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A Tucson financial adviser turned down a plea deal Wednesday to plead guilty to fraud charges. He will is now set to go to trial in July.

(Bryan Denson/The Oregonian/file photo)

About a dozen people filed into a federal courtroom in Portland Wednesday expecting to hear Greg Walsh admit that he conspired with his older brother to bilk $3 million from a widowed client.

But the Tucson financial adviser, indicted 18 months ago, had other plans. He turned down prosecutors' plea agreement and said he would rather go to trial.

It was a high-risk decision that appeared to stun even his own attorney. He was facing as little as under a year in prison. If convicted at trial, he could be sentenced to more than seven years behind bars.

Given the stakes, U.S. District Court Judge Garr King gave Greg Walsh time to discuss his change of mind with his attorney. The pair whispered for a few minutes as the rest of the courtroom sat silent.

Then Walsh sighed, stood and clasped his hands behind his back. "I'm intending to go to trial," the 42-year-old said.

Prosecutors say Walsh convinced a longtime client to loan $1 million in 2011 for a real estate project overseen by his brother, then a top loan officer at the Bank of Oswego in Lake Oswego. The woman invested another $2 million in 2013 based upon his advice. Prosecutors contend Walsh's older brother, Geoff, used most of the money to cover his own expenses. The elder Walsh was also indicted on fraud charges.

Both brothers are now scheduled to go to trial July 28.

Prosecutors say the deals came to light amid an investigation of Geoff Walsh. He was a fast-paced mortgage broker hired in 2009 to help the Bank of Oswego grow.

The institution fired him in May 2012 and sued him weeks later, claiming that he lined up outside loans to struggling bank borrowers, putting the bank's entire portfolio at greater risk.

Bank executives opened up Walsh's office to federal investigators. That inquiry soon spread to Greg Walsh and the bank itself. The Oregonian/OregonLive detailed the case in April.

Both brothers had been set to go to to trial in May. But Geoff Walsh's attorney requested to delay the case so he could work through more than 280,000 pages of evidence and to continue to discuss a potential resolution with prosecutors.

Records with the Financial Industry Regulatory Authority show Greg Walsh resigned from Morgan Stanley in October 2013 amid an internal investigation. The company said it cooperated fully with investigators.

He was barred from being a broker months later, ending his 13-year career as a financial adviser.

-- Molly Young

myoung@oregonian.com

503-412-7056

@mollykyoung