Two Local Men Indicted In Alaska Scandal -- Racketeering Charges Filed Against Former Politicians

CUTLINE: AREA SUPPLIED BY H.W. BLACKSTOCK CO. -- From a satellite office in Barrow, the H.W. Blackstock Co. of Seattle supplied most of the materials for a massive public-works construction effort throughout Alaska's North Slope Borough. The borough is the government for the region.

Former King County Republican Chairman Ken Rogstad and former Seattle City Councilman and mayoral candidate Wayne Larkin have been indicted on charges of bribery and racketeering in connection with a construction contract with Alaska's North Slope Borough.

The federal charges rose from a six-year investigation of a $1.2 billion oil-fed building spree.

A grand jury in Anchorage yesterday indicted Rogstad and Larkin on six counts, including bribery, racketeering and obstruction of justice.

If convicted, the two would face prison time and forfeit an alleged $2.5 million in earnings.

Rogstad and Larkin will plead innocent, their lawyers said today.

``We are going to go through the government's case like Sherman went through Georgia,'' said Rogstad attorney Mark Topel of San Francisco. He described Rogstad as ``very upset and dismayed'' by the indictment.

``Wayne didn't do anything that would violate anybody's laws,'' said Larkin attorney Tom Decker of Chicago.

Larkin, 62, now retired and living in Seattle, was a police officer and union organizer before he served eight years on the City Council. He bowed out of politics after an unsuccessful 1977 run for mayor.

Rogstad, 60, was the county GOP chairman who helped lead a conservative movement in the late 1960s and is now a board member of the Federal Home Loan Bank of Seattle. Neither he nor Larkin could be contacted for comment today.

They could go on trial as early as this summer, possibly in Seattle or Tacoma, lawyers said. A related prosecution against three Seattle-area architects and engineers has been moved from Anchorage and is going to trial in Tacoma next month.

One lawyer predicted Rogstad and Larkin will go broke even if a jury believes their protests of innocence.

``Even if they win, they're not going to have a dime left,'' said Anchorage attorney Douglas Pope, who last year unsuccessfully defended Lew Dischner, a former top Alaska lobbyist and alleged middleman in the borough spending program.

``The situation is you've got five government lawyers and six FBI agents and IRS investigators on one side, and you're alone on the other side.''

Topel said Rogstad will argue his payments to Dischner were legitimate sales commissions and that goods for borough officials were not illegal gifts. Prosecutors say they were kickbacks and bribes.

The case focuses on the H.W. Blackstock Co. of Seattle, which held an exclusive cost-plus contract to supply materials to the North Slope Borough from 1981 to late 1984. Rogstad was president of the company. Larkin was its director of administration.

Most of the money in question went to Dischner and Carl Mathisen, who were advisers to the mayor of the borough as well as part owners of businesses that did some of the work. The indictment says Rogstad illegally paid nearly $2.2 million to Dischner and $270,000 to Mathisen between 1981 and 1984.

Topel, Rogstad's attorney, said the payments were ``totally above-board and totally legitimate.''

Dischner, at his trial last year, agreed he had received a 10 percent fee from companies doing business with the borough but said it was a legitimate commission.

During these same years, the indictment said, Rogstad and Larkin joined Dischner and Mathisen in bribing C. Eugene Brower, then-mayor of the remote borough, and Irving Igtanloc, then its public-works director.

The Seattle company allegedly paid $23,880 in labor to remodel Brower's house, $5,400 for groceries for Brower and $4,371 for groceries for Igtanloc. The indictment said Rogstad helped buy an Anchorage house and pay its utilities for Brower.

Topel said Rogstad and the company never gave illegal gifts to government officials. He said the company tried to bill them for the groceries.

The indictment also said Rogstad and Larkin each gave a $10,000 deposit to an Alaska travel agency owned in part by Brower's wife. Two-and-a-half months later, Brower extended Blackstock's no-bid contract as purchasing agent.

An alleged cover-up constitutes some of the charges. The indictment said Larkin met with a former borough finance director in 1985 to say he wanted documents to back up Blackstock billings.

The indictment says Larkin and Rogstad mailed letters asking payment of rent in 1985. The obstruction-of-justice charge arose from presenting those letters to the grand jury. Topel said that was a ``galling'' attempt by prosecutors to get around a five-year statute of limitations.

Brower has been portrayed as a naive young Eskimo. He cooperated with prosecutors in return for a sentence of 30 days in jail and a $5,000 fine.

The borough, a local government unit, represents a population of about 8,000 scattered in an area the size of Minnesota.

The Inupiat Eskimo government hit it rich with Alaska oil royalties. But prosecutors estimated the payments to Dischner and Mathisen added $73 million to the $1.2 billion public-works effort between 1981 and 1984.

Blackstock projects included a $71 million high-school building for 250 students and a $7 million apartment building with 19 units.

Dischner and Mathisen were found guilty of more than 20 felonies each last May following a seven-month trial - the longest in Alaska history. Sentenced to seven years in prison, they are free on bond, pending appeals.

Three other Seattle-area business people were charged in July with racketeering, tax evasion, mail and wire fraud for their role in the case. Architect Allen McDonald of Seattle and engineers David Coffman of Seattle and Peter White of Bellevue have pleaded not guilty.

They are to be tried in Tacoma in March, partly because of publicity in Alaska. White's attorney, Samuel Eismann of Coeur d'Alene, Idaho, forecast a two- to three-month trial.

Topel predicted Rogstad and Larkin will be arraigned in about two weeks. He could demand a trial within 70 days - possibly, he said today, as early as mid-May.

Pope, who defended Dischner, said such a strategy could force the government to prosecute two big cases at once.

If convicted under the racketeering law, Rogstad would be asked to forfeit nearly $2.1 million and Larkin $421,861 in wages and bonuses they received from 1982 through 1984, according to the indictment.

But that might be a government pipe dream, according to Pope, who noted that Dischner, once one of Alaska's top lobbyists and power brokers, is now flat broke.

Harold Curran, special counsel to the mayor of the borough, yesterday said civil lawsuits are presenting many of the same allegations against Rogstad, Larkin and others as the criminal indictments.

An audit of the final months of the term of Brower, the former mayor, showed Blackstock was marking up its supplies by 30 percent. The audit also alleged that some supplies weren't even delivered.

Rogstad, who worked from 1964 to 1969 as the full-time chairman of the King County Republican Party, moved out of his house on Lake Washington some months ago, a neighbor said yesterday. Rogstad's current address is not known.

A former Boeing engineer, Rogstad helped lead a conservative movement in the 1960s that supported Barry Goldwater and attacked Republican moderates such as Dan Evans and Slade Gorton.

Rogstad has been a member of the board of directors of the Federal Home Loan Bank Board of Seattle since 1984.

Rogstad went to work for the Blackstock company as its president in the early 1970s, not long after leaving the GOP chairmanship. The company specialized in prefabricated homes. Rogstad and unidentified investors bought the company in 1973.

A man of modest financial means, Rogstad made enough money in the years Brower was in office to acquire more than $1 million worth of real estate, including his $429,000 home on Lake Washington in 1982, where he moved from a house valued at $141,900, according to a report in The Anchorage Daily News.

Larkin went to work for Blackstock sometime after losing the 1977 mayoral election. Before that, he served two terms on the Seattle City Council, a conservative voice often outvoted 8-1.

Before entering politics, Larkin had attended Seattle's Roosevelt High School and served in the Coast Guard during World War II. He served in the Seattle Fire Department for five years and the Police Department for 18 years.

Larkin worked seven years on the vice squad and served as administrative aide to then Chief Frank Ramon.