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North CentralW A S H I N G T O N
City editorRuss Hemphill (509) [email protected] Page
A2Tuesday, May 22, 2012
TODAY
CommunityManson Community ◆
Council: 6 p.m., Ray Bumgarner Building, 687-3113
GovernmentDouglas County ◆
Commission: 8:30 a.m., courthouse, Waterville, 745-8537
Douglas County Sewer ◆
District No. 1: 8:30 a.m., district offi ce, 692 N. Eastmont Ave., East Wenatchee, 884-2484
Port of Douglas County: ◆ 9 a.m., Port conference room, 3306 5th St. S.E., East Wenatchee, 884-4700
Okanogan County ◆
Commission: 9 a.m., 123 Fifth Ave., Okanogan, 422-7100
Chelan County ◆
Commission: 9 a.m., 400 Douglas St., 667-6215
Wenatchee Arts ◆
Commission: 4 p.m., Wenatchee Valley Museum & Cultural Center, 884-6243
Leavenworth City Council: ◆ 6 p.m., City Hall, 548-5275
East Wenatchee City ◆
Council: 6:30 p.m., City Hall, 884-9515
Tonasket City Council: ◆ 7 p.m., City Hall, 486-2132
Twisp City Council: ◆ 7 p.m., City Hall, 997-4081
SchoolsOmak School Board: ◆
5:30 p.m., district offi ce, 826-0320
Lake Chelan School ◆
Board: 6 p.m., district offi ce, 682-3515
Wenatchee School Board: ◆ 7 p.m., Columbia School, 663-8161
Orondo School Board: ◆ 7 p.m., district offi ce, 784-2443
Quincy School Board: ◆ 5:30 p.m., district offi ce, 787-4571
WEDNESDAY
CommunityBusiness After Hours: ◆ 3 to
7 p.m., Holiday Inn Express, 1921 N. Wenatchee Ave., wenatchee.org, 662-2116
Suicide Prevention ◆
Coalition of NCW Volunteer Solicitation: 6 to 8 p.m., Wenatchee High School LGI Room, 881-8122
GovernmentPangborn Memorial ◆
Airport Governing Board: 8:30 a.m., Port conference room, 238 Olds Station Road, Wenatchee, 663-5159
Port of Chelan County: ◆ 8:30 a.m., Port conference room, 238 Olds Station Road, Suite A, Wenatchee, 663-5159
Douglas County ◆
Commission: 8:30 a.m., courthouse, Waterville, 745-8537
Economic Alliance: ◆ 11 a.m. to 1 p.m., Koala Street Grill, Omak, 826-5107
Leavenworth Design ◆
Review Board: 3 p.m., City
Plug inYour connection to community events through Wednesday
◆ HAVE A QUESTION?If you have a comment or
question about the paper, call managing editor Cal FitzSimmons at 665-1176 or email him at fi [email protected].
If your question has to do with delivery of the paper, please contact our circulation department directly at 662-2904.
If you believe information printed in The World is incorrect, call 665-1161.
◆ CORRECTIONS
WATER-POWERED GARDEN
World photo/Mike Bonnicksen
Chelan County PUD groundskeeper Jeff Hanson digs up some volunteer fl owers to use in other parts of the garden before preparing this area for planting at Rocky Reach Dam. PUD crews grew about 60,000 plants this year in their greenhouses for use in Chelan County PUD parks. They’ve been busy planting for the last couple of weeks.
BY JEFFERSON ROBBINS
World staff writer
SAN FRANCISCO — Federal prosecutors have recommended a stiff er sentence for confessed East Wenatchee securities swindler Jasper “Jay” Knabb, saying he’s “been evasive about the fl uidity between his and his current wife Laura Valaas’s fi nances.”
Since striking his plea agreement, in which prose-cutors agreed to recommend a sentence of 78 months in prison, Knabb’s been accused of dodging payment for electrical work performed for his wife’s ski-accessories business, and of auctioning high-dollar material goods through eBay under Valaas’s name.
The behavior demonstrates a lack of candor and a failure to accept responsibility on Knabb’s part, Assistant U.S. Attorney Jonathan Schmidt wrote in a May 17 court memo. Because of this, Schmidt said he would revise his sentencing recommen-dation upward, to 87 months.
A federal probation offi cer’s revised report to the court April 5 recommended 17 1/2 years, well up from the 63 months suggested in February.
Knabb, 45, pleaded guilty last year in U.S. District Court to securities fraud, conspiracy to commit securities fraud
and maintaining false books and records, carried out when he headed the failing tech fi rm Pegasus Wireless from 2005 to 2008. He and partner Stephen Durland bilked Pegasus investors of about $30 million by pumping up their stock price and secretly issuing almost 500 million shares to themselves,
then selling them at peak valuation.
Knabb has been married since October 2010 to Wenatchee native Valaas, a former competitive cross country skier.
Valaas’s manufacturing business, Skadi Nordic, was incorporated in Montana in 2009 under the holding company The Magic Bus LLC, with Valaas as the Washington licenseholder. In a February letter to U.S. District Court Judge Jeff rey S. White seeking leniency for Knabb, Valaas wrote that Knabb has no fi nan-cial or legal interest in Skadi Nordic. She characterized him as an engineer who oversees the company’s equipment and maintenance.
