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LA CONNER — Republican Bill Bruch, a candidate for the state Legislature representing District 10 who is seeking to unseat incumbent Democrat Dave Paul, was the subject of two lawsuits in 1998 that found him liable for judgments totaling nearly $1.7 million.

The judgments were made public by Skagit County Democrats on Oct. 14 and posted on their website under the headline “Bill Bruch sued for swindling seniors in 1998.”

Bruch posted a statement on his own campaign website in response.

“When I was starting my career 28 years ago, I trusted the wrong people and unwittingly became an instrument in … [a] purported real-estate investment, which turned out to be a Ponzi scheme,” Bruch wrote. “Young and naïve; I was exploited, used, and defrauded of tens of thousands of dollars of my own money by someone who I believed to be a trusted friend. Most unfortunately two of my good friends also fell victim to the same investment. I lost my money, my home, my job, my car and my credit by trusting someone who turned out to be the purveyor of a Ponzi scheme.”

Bruch claimed he was completely unaware of any court proceedings or judgments until years after the fact, writing “I don’t believe that I was ever served a summons; and I never had a chance to defend myself in court,” and stated “this issue was resolved over a decade ago, it was a civil matter and I most certainly did not break any laws.”

Bruch declined to be interviewed by the Weekly News, which emailed him electronic copies of the two court cases, Partners In Care vs. William U. Bruch III, case #98-2-01077-7 and Geraldine Dixon vs. William Bruch, case #98-2-01166-8. In a short email response Bruch wrote “Over the years my friends and employers have known about the circumstances. It is a non-issue.” He provided a link to the statement on his campaign website, above.

According to the court documents, on Aug. 5, 1998 William Urban Bruch III had a default judgment in a lawsuit entered against him in the Partners in Care case in Whatcom County Superior Court for over $1.5 million “based upon fraud and the fraudulent acts of the defendant.” Documents identified the plaintiff, Partners in Care, as a successor trustee for John Blackmore. On Aug. 14, 1998, Bruch was in found in default for a second time, with a judgment against him based upon allegations of fraud for $184,660 in favor of plaintiff Geraldine Dixon in the same court. Bruch did not appear or provide a defense in either case, court records show.

The Blackmore suit, brought in May 1998 by Partners in Care, as trustee, claimed that Bruch advised Blackmore that if he loaned money to Bruch for purposes of investing, Blackmore would “save on taxes,” “get a high rate of return,” “earn a steady income,” and “have 100% liquidity” and based upon “the above representations and inducements made by Bruch, Blackmore gave Bruch a series of ‘loans/investments’ totaling $1.044,225.38.”

Bruch gave him receipts “showing that such funds were received by ‘Agent Bill Bruch.’” Copies of all signed receipts, promissory notes and assignments are exhibits to the complaint. The complaint further alleged that the representations made by Bruch were “false,” that Bruch “knew the representations he made to Blackmore were false,” and he “intended” Blackmore to rely upon these representations. Finally, it alleged that “Blackmore lacked the mental capacity to make sound financial investments.”

Contrary to Bruch’s assertions and denials, court records show that in addition to being served a summons on June 5, 1998 in Bellingham, he was deposed by plaintiff’s attorney about the fraud allegations in the complaint.

Similarly, court records in the Dixon case show that Bruch was served a summons and complaint on June 11 (just days after the Blackmore summons) at the same Bellingham address.

Exhibits to this complaint show Dixon made Bruch loans/investments ranging from $36,237 to $74,445 in 1996 and 1998, monies that comprised her life savings and that of her ailing mother.

The complaint alleges that Bruch told Dixon “about investment opportunities that he knew or should have known did not exist” and that he “made these misrepresentations in order to defraud plaintiff of her money.” Additionally, the complaint alleged that Bruch violated Washington’s Consumer Protection Act as well as applicable state and federal securities laws.

After a default judgment was entered against Bruch in 1998, he failed to pay the monies owing in full over the next seven years. Thus, on June 27, 2005, the court entered a writ of garnishment to Associated Credit Service, Inc. to enable it to collect the judgment against “William Bruch Estate Planning, Inc. whose residence and/or business location is PO Box 804, La Conner, WA 98257.” P.O. Box 804 is both Bruch’s personal and campaign mailing address in La Conner.

These judgments were the basis of Bruch being denied a license to become a mortgage broker in May 2008.

The Division of Consumer Services of the Washington Department of Financial Institutions reviewed his application and entered a Statement of Charges to deny his application based on “Factual Allegations” finding “Excessive Liens or Judgments,” and citing the two 1998 Whatcom County Superior Court judgments.

The “Grounds for Entry of Order” found Bruch failed “to demonstrate character and general fitness such as to command the confidence of the community and to warrant a belief that the business will be operated honestly and fairly within the purposes of the Act.” Additionally, Bruch failed “to meet the requirements of RCW 19.146.300(1) and (2) and RCW 19.146.310(1) (b) by failing to provide an accurate and complete license application.”