In late 2008, after his second unsuccessful campaign for governor, Dino Rossi told friends that he was finally done running for office. His well-trodden campaign website soon began promoting his return as a real estate investor. His political exile lasted less than 18 months. But those were a good 18 months for Rossi.

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In late 2008, after his second unsuccessful campaign for governor, Dino Rossi told friends he was done running for office. His well-trodden campaign website soon began promoting his return as a real-estate investor.

His political exile lasted less than 18 months. But those were a good 18 months for Rossi.

Despite a deep recession and a bruising real-estate market, Rossi’s personal financial portfolio quickly expanded. He bought into partnerships on three multimillion-dollar deals and was paid well for speaking at a seminar on foreclosures.

As in Rossi’s past business dealings, his recent investments were aided by political supporters, including two brothers who hired Rossi to solicit investors for their Everett-based real-estate company, Coast Equity Partners.

Democrats have seized on Rossi’s past business deals, attacking him as “sleazy” for buying a building with a pair of lobbyists when he was a state senator and for starting his real-estate career with a man later convicted of defrauding investors.

How much Rossi mixed business and politics is unclear when it comes to his most-recent business venture. The names of investors he brought to Coast Equity are protected by limited liability companies, a common practice in real estate.

If elected to the U.S. Senate, Rossi said, he would put his assets in a blind trust, turning over his investments to a financial manager to avoid any appearance of conflicts of interest.

He said he is proud of his 26-year record in real estate and has nothing to hide.

“People don’t invest with you because you are an elected official, they invest with you because they know you know what you’re doing,” he said recently. “I’ve done this from ground up, starting with nothing, and they know that.”

Recruiting “accredited” investors

Rossi joined Coast Equity Partners in January 2009 at the invitation of co-founders Tom and Shawn Hoban.

Tom Hoban, the Snohomish County finance chairman for Rossi’s 2008 gubernatorial campaign, said he shares Rossi’s conservative Catholic values and sees Rossi as a “bit of a celebrity” in commercial real-estate investment.

Rossi’s role is to bring in “accredited” investors — people with five or six figures to invest — and to sell them on potential deals.

Hoban said the firm is “pretty risk averse,” avoiding land speculation and favoring income-generating apartment buildings and office buildings.

“In good times we leave a lot on the table,” Hoban said. “In times like these, we may be the last man standing.”

Connie Niva, a longtime Democrat and former Port of Everett commissioner, said she has invested with the Hobans because she trusts them, and that their Republican politics “have never entered into our business.”

That hasn’t stopped Democrats from attacking Rossi’s work with the Hobans.

Earlier this year, while Rossi was still considering whether to enter the Senate race, the Democratic Senatorial Campaign Committee (DSCC) sent researchers to scour public records for dirt on Coast Equity.

They found and publicized a $20,000 property-tax debt owed on an Everett commercial property — portraying it as evidence of Rossi’s ethical lapses.

Hoban said the tax flap was overblown. He attributed the late taxes to a building tenant, a motorcycle dealership, that had gone out of business.

Unable to recover the taxes from the tenant, the ownership group — which included the Hobans and other investors — elected to pay the semiannual taxes late, with a penalty.

Rossi had nothing to do with the building, which was purchased before he joined the firm, Hoban said. The DSCC effort to connect Rossi to it was “an unbelievable stretch,” he said.

After the publicity, Coast Equity hired former state Supreme Court Justice Phil Talmadge, a Democrat, to write a letter to the DSCC warning it against smearing the company’s reputation with misleading attacks.

A DSCC website trumpeting Rossi’s history of “dirty deals” now contains no references to Coast Equity.

Sizable real-estate portfolio

Rossi already had a sizable real-estate portfolio when he joined Coast Equity. He owns a 135-unit Lake Stevens apartment building worth $1.9 million, and holds part ownership in a $4.2 million Sodo commercial building and a $4.6 million medical building in Mill Creek.

