Advertising

Wednesday, August 2, 2006 - Page updated at 12:00 AM

E-mail article     Print

Shareholder files suit regarding McGavick's $28 million

Seattle Times staff reporter

A shareholder sued Safeco's former chief executive — U.S. Senate candidate Mike McGavick — and its board of directors on Tuesday, claiming they violated securities laws by awarding McGavick about $28 million in stock and other perks when he left Safeco earlier this year.

The lawsuit was filed by Emma Schwartzman, 27, a former waitress studying at the University of Washington who says her great-great-grandfather was a founder of the company that became Safeco.

The suit contends McGavick and the board "committed corporate waste" and made false statements to investors about the nature of McGavick's financial package.

The lawsuit seeks unspecified damages as well as an injunction against McGavick from spending the money.

McGavick, who is seeking the Republican nomination, denounced the lawsuit.

"These allegations regarding my compensation are without merit and obviously politically inspired. It is sad that my opponents insist on dragging Safeco into the mean-spirited political process," he said.

Schwartzman's attorneys, Smith and Lowney along with Hagens Berman Sobol Shapiro, said the lawsuit was nonpolitical and nonpartisan. Former Democratic Gov. Gary Locke, a member of the Safeco board, is listed as a defendant, too.

Both Democrats and Republicans learned of the lawsuit when it was publicly released on Tuesday.

Attorney Knoll Lowney successfully challenged Tim Eyman's property-tax measure I-747. Lowney and his firm have given political donations to liberal candidates and to groups such as Washington Conservation Voters. His law partner, Richard Smith, announced last week he would run for state Supreme Court.

McGavick reported pretax income of $28 million from Safeco this year, even though he left the company in February to run for the Senate.

His financial-disclosure form filed with the U.S. Senate said some of the money came from stock and bonuses, including for work done several years ago.

The state Democratic Party has a complaint pending with the Federal Election Commission that alleges Safeco's financial package to McGavick amounted to an illegal campaign contribution.

McGavick has called that allegation "political junk."

Seattle Times chief political reporter David Postman contributed to this story. Alex Fryer: 206-464-8124 or afryer@seattletimes.com

Copyright © 2006 The Seattle Times Company

advertising


Get home delivery today!

Advertising