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Randy Gray

Other Oregon exonerations
In August 2011, a Linn County, Oregon grand jury indicted 40-year-old Randy Gray, an investment adviser, and two other men on charges that they bilked investors out of more than $3 million in a housing development that was never completed.

The grand jury also indicted Scott Whitney, who was a partner with Gray and handled the accounting for their investment firm, ZurCrowner. Derek Dunmyer, whose business, Absolute General Contracting, was involved in a home construction project in Albany, Oregon, was charged separately with racketeering.

The indictment accused Gray and Whitney of one count of racketeering, 16 counts of aggravated first-degree theft and 16 counts of unregistered sale of securities. Dunmyer pled guilty to a misdemeanor charge and was sentenced to three years on probation. Whitney pled guilty to racketeering and four counts of the sale of unregistered securities. He was sentenced to three years in prison.

In January 2014, Gray went to trial in Linn County Circuit Court. The prosecution focused on a housing development called Somerset that Dunmyer was building. There were six phases planned, and three had been completed by the middle of 2008. All the houses in phases one and two had been built and sold. There were six homes in phase three that had not yet been sold. That summer, Dunmyer began having difficulty obtaining financing. He owed state and federal taxes and was delinquent on more than one million dollars in loans from private investors whose debts were secured against the Somerset land.

Dunmyer owed money to subcontractors and vendors—the company’s debt was around $7 million, and he had additional personal debts of around $3 million dollars owed on a first and second mortgage on his home and vehicle loans. He needed capital to complete the Somerset development. Whitney was a certified public accountant for Dunmyer.

The prosecution claimed that Gray and Whitney began discussing Dunmyer's need for money to pay off debts and get back to building successfully. They decided to forgo other financing opportunities and approach ZurCrowner clients. They decided $3.3 million was the amount needed so that Absolute General, Dunmyer’s company, could resume building homes.

Each of the clients authorized a wire transfer of funds from Individual Retirement Account funds to a bank, which issued a promissory note through which all of the funds were loaned to Dunmyer’s contracting business. After an upfront payment of $100,000 to Gray and Whitney, the funds transferred from the clients were used to pay off Absolute General's debts and Dunmyer’s personal debts.

The money received from the lenders was used to restructure Absolute General Contracting debts by paying off all liens against the Somerset land that was used as collateral, paying off numerous other debts in order to build more homes and to purchase six lots on Alameda Street. Absolute General Contracting was finishing homes in Millersburg, Lebanon, North Albany, and homes in the third phase of Somerset after receiving a $3 million loan. Absolute General Contracting began building six homes on Alameda Street immediately after receiving the loan. But Absolute General Contracting walked away from the Somerset project around four months after receiving the loan and building the six homes on Alameda. The investors foreclosed on the promissory note and received approximately 30 acres of land from the Somerset Subdivision. It was estimated that the 30 acres was of equal value of the promissory note when it was issued.

Gray was charged with 16 counts of theft, each count representing a client, including his father. He was charged with 16 counts of selling unregistered securities and one count of racketeering. The prosecution alleged that Gray had failed to fully disclose the project’s financial condition, told the investors their money would be used for construction, and told them they would receive a substantial return—some said they were told as much as 10 percent.

The defense claimed that Gray had merely recruited clients to loan money to Absolute General Contracting, which, though while in debt, had substantial promise. However, the unexpected collapse of the housing market had caused Absolute General Contracting to fold.

Five clients who had chosen to receive monthly interest payments testified that they had received at least four payments following the transfer of their funds. One of the clients acknowledged that, after receiving those initial four payments from the bank administering the loans, he continued to receive checks from one of Gray's companies for some undetermined time. Another of those clients testified that she received monthly payments for considerably longer than four months, and perhaps until as late as July 2011, but she did not identify the source of those payments. The witnesses included Gray’s father, who had also loaned money.

During the trial, the prosecution asked the judge to bar evidence from the defense relating to repayments by Gray as irrelevant. Gray’s defense lawyer, James Leuenberger, sought to present evidence that after Dunmyer defaulted on payments to those lenders who had chosen to receive monthly payments, Gray continued to make the payments himself for two and a half years.

