FBI probe of ex-West Linn chief sought amid extortion allegations

City Councilor says Terry Timeus may have 'extorted' city funds using personal favor to former city manager

Already facing a federal civil rights investigation over the since-dropped arrest and prosecution of a black Portland man, controversial former West Linn Police Chief Terry Timeus may now face investigation on another front.

City Council President Teri Cummings on Monday told the Portland Tribune she's gone to the Federal Bureau of Investigation with an allegation concerning the former chief's 2017 negotiations over a severance payment and his "retirement" from the city. Specifically, she says it sounds like Timeus tried to "extort" the person negotiating: then-City Manager Eileen Stein.

In an account echoed by fellow Councilor Richard Sakelik, Cummings said Stein told councilors in September 2017 that Timeus had demanded an additional $40,000 to $50,000 in city funds beyond what Stein felt was appropriate, or else he would go public with embarrassing personal information about Stein.

The information reportedly concerns a personal favor Timeus did for Stein or her family, the nature of which is unclear. However, Timeus' alleged threat appears to have worked, according to the two city councilors: on Oct. 19, 2017, Stein signed an agreement authorizing a $123,394 severance worth nine months of compensation — not the six months that generally is considered standard in such situations.

Follow the story This is part of a series of articles related to Terry Timeus and the 2017 false arrest of Michael Fesser. Click here to follow the story from the beginning.

Timeus did not respond to efforts to contact him. Stein, the former West Linn city manager, replied in a text message, "Thanks for reaching out. I'm reserving any comment during the course of the pending investigation."

The allegation, which Cummings and Sakelik documented in input submitted for Stein's mid-year check-in evaluation shortly after she signed Timeus' severance agreement, shows how hardball municipal negotiations can appear to enter a gray area of law, according to lawyers interviewed by the Tribune.

The councilors shared their documents, dated Nov. 20, 2017, saying they were concerned that the information was not disclosed in response to recent records requests for Stein's personnel evaluations.

The story of Timeus' alleged severance demand may also explain how the outgoing chief was awarded such a hefty payment despite more than a decade of misconduct allegations against him, many leading to payouts by the city, and a drunk-driving investigation of him earlier that year.

That history of Timeus' tenure as West Linn chief has gained new relevance in the wake of a $600,000 settlement of a civil rights lawsuit against West Linn over a police investigation and arrest authorized by Timeus. The investigation targeted the employee of Timeus' friend, A&B Towing owner Eric Benson. The employee reportedly had been planning a workplace discrimination lawsuit, and documents suggest the probe was intended to undermine the suit's chances of success.

Lunchroom disclosures

In May 2017, Timeus drove up to two of his subordinate officers outside a restaurant one evening and made questionable comments while appearing drunk, according to a subsequent criminal investigation. Having conducted her own investigation, Stein and the city commenced a discussion with Timeus over his retirement after 12 years as the city's top cop.

That's when, in mid-September, Stein made a disturbing disclosure in the city lunch room that "Timeus was holding something against her," Cummings alleged. Shortly after going to work for West Linn in 2016, Cummings said, Stein had asked Timeus for a personal favor and when the severance negotiations started, "he threatened to expose her if she didn't give him more."

Similarly, Sakelik said that before a council meeting, in the city lunch room, Stein approached him and said that Timeus was demanding an extra six months' severance beyond the six months Stein felt was justified, and the city had negotiated it down to three months extra.

Sakelik recalled Stein saying she had asked Timeus for a personal favor of some kind, potentially advice regarding a family member. Sakelik recalled the conversation with Stein as that "Timeus was threatening to make that public, if she didn't agree to give him extra money."

Both councilors say they objected. Stein signed a severance agreement that the councilors say included the additional funds sought by Timeus.

The severance agreement Stein signed prohibits Timeus from disclosing "confidential or privileged information obtained during the course of your employment."

The two councilors documented their disapproval of Stein's purported handling of the situation in input for her personnel evaluation later that year.

Cummings, in a Nov. 20 letter suggesting expectations for Stein, wrote that "the public trust suffered" because of "Ms. Stein's secret held hostage by the Chief." Cummings added that Ms. Stein's actions only served her personal interests" and appeared to violate ethical standards prohibiting use of a public office for personal benefit.

Sakelik, in his evaluation input, echoed Cummings' concerns of an ethical breach, while also calling it poor judgment. "Ms. Stein voluntarily informed myself of her conduct that would potentially affect the separation agreement she and her staff were in the midst of negotiating. I was told that she had asked Chief Timeus for professional advice or a favor or some action with a personal issue .... and Timeus was using it as leverage to negotiate an extra 3-6 months' severance, stating that he would bring this up in public if need be and it would be very embarrassing for her and the city.

"Ms. Stein was sorry for her error but the bottom line is that she compromised herself personally and most importantly she compromised the city. The outcome is that the city suffered an additional 3 months' severance cost with benefits that would approximate roughly about $50,000. I can empathize with the position Ms. Stein was in but that doesn't make it acceptable. Nor should we ignore this behavior."

Brenda Perry, who was a city councilor at the time, said she recalls hearing a rumor about Timeus making such demands, but "I did not take it as factual." She expressed skepticism, saying sometimes paying extra makes sense. "People don't realize how hard it is to fire someone."

Mayor Russ Axelrod, elected in 2015, said "Extortion is a very strong accusation and I don't have any specific knowledge of that."

Tung Yin, a former white collar criminal defense lawyer who is now a Lewis & Clark School of Law professor, said an account of the allegations is reminiscent of lawyer Michael Avenatti's recent high-profile federal prosecution and indictment for attempting to extort Nike with negative publicly. That said, he'd be interested in hearing Timeus' account of the severance negotiations.

"It's hard to say definitively, but that sounds sketchy to me," he said.

Years of tension

Stein's handling of the severance with Timeus contributed to years of tension that followed with Sakelik and Cummings. The two were among a three-vote majority that voted to terminate her in January 2020.

When she first joined the City, Stein had seemed to get on fairly well with the council. But later on, the two councilors differed with Stein on the manager's desire to hire a deputy city attorney who would report to her, to augment the use of a hired outside attorney, Tim Ramis, who advises the City Council.

Attempts to salvage the relationship didn't progress very far.

"Ms. Stein has tried to improve collaboration with me to start one-on-ones again and I have not agreed to that since I did not find them to be productive in general," Sakelik wrote in his 2019 city manager evaluation. "On the contrary, my lack of trust with Ms. Stein is the main reason to NOT have general one-on-ones."

The duo's distrust of Stein fueled criticism by Mayor Russ Axelrod, who attributed the councilors' criticism to a difference of opinion and "political vindictiveness."

Sakelik and Cummings, however, say their trust in Stein was damaged by the episode with Timeus.

Holly Bartholomew contributed to this article.

Nick Budnick

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