An attorney’s role in a municipal bond transaction gone wrong has sparked opposition to his potential appointment as a U.S. attorney for eastern Washington, the Associated Press reported.

Michael Ormsby is a Spokane-based public finance partner at the firm K&L Gates.

U.S. Sen. Patty Murray, a Democrat, has forwarded his name to President Obama for appointment, the report said.

Four critics of Ormsby, including former Spokane Mayor John Talbott, sent a letter to the administration and some members of Congress urging against Ormsby’s appointment.

The controversy stems from Ormsby’s role as counsel for the ill-fated 1998 River Park Square parking garage bond issue in Spokane.

The $31 million bond issue by the Spokane Downtown Foundation, to finance a parking garage at River Park Square Shopping mall, defaulted in 2001 after the city refused to backstop the debt with parking meter revenue when parking garage revenue fell short of projections.

Bondholders argued that the city had pledged to backstop the bonds, and the city agreed to a 2004 legal settlement that paid them in full.

The Internal Revenue Service also ruled the bonds to be taxable in 2004, and took the unusual step of naming Ormsby and one other bond attorney in a disciplinary complaint.

In 2007, Ormsby and the other attorney agreed to a settlement in which they agreed for an 18-month period to have their bond opinions for certain financings reviewed and approved by the head of K&L Gates’ public finance group, who is also a member of the firm’s opinion committee. The attorneys didn’t admit wrongdoing.

Talbott’s letter argued that the parking garage deal was fundamentally fraudulent, and left city taxpayers on the hook for a facility that benefitted the mall’s well-connected owners.

Ormsby must be vetted before a formal appointment is made. Then he would be subject to Senate confirmation.

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