In federal court papers fi led by the prosecution, Dorsey Electric of East Wenatchee claims it performed about $20,000 worth of work in
summer 2011 to power Skadi Nordic’s manufacturing opera-tion, then based at the couple’s East Wenatchee home.
Bills for the service went unpaid, and Dorsey turned the matter over to a collec-tions agency in March. The federal fi ling includes emails that show when the agency contacted Valaas, she referred them to Knabb, who said he would pay the bills if they were converted to his name. Despite this, the debt still had not been paid as of mid-May, Schmidt wrote.
“Neither Mr. Knabb nor Ms. Valaas explained to the collec-tion agency that they were married, that Skadi Nordic operated out of their shared garage and that the electrical work was for Skadi Nordic equipment,” the prosecution memo reads. “... It is unclear why Mr. Knabb wanted the bills changed to his name and why he would want to assume Skadi Nordic’s debt.”
Aside from his potential prison term, Knabb has been ordered to pay $40 million in stolen funds plus penalties. He has claimed to be unable to pay that amount.
In a defense memo, Knabb’s attorney Kirk W. Elliott wrote that the collection agency submitted fraudulent billing, harassed Valaas’s extended family and threatened to turn the matter over to Knabb’s probation offi cer. Elliott argued the matter shouldn’t
weigh against Knabb at sentencing.
Valaas has also been listed since January as the contact person on Knabb’s four-year-old eBay account, Schmidt’s fi ling claims. The account has been registered to fi ve diff erent names and multiple mailing addresses in its lifetime, but only two IP addresses. Between March and June 2010, the account was registered to “Jay Valaas.”
About $242,000 worth of goods were sold through the account over the last four years, and nearly $64,000 in goods purchased. Items sold include a $40,000 Ford F-350 pickup, two $17,000 Rolex watches and a $5,000 custom Gibson guitar. Buyer feedback entries appear to indicate about $16,000 in sales went through the eBay account while under Laura Valaas’s name, including a $1,400 chandelier, a $2,900 Fender Stratocaster and a $4,000 Canon camera.
However, the bulk of those sales were HO-scale model trains and equipment, sold under the business name Lulu’s Trains, for which Valaas holds a license.
Knabb’s attorney Kirk W. Elliott wrote in a defense memo that “none of the items that have been purchased or sold were either owned by Mr. Knabb nor were any proceeds provided to him. This is evidenced by the fact that Mr.
Knabb’s wife wrote on eBay that she was ‘selling my collec-tion’ — hers, not Mr. Knabb’s.
“Further this separate business of Mr. Knabb wife’s is controlled by pre-nuptial agreement entered into by Mr. Knabb and his wife prior to their marriage.”
The handling of the electri-cian’s bill and the eBay account is not criminal, Schmidt wrote, but it’s similar to the conduct for which Knaab was prosecuted, “in that Mr. Knabb used multiple redundant transactions, and various aliases and nominees, all of which made the fi nancial transactions opaque and diffi -cult to trace.”
Judge White ordered the revised probation report and sentencing recommenda-tion March 8, after question-ing whether 78 months was appropriate.
In that hearing, White referred to the eBay sales and asked investigators to “run to ground what’s going on with these assets. Because it’s going to inform my decision about whether I impose a fi ne or penalty. ... And it may inform the government’s decision about who, if anybody else, to prosecute in this case, for obstruction or conspiracy.”
Knabb is scheduled for sentencing June 7 in a San Francisco federal courtroom.
Jefferson Robbins: [email protected]
Feds question East Wenatchee fraudster’s money handling
I hope every person in North Central Washington had a chance to read the extraor-
dinary and moving story in our Sunday edition about Ryan and Steve Sutherland of Cashmere.
The triumph of Ryan’s spirit despite having a rare form of muscular dystrophy that has taken away most of his motor functions, was truly inspiring. Here we have a young man with a death sentence hanging over his head who not only graduates with honors from a prestigious university but who actively counsels
others who have signifi cant life challenges. He clearly embraces life to the fullest, gets the most he can out of what he has, and inspires others.
The love, care and sacrifi ce of his father to provide the daily assis-tance to perform the simplest tasks so that Ryan could achieve his college degree, was equally inspiring. I’d like to recognize our fi ne feature writer, Rick Steigmeyer for telling the story so eff ectively and our incomparable photographer, Don Seabrook, for his wonderful pictures.
All of us can learn a lesson from the story of Ryan and Steve Sutherland. Most of the issues we face that seem daunting, frustrating or unfair are but minor annoyances and inconve-niences compared to the challenges Ryan has faced.
Maybe we can learn to be a little kinder, more fl exible and keep our petty problems in their proper perspective.
Dr. Fred Deal, a retired Wenatchee surgeon, was in the crowd as Ryan received his diploma from Whitworth University. He stopped by my offi ce to share the story of the graduation ceremony with me and he choked up as he was describing the standing ovation that Ryan received from his classmates and onlookers when he maneuvered his wheelchair across the stage to accept his diploma.
Jon DeJong, the assistant super-intendent of the Wenatchee School District, was also in attendance. “It was pretty hard not to get a bit misty eyed,” DeJong wrote me in an email.
He faces challenges with spirit
World photo/Don Seabrook
Ryan Sutherland, who has muscular dystrophy, attended Whitworth College in Spokane with his father, Steve. He graduated May 13.
Common Ground
Rufus WoodsPublisher
The World
Jasper “Jay” Knabb Will be sentenced for fraud June 7
