Jeffrey Bivens, Washougal’s former finance director and a licensed tax attorney, pleaded guilty Wednesday to making materially false statements to the Small Business Administration and Wachovia Bank.
Bivens, 34, pleaded guilty in U.S. District Court in Tacoma. He faces five years in prison when sentenced by U.S. District Judge Benjamin H. Settle on May 23, 2011. Under the terms of the plea agreement, Bivens also shares a portion of the $1.7 million loss associated with the bank and SBA loan.
Bivens could not be reached for comment Wednesday.
Bivens represented Donald Chill, owner of the Longview-based disaster restoration company, Charles Prescott Restoration, Inc. Bivens assisted Chill in the sale of the company in May 2007 and in obtaining a related loan, according to a news release from the U.S. Department of Justice.
Bivens told Wachovia Bank and the SBA that the sale price of the business was $4 million. Based on that information, Wachovia agreed to a loan of $2 million, which was guaranteed by the SBA, to the purchaser. The true price of the business was $7.4 million and would have caused the loan to be denied, according to the plea agreement.
Bivens failed to disclose to the bank and SBA that there was a secret promissory note between the buyer and seller and misrepresented the length of an employment contract with Chill. In addition, Bivens helped engineer a secret second closing, which he and others concealed from the bank, according to the agreement.
E-mail communications revealed that Bivens, Chill and Jeffrey Kraai, a commercial business broker involved in the sale, fully understood the deal would not go through if the bank and SBA knew the true terms of the deal, according to the news release.
Shortly after the sale of the company, the purchaser, who was not identified, learned the balance sheet had been based on fraudulent conduct by Chill. Beginning as early as 2004, Chill began inflating estimates and invoices submitted to the Mutual of Enumclaw insurance company, padded bills from subcontractors and submitted forged secondary estimates that appeared to be from competitors. In just 10 jobs reviewed during a five-year period, Chill overbilled by about $3.2 million, according to the Department of Justice.
In March, Chill was sentenced to four years in prison and ordered to pay $4.9 million in restitution for mail fraud, bank fraud and money laundering. Kraai pleaded guilty to making false statements, which arose from his participation in the sale of the business and obtaining the loan. Bivens’ plea Wednesday is related to the same part of the transaction.
This is not the first time Bivens has been reprimanded for dishonesty.
In August 2008, Bivens’ license to practice law was suspended for 18 months by the Washington State Supreme Court. The suspension was for charging unreasonable fees, conflicts of interest, failure to preserve the identity of clients’ property and dishonest conduct, according to the Washington State Bar Association.
His license was listed as “active” on the bar association website Wednesday.
In May 2009, Bivens, who was serving as a Washougal City Council member at the time, was hired as the city’s finance director. The city’s insurance company refused to fully insure Bivens due to the suspension.
The city council fired Bivens in December for failing to obtain fidelity bond coverage of $2.5 million per misdeed. He received a severance of $9,167 per month for five months.
The fraud investigation was conducted by the Small Business Administration Office of Inspector General and the Internal Revenue Service Criminal Investigations.
Marissa Harshman: 360-735-4546 or marissa.harshman@columbian.com.