Since joining the Hobans, he has earned a small ownership stake in three other deals: a Puyallup mobile-home park property acquired for $2.6 million last March; a Ballard condominium building bought out of foreclosure for $6.5 million, also in March; and a $9 million apartment complex in Arlington purchased last June.

Though he has criticized Fannie Mae’s lending practices on the campaign trail for contributing to the nation’s economic meltdown, Rossi signed onto a $5.8 million Fannie Mae loan for the Arlington apartment complex.

Rossi said the loan was chosen by a mortgage broker, and that it was “silliness” to see any tension between the loan and his campaign rhetoric.

Besides, he noted, Fannie Mae’s apartment-building loans have remained relatively strong, unlike Fannie’s troubled single-family lending.

Rossi said declining real-estate prices make it a good time to buy the type of income-generating properties he favors.

“My real-estate purchases are even more conservative than my politics,” he said.

His investments — including money he makes selling access to his list of political donors — appear to generate at least $240,000 in yearly income, according to figures from the financial-disclosure form Rossi filed for the U.S. Senate campaign.

Rossi also made $16,000 for speaking at real-estate seminars aimed at teaching investors how to make money buying foreclosed properties, including million-dollar lakefront homes.

Fertile ground for political attack

Rossi’s past business dealings have proved fertile ground for Democratic attacks.

In his 20s and early 30s, Rossi worked alongside real-estate financier Melvin Heide during the 1980s even after Heide’s illegal practices came to light. Heide eventually landed in prison for fraud.

Rossi was not accused of any wrongdoing.

In 1997, a year into his term as a state senator, Rossi invested in a Federal Way apartment building with a pair of Olympia lobbyists, Richard and David Ducharme. The father and son pair also later invested in a Bellevue bank Rossi helped found.

Richard Ducharme was the lobbyist for the Building Industry Association of Washington, the powerful homebuilders group that later became Rossi’s biggest supporter during his gubernatorial runs.

Rossi also has had ties to Michael Mastro, the real-estate financier facing one of the largest bankruptcies in the region’s history. Rossi bought two apartment buildings in the 1990s from Mastro, who also loaned Rossi money for the deals.

Citizens for Responsibility and Ethics in Washington, a national nonprofit watchdog group, put Rossi on its list of “Crooked Candidates” — a roster that included mostly Republicans but also some Democrats and independents — for his past associations with Mastro and the Ducharmes, among others.

Rossi should disclose his co-investors and the people his partnerships owe money to, said Melanie Sloan, the group’s executive director. “Given his background, you wonder what kind of influence these people would have over him. That’s a legitimate concern.”

It is impossible to identify all of Rossi’s current business partners, because his investments are held by limited liability companies (LLCs) that shield their investors from public scrutiny.

The personal financial-disclosure form he filled out in June — a requirement for federal candidates — lists the assets of nine LLCs but does not disclose those entities’ liabilities or debts.

Rossi said he hasn’t brought any lobbyists into the Coast Equity purchases, and does not believe the investors should be public. “These are regular folks looking for retirement income. They’re business people. They’re not even known to each other. They know us; they trust us.”

Neither Rossi nor his opponent, incumbent Democratic Sen. Patty Murray, have agreed to release their federal income-tax returns.

A return to politics

Rossi celebrated his 50th birthday last October at an intimate dinner with family and friends at Maggiano’s restaurant in Bellevue. He joked with his daughter, a college freshman, about her new love interest, and talked about playing golf.

But he didn’t say anything about politics, even with dinner companion J. Vander Stoep, a previous political adviser.

“I know he genuinely had no political plans,” Vander Stoep said.

“He not only had no plans, he didn’t expect to [have them] anytime soon, if ever.”

But that changed within months.

Early this year, national Republican leaders feared they wouldn’t find a credible challenger to Murray. They aggressively courted Rossi, who says he was initially skeptical.

His longtime political website,, had been dormant for more than a year, directing visitors to his new job at Coast Equity.

On the morning of May 26, Rossi ended months of speculation by declaring his Senate candidacy — and his website flipped back from business into campaign mode.

Jonathan Martin: 206-464-2605 or Jim Brunner: 206-515-5628 or