He resigns from state board and utility company

02:33 PM PDT on Friday, May 7, 2004

By ABE ESTIMADA, JIM PARKER and TERESA BELL, kgw.com Staff

Former Oregon Governor and Portland mayor Neil Goldschmidt admitted to the Oregonian newspaper for a story in its Friday editions that he had a sexual relationship with a then 14-year-old girl about three decades ago.

Neil Goldschmidt talks with reporters recently after his appointment to the state's higher education board. (KGW Photo)

The startling revelation came after Goldschmidt announced his resignation Thursday from the Oregon Board of Higher Education and his chairmanship of the Oregon Electric Utility Company, which wants to buy Portland General Electric. Goldschmidt had blamed health problems for his abrupt resignations.

His admission to the Oregonian apparently confirmed an account by Willamette Week reporter Nigel Jaquiss published online Thursday afternoon that said Goldschmidt was involved in a relationship with the girl named in the article as "Susan," a mayor’s office aide who lived six doors from his home in the Sabin neighborhood.

The Willamette Week report had relied on more than a dozen sources – some named, some anonymous – to name Goldschmidt as the man who she had a relationship with when she later threatened to file a lawsuit in the mid-1990s.

Goldschmidt, one of the state's most influential behind-the-scenes political players, told the Oregonian that deteriorating health and knowledge that media accounts of the affair were about to be published made him come forward, and to resign his public and private positions.

"For almost thirty years, I have lived with enormous guilt and shame about this relationship. I have also been afraid that it would be exposed to my family, friends and the public whose respect I have sought to earn," he said."

In 1973, Goldschmidt was elected as the nation's youngest big city mayor when he was elected to lead Portland at age 32. The relationship with the teen occured a year later, said Goldschmidt, who was married at the time of the nine-month affair.

He left the office in 1979 to become Secretary of Transportation under President Jimmy Carter.

Oregon law says if an adult has sex with someone under the age of 18, it is considered rape. But law enforcement officials who spoke to Willamette Week said the statute of limitations for prosecution has passed.

Goldschmidt also said he didn't think there are any legal ramifications. But he acknowledged that his reputation has been forever tarnished.

"If people work hard enough, I think you'll find indiscretions," he said. "But nothing as ugly as this."

"How can such behavior be erased when the damage to others and to myself lives on?" he said in his statment to the Oregonian. "I have sat in places of worship each year at Yom Kippur, the day of atonement in my religious tradition, reading in silence, searching for personal peace. And I have found that the answer to that question is that it cannot be erased."

"The pain and damage that I have caused have been with me constantly. I have known all along that my private apologies and actions, deep and true though they were, would never be enough. I apologize now, publicly and completely," Goldschmidt's statement read.

But the Willamette Week story alleges a three-decade long effort by him to “cover (the relationship) up.”

Willamette Week claims it found two, separate court records that refer to the relationship, “though neither names Goldschmidt.”

“Those documents, along with the interviews, suggest that later in life, the woman was deeply troubled by their earlier relationship, and for the past nine years, has been receiving monthly payments from Goldschmidt,” Willamette Week reported.

Goldschmidt's ailing health

Goldschmidt suffers from atrial fibrillation, an irregular heart beat, and coronary artery disease, a blockage of the arteries to the heart muscle. In a statement to the media prior to the report of the teen affair surfacing, Goldschmidt said he made the decision to stop working on the advice of his personal physician and family.

"This is one of the most difficult decisions of my life," Goldschmidt said of the resignations. "My personal commitment to the Oregon Board of Higher Education, Oregon Electric and my clients are undiminished, but I find that I simply cannot sustain the effort required without risking my future with my family, children and grandchildren."

Following a heart problem last fall, Goldschmidt got a second opinion about his health from a doctor at the Mayo Clinic. That doctor confirmed the diagnosis and encouraged him to make lifestyle changes to help his condition.

“Aggressive medication and lifestyle interventions are necessary to slow the progression of this (coronary artery) disease,” said Dr. Sandra Lewis, Goldschmidt’s personal physician.

Goldschmidt took over the investment group called Oregon Electric Utility Co., last November. The plan was to purchase PGE, which Enron acquired in 1997. Just a few months later, Goldschmidt was appointed as president of the Oregon Board of Higher Education on Jan. 22.

His statement had said he was disappointed to have to leave so soon.

"I am determined to get my life in order, so that I can continue to be involved in the issues that matter to this state that I love and have served. I need to fundamentally change my lifestyle and reduce the stress in my life,” Goldschmidt's statement read.

"I continue to believe that Oregon Electric's acquisition of Portland General Electric (PGE) is in the best interests of PGE's customers and the broader community, and I have every confidence that it will move forward without me," he said.

