Ex-Bothell mayor accused of misleading real estate investors

One Snohomish couple sued Joshua Freed after losing a $300,000 investment in a development project.

Joshua Freed

Joshua Freed

By Jim Brunner / The Seattle Times

BOTHELL — Former Bothell mayor and 2020 gubernatorial candidate Joshua Freed has been accused in a spate of lawsuits of misleading investors, failing to pay creditors and misappropriating money that was supposed to go toward a Kingston town home development.

Freed, a longtime homebuilder, resigned abruptly as chair of the King County Republican Party in early February, not long after contractors and a lender sued him for unpaid debts.

Freed declined interview requests. In an email he questioned whether the cases were newsworthy and characterized the lawsuits accusing him of wrongdoing as “misunderstandings that have been dismissed.”

Several of the lawsuits center on a 140-unit town home development called Seaside Kingston, which has been under development by Freed for years, less than a mile from the Kitsap County town’s ferry terminal.

Some of the most serious lawsuit allegations overlap with Freed’s unsuccessful 2020 gubernatorial campaign, when he sought to become the Republican challenger to Gov. Jay Inslee. Freed placed third in the primary after sinking nearly $700,000 of his own money into the contest.

A prominent Bellevue real estate investor, C. Edward Springman, accused Freed in a lawsuit filed last year of misappropriating more than $2 million that Springman had invested in the Kingston town home development.

Springman had been approached by Freed about investing in the project after it ran out of initial funding in mid-2019, according to the lawsuit. Springman agreed and put in $4,150,000 that August, becoming the senior investor in the project.

But Freed did not devote all of that money to construction of the Kingston town homes, the lawsuit alleged. Instead, he “misappropriated” and “diverted” more than $2 million “and gave it to several companies Freed owned and controlled,” the complaint stated.

The alleged misappropriations took place in late 2019, a period when Freed was launching his candidacy for governor. On Sept. 14 of that year, he loaned $500,000 to his own campaign. A few months later, Freed tried to take that money back, but ran afoul of a state law limiting such repayments. The money stayed in his campaign and he was fined $25,000 by the state Public Disclosure Commission for violating campaign finance law.

In all, Freed contributed $687,000 to his 2020 campaign — including cash and in-kind donations — nearly half of the $1.6 million he raised.

According to Springman’s lawsuit, which does not mention the campaign spending, Springman discovered Freed’s deception in February 2020 and confronted him.

“Freed acknowledged his actions and agreed to repay by the end of 2020 all the funds he improperly took. Despite this commitment, Freed did not repay the funds,” the lawsuit stated.

In April 2021, Freed repaid about $1.2 million after selling a Bothell development to which he’d diverted some of Springman’s money, according to the lawsuit. But Freed still owed $964,531, according to the lawsuit, which was filed the next month, seeking payment of that principal amount plus interest of nearly 20% and legal costs.

The Springman lawsuit, filed in King County Superior Court, named as defendants Freed and his wife, and his companies Element Residential and Equity Holdings.

After winding on for several months, the case was settled in late April, court records show. Terms of the settlement were not disclosed, and Springman’s attorney, Kevin Bay, said he and his client would have no comment on the matter. Such settlements frequently include nondisclosure clauses restricting parties from discussing them.

Less than a month later, Timothy and Maria Sier, a married couple from Snohomish, sued Freed in a complaint alleging “fraud,” “negligent misrepresentation,” breach of good faith and “unjust enrichment.”

Freed had solicited a $300,000 investment in the Kingston project from the Siers on around May 25, 2021, dangling a projected profit of 22% within a year, even though Freed was “knowingly insolvent at the time,” the May 3 lawsuit in King County Superior Court alleged.

Within two months of the Siers’ investment, one of Freed’s companies started defaulting on payments to a drywall contractor and to a lender, the lawsuit stated.

The lawsuit, which sought repayment of the $300,000 plus interest and attorneys fees, was voluntarily dismissed on May 12. No settlement terms were disclosed. Arnold Willig, an attorney for the Siers, declined to comment.

In his email, Freed characterized both the Siers and Springman lawsuits as misunderstandings, declining to discuss details.

In January, one of Freed’s companies, Skyfall LLC, was placed into receivership after a lender, BRMK Lending, petitioned Kitsap County Superior Court. The petition said Skyfall had defaulted on two loans associated with a Bremerton development and owed nearly $1.7 million.

In a receivership action, which is an alternative to a Chapter 11 bankruptcy, a court-appointed receiver is empowered to liquidate a company’s assets to pay creditors.

Four additional lawsuits were filed against Freed and his companies in February and March by building material and glass contractors saying they are owed hundreds of thousands of dollars in unpaid bills for products and services.

Before running for governor, Freed served three terms on the Bothell City Council, and was chosen mayor by his colleagues in 2014. While mayor, he drew public backlash for buying part of a local golf course for development after a city option to buy the land lapsed.

In quitting as head of the King County GOP in February after a little more than a year in the post — a move that caught local Republican activists by surprise — Freed said he had “many new business opportunities across Washington and ministries here and overseas” that he’d be focusing on with his family.

On March 22, Freed sold his family’s Bothell home for $3.85 million, property records show.

Meanwhile, the Kingston development, advertised as “a colorful cluster of brand-new modern townhomes” located “mere minutes from the ferry terminal” and “miles of nearby sandy beaches” sits fenced off and largely barren.

It was supposed to be finished by late 2020, but as of last week featured only one cluster of partially built gray-and-white town homes with no landscaping, in a corner of the lot.

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