McKenna returns $14,000 from foreclosure trustee firm

OLYMPIA, Wash. (AP) - Republican gubernatorial candidate and state Attorney General Rob McKenna has returned nearly $14,000 in donations from people tied to a firm that helps mediate foreclosures.

McKenna's office had put the company, Northwest Trustee Services, Inc., on notice in 2010 that they could face investigation, but his campaign accepted donations from the donors on Sept. 30. He has since returned the money, according to an amended financial disclosure form that was submitted on Feb. 9, the same day McKenna announced Washington state's share of a $25 billion settlement with the nation's biggest mortgage lenders over foreclosure abuses.

McKenna campaign spokesman Charles McCray said that the timing was a coincidence, and noted that the refund was made on Feb. 2, and that the Feb. 9 filing was in advance of a Feb. 10 filing deadline.

"The mortgage settlement is unrelated to the refunds," he said. "The important part to focus on is that we made the refund."

The $13,800 in donations was made by three attorneys, and two wives, associated with either the law firm Routh, Crabtree, Olsen, or Bellevue-based Northwest Trustee Services Inc. The law firm is an affiliate of the trustee.

Northwest Trustee Services was one of more than 50 foreclosure trustees that received a letter from McKenna on Oct. 13, 2010 "regarding serious problems associated with foreclosures in the state of Washington that we have been observing." The letter advised the dozens of trustees from seven states to suspend all questionable foreclosures and warned that they could be investigated. Trustees act as a neutral third party, working with both the lender and borrower during foreclosure proceedings.

Stephen Routh, a founding partner of the law firm, and his wife, JoAnn, each donated $3,200 to McKenna's campaign; attorney Lance Olsen donated $1,000; and attorney David Fennell, an executive with Northwest Trustee, and his wife, Catherine, each donated $3,200.

"I respect the right of Attorney General McKenna to make whatever decision he feels is best for his campaign," said Olsen, who said that his law firm and his client, Northwest Trustees, "does everything it can to act in strict compliance with the spirit and the letter of the law."

"We do the best we can to do business in the right way," he said. "I would hope that nobody would draw a conclusion that isn't supported by the facts."

Routh and Fennell did not respond to emails seeking comment.

Janelle Guthrie, a spokeswoman for the attorney general's office, said that the office does not confirm or deny existing investigations unless a civil action is filed by the attorney general. No actions have been filed against Northwest Trustee Services as a result of the 2010 letter, Guthrie said.

Still, McKenna felt that the donations should be returned.

"As AG, there can be times that Rob finds it appropriate to return contributions," McCray said. "This is one of those times."

Jaime Smith, a spokeswoman for Democratic gubernatorial candidate Jay Inslee, questioned why the McKenna campaign didn't quickly identify a potentially problematic donation.

"I think to have waited this long certainly raises some questions about why it took them so long to return that money," she said.

Inslee and McKenna are vying to replace Democratic Gov. Chris Gregoire, who is not running for a third term.

A recent survey of 405 voters by independent pollster Stuart Elway showed McKenna with a 9-point lead over Inslee. The poll found McKenna had a 45-36 advantage over Inslee with the statewide voters who were polled. The poll was conducted last week and had has a margin of error of plus or minus 5 percent.

Inslee has raised a total of about $3.8 million for his campaign, raising more than $473,000 in January. McKenna has had to stop collecting donations at the end of November because state officials are prohibited from fundraising while the Legislature is in session. McKenna has raised a total of $3.73 million, according to the latest figures from the state Public Disclosure Commission.

Inslee, a member of the U.S. House of Representatives, does not have to abide by the fundraising freeze because he holds federal office.