By Jeff Manning

The Oregonian

One was president of a Portland bank.

Another was a utility executive who helped change Portland’s business landscape.

Brian Rice and Andrew MacRitchie left their corporate posts for jobs at Aequitas Capital.

Now both have been sucked into the criminal fraud investigation of the collapsed firm.

Rice, former president of Key Bank of Oregon, acknowledged in recent court filings that he is a target in the case.

Rice included in his court filings a copy of an April 23 letter from the U.S. Attorney’s office in Portland informing him “that you are a subject of a federal criminal investigation concerning fraud that occurred at Aequitas.”

MacRitchie, the former ScottishPower and PacifiCorp executive, said he too has “incurred defense costs in connection with the DOJ investigation.”

Federal prosecutors have already cut guilty plea deals with two former Aequitas executives. But it appears they are far from done. The recent filings indicate several additional Aequitas executives, like Rice and MacRitchie, are in harm’s way.

Two former Aequitas executives, Brian Oliver and Olaf Janke, have agreed to plead guilty and cooperate with the government.

No criminal charges have been filed against Bob Jesenik, Aequitas’ co-founder and CEO.

Both Rice and MacRitchie have asked the court for access to Aequitas insurance money to cover their defense costs. But much of that money has already been spent.

The company had three policies each for $5 million of coverage. But the defendants have already spent more than $10 million on legal costs, exhausting the first two policies. The third policy is now being consumed even though the criminal case is just getting underway and the pool of potential defendants is expanding.

Attorneys for the receiver now in charge of Aequitas have voiced alarm at the share of the insurance money spent by Jesenik. His attorneys have submitted bills for at least $2.7 million, far more than any other defendant. As U.S. Magistrate Paul Papak noted in an October 2017 ruling, at that point 61 percent of the defense cost payments went to Jesenik’s lawyers. Plus, Jesenik’s monthly legal fees approximately quadrupled after he hired new counsel around March 2017.

It’s not just the amount of insurance money that went to Jesenik that concerns the receiver. There are also questions about whether Jesenik and other defendants spent the money appropriately.

Nevertheless, Papak ruled in favor of Jesenik’s request for access to additional insurance funds to cover his defense.

The court-appointed receiver now in charge of what’s left of Aequitas opposes Rice’s and MacRitchie’s request for access to the insurance money. He argues he needs the money to help defray losses suffered by Aequitas investors.

Until now, Rice and MacRitchie have faced minimal legal expenses. Neither was charged when the U.S. Securities and Exchange Commission shut Aequitas down and filed a civil lawsuit in March 2016.

That has changed as the criminal case nears the indictment stage.

“Recently, MacRitchie has incurred defense costs in connection with the DOJ investigation and expects to continue to incur Defense Costs in that matter,” his lawyer said in a court filing.

Both Rice and MacRitchie were high-profile Portland executives before joining Aequitas.

Rice headed KeyBank in Oregon for 12 years before joining Aequitas in 2014.

MacRitchie was ScottishPower’s point man in its efforts to buy PacifiCorp and served as an executive vice president there.

Aequitas collapsed in 2016 owing about $600 million to investors. Federal regulators claimed that Aequitas executives misled investors for years about the company’s true financial condition. It was actually a giant Ponzi scheme, they said, in which the company relied on money from new investors to repay the old.

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