A candidate for a state representative seat in Legislative District 10 was sued twice in Whatcom County in 1998 for allegedly make false representations to two clients about investment opportunities.

Default judgments totaling $1.7 million combined in the two cases were entered against Bill Bruch, a Republican candidate who lives in La Conner, after he failed to respond to the lawsuits, according to court documents. Bruch is running against Rep. Dave Paul, D-Oak Harbor.

One of the lawsuits accused Bruch of creating investment organizations that existed in name only and convincing older clients to invest large sums that he never intended to pay back.

Bruch called this “ancient history” and criticizes a press release sent out about the cases as “a politically motivated hit piece.” He said he did not defraud anyone, but he was a “naive victim” of another man’s real-estate scheme.

“Young and naïve; I was exploited, used, and defrauded of tens of thousands of dollars of my own money by someone who I believed to be a trusted friend,” he wrote in a statement on his website. “Most unfortunately two of my good friends also fell victim to the same investment. I lost my money, my home, my job, my car and my credit by trusting someone who turned out to be the purveyor of a Ponzi scheme.”

Bruch said he wasn’t even aware of the lawsuits until years later — he had moved and doesn’t remember being served — which is why he lost by default. He said he never paid any of the judgments, which were not renewed after the 10-year statute of limitations elapsed.

The House Democratic Campaign Committee sent out a press release detailing the two cases. It states that Bruch perpetrated “a financial scam” and was “sued twice for defrauding seniors.”

“It appears that he built trust with them over years, made unrealistic and false promises, and took advantage of them for his own massive financial gain,” the press release states.

Paul said his campaign was not involved in circulating the information about Bruch’s legal troubles.

“We are focused on getting our message out,” he said.

Bruch said he lost everything in the Ponzi scheme because he “trusted the wrong person.” He said he didn’t even have the money to file for bankruptcy, but he was able to continue a successful career as a manager in estate planning.

He said his employers and friends are aware of the details of the cases and never saw a problem.

“Attorneys thoroughly looked at it,” he said, “and it’s a non-issue.”

The state, however, did see a problem.

In 2008, the Department of Financial Institutions Division of Consumer Services denied Bruch’s application for a loan originator license because of the judgments against him, according to the statement of charges against him.

The document states that the grounds for the denial was because of Bruch didn’t meet state requirements “by failing to demonstrate a general fitness such as to command the confidence of the community and to warrant a belief that the business will be operated honestly and fairly.”

In addition, it states that he failed to provide complete and accurate information on his application.

In the larger of the two cases, the nonprofit Partners in Care filed the lawsuit against Bruch as the trustee for John Blackmore.

The complaint states that Bruch represented himself as an agent for two different investment firms. From 1993 to 1996, Bruch induced Blackmore to invest money with the firms, promising he would save on taxes, get a high rate of return and maintain 100 percent liquidity, the document states.

Blackmore gave Bruch more than $1 million to invest and received promissory notes promising an interest rate of 10 percent per year.

The lawsuit states that the representations made by Bruch were false and that he did not intend to pay back the principal or the interest.

The lawsuit states that Blackmore lacked the mental capacity to make sound financial interests.

According to the attorney representing the trust, Bruch was deposed in March 1998 and was served the summons and complaint on June 5, 1998.

Under the default judgment, Bruch was ordered to pay the principal and $400,000 in interest, totaling $1.5 million.

In the other case, a woman named Geraldine Dixon filed suit.

Bruch promised Dixon that she would make a sizable return on her investment if she invested in the two investment firms through him. He said at the end of three years he would either return the principal or she could continue investing, the complaint states.

The woman gave Bruch $150,000, which was the life savings of both her and her ailing mother. The lawsuit states that the organizations he purported to represent “existed in name only” and were created by Bruch and possibly others to further his “fraudulent, tortious and outrageous activities.”

Moreover, it states that Bruch never properly invested the money nor did he intend to return it.

Under the default judgment, Bruch was supposed to pay Dixon $179,000.

Bruch points out that the civil matter was resolved more than a decade ago.

“I learned a very hard and valuable lesson about human nature and trust that has served me well ever since; and will serve the people of LD 10 into the future should they elect me to represent them,” he wrote.

“The people who know me, trust me, and support my campaign know that I am an honorable person, learned from my experience and have earned their trust to represent them well in the State Legislature.”