It's their story, and they're sticking to it.

The City of Seattle and the Washington State Liquor Control Board both insist they did nothing wrong when they conspired to shut down Oscar's II, a nightclub at 21st Avenue and East Madison Street in the Central District.

They just paid out a combined $1.2 million to avoid going to trial--and to duck having to identify the crackheads they employed to prove the club had a drug problem. There are a few other points they probably weren't looking forward to addressing in court either.

For example, why did they document 18 drug buys inside of Oscar's and make no arrests? And why didn't they tell the club owner, Oscar McCoy, what they were up to? And exactly how much public money did they pay the "confidential informants" (i.e., ex-cons, addicts, and snitches) they sent into Oscar's to buy rock cocaine? Were the informants paid for their time? If so, how much? And was the payment in cash or in dope?

And what was the relationship between the buyers hired by the cops and the sellers within? Had they worked together in the past? Were the cops working with the sellers as well as the buyers? Is that why nobody got arrested?

SET UP AND SHUT DOWN

Of the dozen clubs catering to young blacks that were shut down or forced to stop playing hiphop during the reign of former City Attorney Mark Sidran, the case of Oscar's goes down as the most blatant.

A quick recap: Crack started showing up at the corner of 21st and Madison in the early '90s, and started finding its way into Oscar's a short time later. Oscar McCoy thought he was working with the authorities. He allowed federal drug agents into his club. He testified against drug dealers in court. He also worked closely with two white beat cops, Samuel Derezes and Eric Zerr, who pounded the pavement around the club. In 1994, however, the city pulled Derezes and Zerr off the Central District foot beat and replaced them with a serpentine squad of undercover narcotics detectives.

"We worked with the police for years," recalls McCoy, now 72, "until they started trying to set us up."

These narcs stopped making arrests and started building evidence against Oscar's to shut it down.

"We were trying to build up enough evidence to show an atmosphere... that allowed drug dealing to flourish," explained Seattle Police Department detective Donny Lowe in a 1997 deposition.

What happened next is well documented in its generalities but still murky in its details, four and a half years later.

The narcs began using confidential informants to stage dope deals inside of Oscar's. They sent informants into the club with public money 18 times, and 18 times the buyers came out with crack. Nobody was arrested. McCoy was never informed of the drug deals until later--when the cops had compiled the "proof" they needed to declare the club a drug nuisance. The liquor board used the SPD's evidence to justify revoking the McCoys' liquor license. This effectively crippled the family business while the city pursued legal action to close it for good.

WHO WERE THEY?

So who were these confidential informants? How extensive were their criminal records? What about their addictions? And from whom were they buying the shit?

Those are the questions the city paid big bucks to avoid answering in public. A half hour after the State Supreme Court ruled that the police had to release the names and histories of the informants, the city cut its deal with the McCoys. As a result, we'll never learn the true identity of the young woman known as Bright Eyes. Ms. Eyes, as she is named in court documents and police reports, proved time and again that given public money, she could quickly and reliably procure cocaine. She did so six times in the summer and fall of 1997. Her purchases led directly to a two-day hearing in November of that year, before Senior Administrative Law Judge Ernest A. Heller.

Heller's charge was to determine whether the liquor board should revoke Oscar's liquor license. Had the liquor board read Heller's ruling more closely, they might have saved themselves--or, rather, the taxpayers--a cool half million. The careful reader would have noted that in three pages of discussion regarding the collaboration between the SPD narcs and Ms. Eyes, Heller used the phrase "not credible" or something close to it four times. The phrase "not sufficient evidence" also stands out, with five refrains in the same passage.

Heller noted: "It is troubling that the undercover operations resulted in no arrests.... It is troubling that hundreds, if not thousands of dollars in government funds were paid out to drug dealers leading to no enforcement activity." Heller ordered that the liquor board's action be overturned, and that the McCoys be given back their liquor license. The board ignored the ruling, overruling Heller.

"The liquor board should have come in and investigated for themselves," says McCoy. "But they didn't. Whatever the police handed them, they just took it and ran with it."

SIDRAN GONE, CITY SETTLES

Two and a half years later, the State Court of Appeals ruled that the city had violated the McCoys' constitutional right to due process. The appeals court later found that the liquor board had erroneously stripped the McCoys of their license. Those rulings opened the door for the combined $1.2 million in settlements that the McCoys hope will carry them into retirement, with their reputations restored.

The city made its deal with the McCoys during the first month on the job for Sidran's replacement, new city attorney Tom Carr, who took office with a mandate to represent the city rather than to try and mold it to his liking. Sidran, meanwhile, has never apologized to the McCoys for the whole debacle, and it's safe to say he never will.