State Rep. Greg Smith, one of Oregon’s most powerful legislators, is in trouble again.
He is now accused of helping business associates in eastern Oregon take over a nonprofit’s business arm at an artificially low price.
Smith, a Republican from Heppner, is being sued by Attorney General Dan Rayfield.
Rayfield is seeking to bar Smith from ever being involved in an Oregon charity and demanding he join other defendants in paying reparations of at least $6.9 million.
The lawsuit in Morrow County Circuit Court comes as Smith is already facing a state ethics investigation for illegally manipulating his pay at a public agency and a second investigation for failing to disclose one of his business clients.
The veteran legislator didn’t respond to telephone messages or emails seeking comment on the lawsuit. He also didn’t respond to draft excerpts of this story sent to him to review accuracy.
And several people involved with Smith in his public and private dealings in eastern Oregon didn’t respond either.
READ IT: Oregon Justice Department lawsuit
Smith, a representative since 2001, has a role overseeing the budgets of the two state agencies investigating him. He issues regular press releases about the use of his power, noting in one that he “holds a gavel” as co-chair of a key budget committee and is a vice chair of the Legislature’s main budget committee.
He described himself in one press release as “the Republican budget leader” in Salem.
Oregon legislative leaders have remained silent on whether they will shield the state agencies investigating Smith from any influence he has over their budgets.
House Speaker Julie Fahey, D-Eugene, said she was waiting for the outcome of the investigations and “will review the findings of any investigations and processes when they are complete,” her spokeswoman said.
State Rep. Christine Drazan, Republican leader in the House, didn’t respond to telephone messages or emailed questions.
“I think every one of them made decisions for themselves and not the best interests of the county. ”
-Melissa Lindsay, former Morrow County commissioner
But after the lawsuit was announced, Kerry McQuisten, leader of a conservative Republican group in Oregon, again called for Smith to resign his legislative seat.
“We have seen year upon year of public and private scandal surrounding this representative,” she wrote in a social media post.
The state lawsuit lays out a complex story of how people in public positions in Morrow County used insider information to cut a deal to enrich themselves.
The focus is an internet company called Windwave Technologies, based in Boardman. The company was a subsidiary of an Oregon nonprofit called Inland Development Corp. The lawsuit maintains that directors on the nonprofit’s board arranged to buy Windwave for themselves, ahead of a surging demand for the company’s work as Amazon Web Services expanded in the area.
“These were people in power who knew that Windwave was about to explode in value – and instead of protecting the public’s interest, they cashed in.”
-Attorney General Dan Rayfield
The lawsuit said the board members bought the company in 2018 for $2.6 million – at least $6.9 million less than its true value.
“When public officials use their positions to game the system for private gain, it’s a betrayal of trust,” Rayfield said in announcing the lawsuit on Tuesday, July 15. “These were people in power who knew that Windwave was about to explode in value – and instead of protecting the public’s interest, they cashed in.”
Among those reacting was a colleague of Smith’s, state Rep. Bobby Levy, a Republican from Echo.
“We all knew it would come out and the truth would be known,” she wrote in a social media post. “I’m sorry it took so long.”
Two former Morrow County commissioners said the lawsuit brings into the open what they see as manipulation of public agencies in their county.
“It was a small group that slowly put themselves in all the positions” on boards and commissions, said Jim Doherty, recalled as a commissioner in 2022. “Everything was orchestrated.”
Melissa Lindsay, recalled as a commissioner in 2022, agreed with Doherty that it was “by design” that a handful of people obtained key positions of power.
“I think every one of them made decisions for themselves and not the best interests of the county. I want them at long last to be accountable to the public for what they did,” Lindsay said.
Social media accounts sharing news of the lawsuit carried comments that reflected a common theme: Finally.
Doherty said public reaction and anger has been swift.
“I can smell the tar being boiled,” he said.
According to the lawsuit, Smith played a key role in moving along the nonprofit’s sale of its internet subsidiary.
Five people on the board of the nonprofit who were going to buy the internet business needed to add “disinterested directors to approve Inland’s sale of Windwave,” the complaint said.
Smith and two others subsequently served that role after they were named to the Inland board in September 2017.
At that time, Smith was already successfully running his own company while serving in the Legislature.
Gregory Smith & Company held contracts with several public bodies to provide economic development and finance services. By then, he also was the full-time executive director of another public entity, the Columbia Development Authority of Boardman.
He also has served as a business consultant to Umatilla Electric Cooperative, based in Hermiston. As a legislator, Smith arranged $5 million in state funding for the utility, which in turn committed the money to the CDA. He has reported to the state that the utility provides at least 10% of the income of his company.
