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Originally published January 5, 2013 at 8:00 PM | Page modified January 6, 2013 at 9:23 AM

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U.S. to pay for Mastro defense

A federal magistrate concludes Michael and Linda Mastro lack the resources to pay lawyers themselves as they face bankruptcy-fraud and money-laundering charges, when and if they return to Seattle.

Seattle Times business staff

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When — or if — Michael R. and Linda Mastro return to Seattle from France to face bankruptcy-fraud and money-laundering charges, taxpayers will be paying their attorneys.

A federal magistrate last month concluded the former Seattle real-estate magnate and his wife now lack the resources to pay lawyers themselves.

So federal public defender Tom Hillier was appointed to represent Linda. And James Frush, the Seattle criminal-defense attorney Michael retained three years ago when federal authorities first began investigating him, will continue to represent him — but with Frush’s compensation now coming from the federal treasury.

Frush maintains the arrangement is justified. “The reality is, the French authorities have seized all the assets the Mastros had,” he said last week.

The couple were arrested in a lakeside village in the French Alps in October after 16 months on the lam. They disappeared after a Seattle bankruptcy judge ordered that they turn over two giant diamond rings valued at $1.4 million.

The rings were among the assets seized in France after the Mastros were apprehended.

While they won’t confirm it, U.S. authorities apparently have begun extradition proceedings to bring the couple back to Seattle, where a federal grand jury indicted them on 43 counts of bankruptcy fraud and money laundering.

Federal dollars aren’t paying the Mastros’ legal expenses in France, Frush said.

The federal treasury could be reimbursed later if more assets are found, Frush said, or if courts rule the property seized in France belongs to the Mastros.

Meanwhile, he added, the government is limiting his fee for representing Mastro to $125 an hour — a fraction of his normal rate.

But he hasn’t been paid in a long time, Frush said, “and $125 is better than nothing.”

— Eric Pryne

Seattle company gives 2% raises to make up for pay tax

Most U.S. workers will see their paychecks shrink this month because Congress on New Year’s Day let lapse the 2 percent reduction in the employee payroll tax.

Unless you are among the nearly 100 workers at Seattle-based Gravity Payments, a credit-card processor.

“My own personal belief is the payroll tax is very regressive and tends to hit workers more than they realize,” said co-founder and CEO Dan Price. “I thought it was a shame that it was left unextended by Congress.”

So a day after the nation’s lawmakers narrowly averted a skid into the financial ditch, Price took action.

He decided all Gravity Payments employees earning less than $100,000 — the vast majority — would get a 2 percent pay bump to offset the payroll tax increase.

The cost to the company is “probably $150,000.”

The payroll tax rate was temporarily reduced to 4.2 percent in 2011 to stimulate the economy. The rate now returns to 6.2 percent of wages and salaries up to $113,700, matched by the employer, to fund Social Security. That increase means withholding about $1,000 more from a worker earning $50,000 a year.

Gravity Payments’ move didn’t require a lot of meetings, since the 28-year-old Price has just one minority shareholder in the company. “I bounced it off a few people first to make sure I wasn’t crazy,” he says.

Price’s company processed $6 billion in credit-card payments last year and collected $100 million from its customers. But the bulk of that revenue goes back out to the credit-card companies.

“Of the $10 million that we have to operate, labor is by far our biggest cost,” Price says. So tacking on 2 percent wasn’t done lightly.

But he says Gravity Payments can afford it because it’s profitable, and he’s concerned about rising inequality in the U.S. economy.

Despite the much-ballyhooed tax increases on households earning more than $400,000, says Price, “We’re doing a lot to take care of investors and we’re not doing as much to take care of workers in this economy.”

At the Main Street Alliance, a group of liberal small-business owners that supported ending the Bush-era tax cuts for the wealthiest Americans, spokesman Joshua Welter says Price’s initiative to offset the payroll tax hike is unusual.

“That’s the first I’ve heard of anyone doing it,” he says.

Price hopes his one-man stimulus program will spread, at least among his circle of Seattle business owners.

“I’m going to be out there pitching it to all my friends.”

— Rami Grunbaum

More details on big Amazon deal

Some loose ends from Seattle’s big real-estate deal of 2012 —’s $1.15 billion purchase of its leased, 11-building South Lake Union headquarters campus from developer Vulcan Real Estate:

Public records from the Dec. 21 deal reveal it was six separate transactions — one for each of the six phases in which the complex was built over the past four years.

Overall, Amazon paid $644 per square foot for the campus’s 1.7 million square feet of offices and 100,000 square feet of retail space. But some parts of the campus fetched a higher price than others.

The least expensive building, curiously, was the newest — the 12-story tower on Boren Avenue North between John and Thomas streets that Amazon moved into just weeks ago. It went for about $614 per square foot.

The priciest? The block between Harrison and Republican streets, Boren, and Terry Avenue North. Vulcan built two six-story buildings there, wrapping them around a plaza and the renovated, century-old Van Vorst Building, a former stable.

That block fetched about $670 per square foot — the highest price anyone has paid for office space in Seattle, ever.

— Eric Pryne,

Comments? Rami Grunbaum:

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