said he concealed income in 2005-07 by funneling commissions he earned to FRB Inc. — a Nevada-based firm that is “owned by M.R.M., his longtime friend and business associate.” Court documents from other proceedings said FRB was owned by Mastro.

Sentencing is scheduled for March 12 before U.S. District Judge Thomas Zilly. Hazelrigg faces up to five years in prison on each count, and restitution in the neighborhood of $1 million, according to prosecutors.

Hazelrigg was an Olympia High School football star who played linebacker at Stanford University, was drafted by the Denver Broncos but never played in games. The Seattle Times profiled Hazelrigg in 1993, saying he never played professionally because of an injury but that he used his Broncos’ signing bonus to buy duplexes and other properties and then fix them up before going into bigger projects. That news report depicted Hazelrigg as “The Repo Man” for his hard-hitting approach to buying and collecting on developers’ and contractors’ debts — and his tactic of freezing their assets and credit lines to force them into settlements.

The profile said Hazelrigg also was involved in a Palm Springs hotel project developed with Mastro and Mastro’s wife. The Mastros later fled to Europe to avoid creditors whom they owed an estimated $325 million.