Last of bond scam defendants pleads guilty

A former Everett lawyer pleaded guilty to wire fraud and money laundering Thursday in connection with a phony investment scheme involving a tiny Whidbey Island sewer district.

Edward L. Tezak, 45, now of Sheridan, Mont., could be sentenced to up to 18 months in prison when he goes before U.S. District Court Judge Robert Lasnik Nov. 12.

Tezak was the last to plead guilty of five defendants charged in the scheme.

The others were Mukilteo developer Terry R. Martin, 57; Edmonds attorney J. David Smith, 53; Lynnwood mortgage broker John White, 52; and former Holmes Harbor Sewer District engineer Leslie Killingsworth, 68, of Coupeville.

It was Martin who talked Holmes Harbor commissioners into selling $20 million in municipal bonds for a commercial center near Paine Field in Everett. The development never took place, and Martin never came up with the remainder of financing needed to build the office park.

In addition, the commissioners went ahead with a bond sale for a project outside their jurisdiction despite warnings that such sales are illegal.

The scheme centered on a 500,000-square-foot commercial office park project Martin called Silver Sound Corporate Center.

Martin assured commissioners that he had additional financing, had secured building permits and had already leased all the space. None of that was true, court documents said.

According to his plea agreement, Tezak made false statements that he had access to about $20 million in funds from another source. He also wrote letters saying there was a total of $63 million available for the center’s development.

At the time, Tezak knew those statements were false, the agreement said. One fraudulent letter was faxed to a bond attorney in California as part of the wire fraud, the U.S. Attorney’s Office said.

Tezak was paid $50,000 by Martin for falsely verifying that the funding was available, the agreement said. The payment was made to Tezak’s purportedly charitable organization, Air Medical Services of America, it said.

The money later was transferred into an account for Tezak’s own personal use, the agreement says.

He also admitted that the transaction was designed to conceal the nature, location, source and ownership of the funds.

Besides prison, participants in the scheme face court-ordered restitution to some 200 investors in the Holmes Harbor municipal bonds.

In addition, a class-action lawsuit is pending against Martin and two securities companies for allegedly not fully investigating Martin’s claims about the project. The Island County trial now is set for March.

Reporter Jim Haley: 425-339-3447 or haley@heraldnet.com.

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