The day after the state’s lawsuit was filed, the utility’s vice president for administration, Lisa McMeen, announced Umatilla Electric was shuttering the business center run by Smith. She didn’t respond to an email about the fate of Smith’s contract.
In his role on the Inland board, Smith was expected to “exercise exacting and rigorous analysis independently from the self-interested information” provided by the insiders, the lawsuit contends.
But Smith and the other new directors didn’t “exercise adequate diligence” to scrutinize the nonprofit’s sale of the internet business, independently assess the value of the nonprofit’s subsidiary or ensure that “terms of the transaction were fair to Inland.”
Instead, Smith voted in May 2018 to approve the sale of the internet business to the insiders. Federal tax records show he remained on the nonprofit’s board another four years.
Smith had a duty as the director of a nonprofit to use “reasonable care and prudence” in administering the charity’s assets and owed “a duty of loyalty to the charitable organization,” the lawsuit said. Instead, he “breached these duties.”
Smith also helped funnel public money to the internet business, according to federal tax records.
One contract held by his company was with a public entity called the Morrow Development Corp., created to help finance local businesses.
Tax records document that the public company itself loaned money to Windwave. The records show two loans – one for $150,000 and one for $600,000. Details about the loans couldn’t be established and company officials didn’t respond to written questions or telephone messages.
But the money may have been needed to pay off an earlier loan Windwave had taken out as part of the insider sale.
Morrow Development pays Smith’s company $100,000 a year to run its loan program. In the 2024 tax year, the development company reported total income of $103,929. The tax returns show that Morrow Development lost money in 2023 and 2024.
Smith is facing an investigation by the Oregon Government Ethics Commission over that contract. A complaint filed in May said Smith as a state legislator failed to disclose that the development company was a source of income for his private company.
On July 8, records show, Smith amended his statement of economic interest for 2023 and 2024 to disclose that Morrow Development provided at least 10% of his company’s income and that it had a legislative interest in his office.
Smith earlier this year conceded violating the state ethics law by failing to disclose yet another client of his company. He settled that complaint in February by agreeing to accept a letter of education.
Smith’s role in Morrow Development helps reveal the deep connections among a handful of public leaders in Morrow County.
The president of the development company, for example, is Jerry Healy. Healy also has been on the board of Inland Development Corp. and Windwave. He also once served on the powerful Port of Morrow Commission.
He is one of the insiders being sued by the state over the Windwave sale.
Last year, Healy agreed to pay $2,000 to the ethics commission to settle its investigation of his failure to declare conflicts when acting on the Windwave sale.
Lawyers representing Healy told the ethics commission that he was one of the “pillars of the community” who has shared time with “Morrow County’s government, nonprofits and community over several decades.”
Rayfield cast the Windwave deal as a betrayal of the public interest.
“Inland was created to serve schools, hospitals, courthouses, and other public-sector institutions in eastern Oregon – many of which continue to rely on Windwave today,” his statement said. “The insider sale of Windwave not only diverted public value into private hands but potentially undermined the long-term availability of affordable broadband for these essential services.”
While the civil suit proceeds, Smith awaits the results of the ethics investigation. The agency is probing whether he illegally used his position as a public agency executive to raise his own pay.
Smith for a time saw his annual salary at the Columbia Development Authority boosted from $129,000 to $195,000. His board in September 2024 rescinded the pay raise and directed that Smith pay back the excess pay, amounting to as much as $27,500.
The Port of Morrow handles payroll for the CDA. The agency responded to a recent public records request that it had no records that Smith repaid the pay – or that he was even asked to do so. The port’s executive director, Lisa Mittelsdorf, didn’t respond to questions about the matter. She serves on the board of the Morrow Development Corp. alongside Smith.
Kim Puzey, chair of the CDA board, also didn’t respond to emailed questions or telephone messages regarding the excess pay.
Last December, Smith threatened to sue both the Port of Morrow and the CDA over the pay issue. An attorney for the port said it was taking no action on the claim. Puzey didn’t respond with the status of the claim at the CDA.
The claims said Smith should be compensated for actions at the CDA board meeting in September 2024 that stripped him of his pay raise.
He was the victim, according to the claims.
Statements at that meeting “irrevocably damaged Mr. Smith’s reputation,” the notices said. The claim said Smith subsequently was “suffering from insomnia, nightmares, lack of appetite, depression and hopelessness.”
He had to seek, the claim said, “ongoing psychological and medical counseling to help recover from the trauma.”
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