Rep. Greg Smith, R-Heppner, left, and Dan Rayfield, Democratic candidate for Oregon attorney general, listen June 19, 2024, as audience members bring up their concerns in a meeting in Hermiston. Rayfield, Oregon attorney general, filed a civil suit against Smith and others July 15, 2025, claiming they used insider knowledge to purchase a company. (Tori Schuller/East Oregonian, Archive)

SALEM — Oregon Attorney General Dan Rayfield filed a civil penalty lawsuit Tuesday, July 15, against former Morrow County elected officials and community leaders as well as state Rep. Greg Smith, R-Heppner.

The suit, which Rayfield filed in Morrow County Circuit Court, claims the defendants — called “insiders” in the filing — used knowledge they only had from their positions of power in the community and company to purchase a broadband subsidiary of a nonprofit for personal profit.

Rayfield is seeking $6.9 million for breach of fiduciary duties, conflict of interest, unjust enrichment and injunction.

“This nonprofit was created to connect eastern Oregon communities — not to quietly enrich a handful of officials behind closed doors,” Rayfield said in a press release announcing the filing. “When public officials use their positions to game the system for private gain, it’s a betrayal of trust. These were people in power who knew that Windwave was about to explode in value — and instead of protecting the public’s interest, they cashed in.”

The insiders, according to the suit, orchestrated the purchase of the broadband company Windwave Technologies from Inland Development Corp., an Oregon nonprofit “created to provide internet services to rural school districts, hospitals, libraries and courthouses.”

In addition to Smith, the defendants are Jill Parker and Richard Devin, Smith’s fellow members of Inland’s board of directors; Jerry Healy and Marvin Padberg, former Port of Morrow commissioners; Gary Neal, former Port of Morrow general manager; and Don Russell, former Morrow County commissioner.

The group purchased Windwave Technologies in May 2018. Today, Windwave runs approximately 1,000 miles of broadband fiber across Eastern Oregon.

Rayfield, as attorney general, “brings this action to redress the harm caused by the insiders to Inland and to ensure that the insiders and others involved in the transaction are permanently barred from any further involvement with any nonprofit organization in Oregon.”

About the damages

According to a press release announcing the suit, the Oregon Department of Justice is seeking damages of at least $6.9 million or “for the sale of Windwave to be voided, for an injunction and for other remedies to ensure accountability and to safeguard the principle that nonprofit resources created for public benefit must not be converted into private profit.”

Windwave was a for-profit subsidiary of Inland, and Rayfield’s suit claims the purchase was “based on confidential, non-public information.”

The defendants’ purchase price for Windwave — $2.614 million — was lower than it should’ve been, Rayfield claims, because its evaluation from 2017 didn’t include the opportunities associated with Amazon Web Services locations being established in the county, which the purchasers did know about.

In March 2018, the lawsuit notes, Healy wrote an email to only the other insiders that a delay in purchasing Windwave had already “cost us 2017 net profits of $1,500,000,” indicating the defendants knew in May, when they purchased Windwave, the company’s independent valuation of $2.612 million from 2017 was likely inaccurate “to an extent that rendered [the valuation company’s] valuation inaccurate and unreliable.”

The data centers built by Amazon — and approved by the Port of Morrow under general manager Neal — were a boon for Windwave. And still, the suit says, the defendants failed to disclose the increased financial value of the company.

In fact, according to the suit, Smith, Parker and Devin on Inland’s board of directors “relied entirely upon information and analysis that was produced or managed by the insiders” in their vote approving the purchase, “despite knowing that the transaction was subject to numerous conflicts of interest.”

Rayfield’s suit states the conflicts should have indicated a need for independent analysis. Instead, in April 2018, the directors approved the sale.

The next month, the insiders purchased Windwave for “at least $6.9 million less than its actual value based on information known to the insiders as of the date of sale.” The suit does not say how the plaintiff determined Windwave’s supposed value of $9.5 million at the time.

Claims of duty

The suit also claims the defendants failed in their fiduciary duty to Inland in charging higher prices after just one year for Windwave’s services than the agreed upon $200,000 for the first five years as part of the company’s sale. Inland’s IRS return showed payments to Windwave of $350,000, 1.5 times as much as the sale outlined.

“Under the common law, persons who exercise control over charitable assets have

fiduciary duties of reasonable care and prudence in the administration of charitable assets,” the suit said. “They also owe a duty of loyalty to the charitable organization and its beneficiaries, which requires that charitable fiduciaries place the interests of the charitable organization and its beneficiaries ahead of their personal interests.”

All of the defendants breached these duties, claims the filing.

“The insider sale of Windwave not only diverted public value into private hands but potentially undermined the long-term availability of affordable broadband for these essential services,” said the Department of Justice.

In all, the state offered seven claims for relief to justify its requested judgment of at least $6.9 million. If the court doesn’t award damages, the state requests Windwave’s sale to the defendants be voided, coverage for costs of attorney fees and that the court prevents the defendants from acting on behalf of any charitable organization or handling any money or financial matters for a charitable organization moving forward.

This is a developing story. Check back soon for updates.