MEDFORD, Ore. -- An attorney representing a bank based in the Kingdom of Tonga said Monday he will file a $600 million lawsuit in response to a civil racketeering suit filed against five southern Oregon men.
Attorney General Dave Frohnmayer last week accused Dennis Walker of Talent and four others with selling about $2.3 million in International Bank of the South Pacific certificates of deposit to investors in Oregon, Washington, California and Utah between November 1984 and July 1985. He said the investors were promises a 25 percent to 35 percent return on the securities, which were not registered in any of the four states or with the federal government.
Frohnmayer called the operation a 'Ponzi scheme' whereby a few investors get big payoffs to lure others into investing.
The investment programs were held by the International Bank of the South Pacific, a corporation in the Kingdom of Tonga.
Volney Morin, an attorney representing the Tongan bank, told a news conference Monday that bank officials have asked him to file a lawsuit in federal court against the state of Oregon for 'slander, libel, and possible other causes of action in the amount of $600 million.'
Morin said investors earned substantial interest on their deposits, and 'every investor had his or her principal returned when requested.'
The news conference was held at the former site of Walker's Sports Hall of Fame, one of the businesses named in the state racketeering suit. Walker said he closed the sports memorabilia display in November, moving it out of the country. He said he thinks the closure of the Sports Hall of Fame was part of what prompted the state to conduct an investigation into his business interests.
Walker said Frohnmayer undertook the investigation to make up for past failures and to score political gains. 'They need something to make themselves look good,' he said.
Both Walker and Morin denied that the certificates of deposit were sold in Oregon. 'The bank does not offer securities in Oregon and is not engaged in business in Oregon,' Morin said.
Walker said the investments are safe, adding that the bank would return deposits at the investor's request.
Jackson County Circuit Court Judge L.A. Merryman last week issued a temporary restraining order that freezes several accounts at Western Bank's Ashland branch. The accounts belong to the Tongan bank, International Enterprises Financial Account, Walker and the Sports Hall of Fame.
According to affidavits filed by state investigators, investors deposited more than $2 million at the Ashland bank. Department of Justice investigator John Cannon said much of the money went to pay Hall of Fame expenses.
Walker denied the charge, saying investors made their transactions directly with the Tongan bank.
Others named in the racketeering case are Rex Jakcson of Medford, William Mills of Medford, Larry Dotson of Ashland and Raymond Cluff of Ashland.