Key figure in Oregon bribery scandal arraigned on 78 charges

The Oregonian – by Ted Sickenger

SALEM – A Seattle-based energy consultant implicated in a widening corruption scandal was arraigned Friday morning on dozens of bribery, racketeering, theft and tax evasion charges.

Martin Shain is accused of paying nearly $300,000 in kickbacks to a former manager at the Oregon Department of Energy, Joe Colello, who helped him broker state energy tax credit sales and earn lucrative commissions. Colello pleaded guilty to accepting bribes and other felonies earlier this week.  

Shain, 60, was arraigned in Marion County Circuit Court before Judge Janet Klapstein on 78 counts. She appointed a preliminary public counsel for Shain, whom she noted had already qualified for a court-appointed attorney in federal court. Shain was released on his own recognizance with no objection by state prosecutors.

On his way out of court, Shain said he had no comment then stopped briefly.

“My life has been ruined,” he told The Oregonian/OregonLive. “I lost everything.”

“You know, intentions are not equal to outcomes,” he added. “I’ve served this state for 20 years, and I have nothing.”

Shain was both a consultant on energy projects and a tax credit broker. Court documents allege that he bribed Colello on more than 50 occasions, with payments ranging from $1,000 to $14,130. Colello told The Oregonian/OregonLive that he deposited the cashier’s checks, which arrived via FedEx, in his brokerage account.

Shain also faces charges stemming from an August 2016 indictment. Prosecutors say he used forged documents to obtain nearly $12 million in state energy tax credits for a solar project at Oregon State University and the Oregon Institute of Technology.

State and federal law enforcement agencies launched investigations of the solar project after a February 2015 report in The Oregonian/OregonLive raised questions about the authenticity of the documents and Shain’s involvement in gaining the tax credits.

Shain was hired by the state on that project to help solicit proposals, select vendors, negotiate contracts, monitor construction and help secure the tax credits. He was paid some $2.4 million in fees, most of it by the project developer, SolarCity.

Shain became an active player in the lucrative business of brokering tax credits, joining other firms and individuals in the gold rush that ensued after the state supersized the long-running energy incentive program and issued hundreds of millions of dollars in tax credits. The business entailed helping tax credit recipients — including municipalities, state agencies, transit agencies and private companies — sell them for cash to deep-pocketed individuals and corporations looking to reduce their tax liabilities.

The state allowed the sales to help project backers raise upfront cash. For years, those sales were handled strictly by the energy agency, with Colello in charge of matching up buyers and sellers and verifying that the transactions took place at the state-mandated price.

That worked smoothly until 2010, when the market for tax credits plunged during the Great Recession. Then, in 2012, the market softened as the original sunset date of the program approached, and tax credits flooded the market.

In the end, third-party brokers virtually took over Colello’s matchmaking role. The brokers earned hefty commissions in the process, sometimes 10 percent or more of the value of the tax credits they placed.

Shain’s brokerage business, RC Shain & Associates, is registered to 85-year-old Roselle Shain of Seattle.

Her relationship to Martin Shain was not immediately clear, but his brother has become entangled in the forgery case. Earlier this year, Phil Shain submitted an affidavit to the court claiming he forged the documents to save his brother’s business, which was in danger if the solar project fell through.

—Ted Sickinger
503-221-8505; @tedsickinger

http://www.oregonlive.com/politics/index.ssf/2017/06/consultant_arraigned_in_oregon.html