Rossi's Rags-to-Riches Story Includes a Convicted Felon
It's a great story, devoid of blemishes and moral ambiguities, a glossy, uplifting Horatio Alger tale where a little gumption and hard work are all it took to get ahead in life. It is the American Dream personified. And it makes for a great political pitch.
There's just one problem: Rossi is not telling the whole story. His first apartment building, for instance, was bought from a company where Rossi worked, a company that turned out to have a notorious track record of defrauding clients.
What Rossi leaves out--where and how he got his start in business--might put his success in a less flattering light. In fact, Rossi's story is a more nuanced tale. Rossi started out at a real estate company that engaged in fraudulent business practices and went bankrupt, and whose president, whom Rossi followed to other firms, was eventually indicted by a federal grand jury and sent to prison.
In the mid-1980s, Melvin Heide was owner of Capretto & Clark, a firm that brokered sales of apartment houses and managed properties. On December 23, 1983, Rossi, then 24, joined the company as a real estate salesman, according to state records.
But Heide was doing more than brokering real estate deals; he essentially set up Capretto & Clark as an unregulated bank, concocting a complicated scheme in which he borrowed money from real estate clients at high interest rates to fund other real estate deals. Heide was a "little-educated but a street-smart master of putting together complicated deals," according to a lengthy August 28, 1985 investigative article detailing Heide's dubious business practices in the Seattle Post-Intelligencer. Sales agents working for Heide were instructed to bring in clients with large amounts of cash, and Heide then pitched those clients to invest in his deals, the story claimed.
The money Heide took from clients was ostensibly secured by liens on the company's apartment buildings, though many clients did not know that other clients already had liens on the same buildings, or that the potential claims on the buildings exceeded their value.
On November 15, 1984, the scheme went belly-up when the state ordered Shoreline Savings to stop lending money to Heide after regulators discovered the thrift's loans to Heide far exceeded the amount it was legally allowed to loan to any single borrower for commercial purposes. Because of their dealings with Heide, the thrift executive in charge of the Heide accounts was eventually fired and the thrift president ordered to resign by regulators. (In 1987, Shoreline paid $5.8 million in cash and real estate to Capretto creditors to settle a racketeering suit alleging illegal dealings with Heide.)
On December 21, 1984 Heide and his company filed for bankruptcy, citing cash-flow problems caused by the loss of Shoreline's credit. Capretto reported debts of $40 million, including $11 million owed to unsecured creditors, some elderly, some of whom had invested in third, fourth, or even fifth mortgages on the company's commercial properties, according to a February 1, 1985 Seattle Times story. It was the third business in which Heidi was involved that declared bankruptcy.
The Rossi campaign contends he was never involved in Heide's machinations at Capretto. Rossi never invested in Heide's scheme, according to Rossi campaign spokesperson Mary Lane, and "he made sure none of his clients invested" despite Heide's efforts to get Rossi to interest his clients in Heide's deals. Rossi "didn't totally understand what was going on," Lane says, but felt it was his job to sell real estate, not investment opportunities. Rossi did purchase his first apartment building--the one he touts in campaign appearances--from Capretto & Clark.
Less than a week after liquidating Capretto & Clark, Heide moved to a new firm, Metropolitan Real Estate, on August 7, 1985, and then, on September 9, to Imperial Real Estate. Rossi followed, joining Metropolitan on August 8 and Imperial on September 11, according to state records. While Lane minimizes Rossi's ties to Heide, regarding Heide's jump to Metropolitan the Post-Intelligencer wrote that "Heide, his longtime secretary and several key sales associates recently resumed business in new offices..."
The bankruptcy of Capretto spawned an investigation by the FBI, the U.S. Attorney, and the King County Prosecutor's fraud division. The investigation dragged on for years, during which both Heide and Rossi remained at Imperial. On August 18, 1989, Heide was indicted by a federal grand jury on 18 counts of bank fraud, making false statements to a federally insured savings bank, and mail fraud based on his dealings at Capretto. On March 2, 1990, Heide pleaded guilty to bilking a Tacoma couple out of $400,000 and to making a false statement to Shoreline in exchange for other charges being dropped.
On July 20, 1990, Heide was sentenced to three years in prison and ordered to pay $1.7 million in restitution. His real estate license was revoked on November 26, 1991.
At Imperial, Rossi did not work under Heide, according to Lane: "Dino was a free agent there." When others at Imperial acted as if Heide had done nothing wrong, and indicated they intended to rehire him after his stint in prison, Rossi felt he "had to get out of here," Lane says. On March 10, 1992--in the midst of his first political campaign--Rossi moved on to "cleaner pastures," registering as a salesman at Diesse Commercial Real Estate, where he felt "such a relief to be at a well-run company." He moved in 1993 to Scott Real Estate, where he is still registered.
As for Rossi's long affiliation with Heide, "Dino tends to see the best in everyone," Lane says. She adds that over his career in business, Rossi has never been sued.