Circuit Court Judge Thomas McHill ruled that the evidence “was not relevant legally nor factually,” reasoning that the evidence was “kind of like going to the store and stealing candy—or taking a candy bar, taking it home and then trying to pay for it later on.”

Judge McHill also ruled the defense could not elicit testimony that Gray had offered to help the investors develop and sell the land in order to recover their losses.

At the conclusion of the evidence, Judge McHill granted a defense motion for an acquittal on the racketeering charge as well as the 16 counts of unregistered sale of securities.

On February 3, 2014, the jury convicted Gray of 16 counts of first-degree aggravated theft. Prior to sentencing, the defense filed a motion for a new trial, arguing that Gray should have been allowed to present evidence that he had made payments totaling $161,920 from January 2009 until July 2011, at which time when he “was ordered to have no contact with the lenders.”

The defense contended the evidence was “relevant to whether [Gray] possessed the requisite intent at the time the theft occurred,” because it suggested that he never intended to defraud or to deprive the lenders of their property.

The state claimed that evidence was irrelevant because it was not proof of Gray's intent at the time he obtained the money, and that it was not relevant to the theft charges, because Gray's intent to repay the investors after-the- fact had no bearing on whether he committed theft when he obtained their money through deception.

On March 12, 2014, Judge McHill sentenced Gray to three years in prison. At the time, Gray had six children, and his wife was expecting their seventh in May.

Gray was released on parole on March 10, 2017. Four months later, on July 19, 2017, the Court of Appeals of Oregon vacated Gray’s convictions and remanded the case back to the trial court.

The court held that the defense should have been allowed to present the evidence of Gray’s repayments to lenders. The court said that if Gray had been “allowed to introduce evidence of his efforts to repay and assist the victims, he could have argued to the jury that those actions demonstrated that his earlier misstatements or omissions resulted from inadvertence or a belief that his clients would not consider the omitted information significant, and that they did not reflect an intent to defraud.”

“Given that [Gray's] evidence plausibly supported such an inference, the court erred when it ruled that the evidence was irrelevant,” the appeals court ruled. In addition, the court noted that Gray, Dunmyer, and Whitney “all testified that they had believed that the project could succeed based on reasonable financial projections, and Dunmyer's accountant testified that those projections had used ‘valid numbers based on valid assumptions,’ which understandably had not predicted the subsequent housing market crash.”

The court added, “Had the [trial] court ruled otherwise, [Gray] would have been permitted to introduce evidence that he had personally made payments of more than $160,000 to his former clients, well more than the $50,000 that he had obtained from the venture. The jury may well have considered that strong evidence that [Gray] had not intended to defraud the victims in the first place.”

Gray, represented by attorney Jason Thompson, went to trial a second time in November 2022. During this trial, Thompson was able to present the evidence of Gray’s attempt to repay the clients. Thompson also elicited for the first time testimony from Gray’s father that Gray was his heir. Thompson said that the state’s attempt to portray Gray’s father as a “victim” was faulty—Gray was not going to defraud his own father, particularly since Gray was going to inherit the money anyway.

Thompson also presented evidence that Ruth Johnson, the State’s lead investigator, had not disclosed information about the value of the Somerset division to the lenders. Dan Watson, owner of K&D Engineering, had told her the land could be worth as much as $80,000 to $100,000 per acre after the market rebounded. Johnson admitted she had withheld that information from the lenders. Thompson argued that Johnson told the lenders it would cost at least another $6 million before the first house could be started to convince the lenders that they had been duped.

As a result, the lenders sold the land for less than $10,000 per acre. The buyer of the 30 acres for $300,000 developed it and later sold the land in parcels in 2019 and 2020 for $10,071,200.

On November 8, 2022, the jury acquitted Gray on all charges. After the acquittal, Gray filed a claim for state compensation for his wrongful conviction.

– Maurice Possley

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Posting Date: 2/22/2023
Last Updated: 5/24/2023
Most Serious Crime:Theft
Additional Convictions:
Reported Crime Date:2008
Sentence:3 years
Age at the date of reported crime:37
Contributing Factors:Official Misconduct
Did DNA evidence contribute to the exoneration?:No