The Morrow County Courthouse in Heppner Ore. on July 17, 2024
Antonio Sierra / OPB
A lawsuit filed by Oregon Attorney General Dan Rayfield accusing several former Morrow County officials and a sitting state representative of improperly profiting off of the sale of a broadband company can proceed, a circuit judge ruled Tuesday.
In July, the Oregon Department of Justice sued board members for a nonprofit that oversaw Boardman broadband company Windwave Communications. The suit alleges the board members arranged to sell the company to themselves at a bargain price in 2018, ahead of an internet boom spurred by Amazon data centers in the region.
The defense filed a request for a summary judgment in an attempt to get the case thrown out of court. But Union County Circuit Court Judge Thomas Powers — who is presiding over the case after every local judge recused themselves — sided with the state and is allowing the case to move forward.
“The attorney general is in a unique position representing the state of Oregon,” to benefit the public through legal action, Powers said.
The defendants include former Morrow County Commissioner Don Russell, former Port of Morrow commissioners Jerry Healy and Marvin Padberg, Gary Neal, the then-executive director of the port, and state Rep. Greg Smith, R-Heppner. Russell, Healy, Padberg and Neal all left the nonprofit board to take over the private company that bought Windwave. Smith was one of three board members who joined the nonprofit to help complete the sale.
Their attorneys argued in court documents that their clients were well-intentioned, arranging to sell Windwave to themselves to keep it in local hands rather than a national corporation looking to take advantage of the county’s data center boom. That boom didn’t need to be emphasized in sales documents, they wrote, because it was already “public knowledge.”
The defense attorneys stated that DOJ approved the 2018 deal and only revisited the issue after The Oregonian/Oregon Live investigated the sale in 2022, well past a two-year statute of limitations.
The state argued that board members took steps to conceal a relationship with Amazon and downplay Windwave’s value before selling it. The lawsuit isn’t bound by the statute of limitations, they said, since it was an action brought by Rayfield in the public interest. The state never “approved” the deal, according to its attorneys, instead the DOJ sent a letter stating it had “no objection” after reviewing incomplete information.
Powers did side with the defense on a key issue. He ordered state attorneys to refile their arguments to make more specific allegations of “gross negligence and intentional misconduct.”
Attorneys for both sides will now prepare to collect more information through the discovery process as the case winds its way to a trial.
If the state prevails, it’s asking the court to either award $6.9 million in damages or to put Windwave in a trust and void its sale to WW Technologies. Rayfield also wants to ban all the defendants from leading or managing money for any charitable organizations in the future.