The resignation is a serious blow for the higher education community, which has taken a financial beating over the last decade, and was counting on Goldschmidt's considerable political clout to help push through new policies on financial aid and educational quality.

"Our governor has created a board that is absolutely committed to carrying out his objectives of access and excellence, and I will be urging them on from the sidelines," Goldschmidt said, downplaying the concerns.

Susan's story

Willamette Week talked to three sources who said "Susan" told them that one evening in 1975, after a dinner party at Susan’s parents' home, Goldschmidt began a sexual relationship with the teen-ager.

Goldschmidt, then 35-year-old, was married and had two children, ages 6 and 3, for whom "Susan" babysat. She later told friends and lawyers the relationship would last for three years.

“(Susan) talked about Neil Goldschmidt all the time,” said Sheilah Wilson to the newspaper. “She’d get drunk and say when she was 14-years-old she’d screwed him in hotel rooms."

Wilson was Susan’s roommate in the mid-1980s.

“The story had been around for years, and everybody knew about it, Wilson said.

Story makes it to court

Susan left Portland in 1988. But soon after the move, she was abducted outside of a clinic at knifepoint and brutally raped, the newspaper reported.

The suspect was caught, and his attorney interviewed Susan, according to court records obtained by Willamette Week. The lawyer learned that Susan was the victim of a prior sexual assault.

The source of information was a counseling record in which Susan had talked about a relationship she had from age 14 to 17. The judge refused to allow the counseling records as evidence, according to the newspaper. That also included clues about the man who sexually abused Susan.

“The abuser was a family friend twenty-one years older than (Susan),” the newspaper quoted the prosecuting attorney as telling the court. He was “a family friend for many years; was the age of (Susan’s) father; certainly no stranger, according to (Susan’s) mother.”

Susan called Goldschmidt

Through the years, friends say, “Susan periodically called Goldschmidt, sometimes in anger, sometimes in desperation,” the newspaper said.

In October 1994, Portland lawyer Doreen Margolin filed an application to be Susan’s conservator in Washington County Circuit Court, the newspaper said. A conservator is similar to a guardian; Susan’s parents were living in Rome and court records showed that Susan was “unable to manage her property effectively without assistance.”

Margolin made her first filing with the court on Oct. 25, 1994, Willamette Week said. By December of that year, billing records revealed that Susan and her lawyer had a settlement offer that “was good enough to ensure that Susan’s personal injury lawsuit was never filed,” the paper said.

“Because the suit was never filed the name of the person allegedly responsible for Susan’s injury was never stated in the Washington County records,” the newspaper said. “But her boyfriend at the time told WW that Susan often talked about how she was going to get enough money from Goldschmidt to start a bed-and-breakfast on the coast.”

Court records showed that "Susan" received a settlement of $250,000. After receiving attorney’s fees, she received $30,000 in cash and an annuity, which pays her $1,500 per month for years beginning in March 1995.

Hush-hush

The money came with “one large string attached,” the newspaper said.

“Payment of the annuity was contingent on confidentiality agreement,” according to court records obtained by Willamette Week.

Despite the gag order, friends said "Susan" talked about the settlement.

“She told us that she wasn’t supposed to talk about it, but she talked anyway,” said a woman to the newspaper. The woman knew Susan for 15 years.

Susan now lives in Nevada. When Willamette Week reporters visited her in April, Susan told them the relationship with Goldschmidt never happened. She claimed she was abused by somebody else.

“It was not Neil Goldschmidt,” she told the paper. “I have the highest regard for Neil Goldschmidt. He never did a thing to hurt me.”

The newspaper claims Goldschmidt had known for the past month that the newspaper was investigating the story.

Oregon governor reacts

While Goldschmidt announced his decision Thursday, current Oregon Gov. Ted Kulongoski said he submitted his resignation from the education post in April.

"His health is his priority right now and I think that he has made the right decision. We owe him a great debt for his service. He and the other board members are already making a difference on behalf of Oregon's current and future students," the governor said.

Kulongoski said Thursday that he had known of Goldschmidt's heart problem for a month, when the former governor returned from the Mayo Clinic and said he might have to resign.

"His doctors had told him he had a high probability of a major heart attack," Kulongoski said. "I had just been trying to figure how I was going to keep him involved," he said, explaining the delay in the announcement.

Kulongoski said he would meet with the education board soon.

Goldschmidt became governor in 1987 and served until 1991; Rumors of extramarital affairs were hinted at during Goldschmidt's political career, and he decided against a second term as governor after his first marriage ended.

He also worked as an executive officer for Nike and as a consultant for SAIF Corp. in recent years. SAIF, which was created by voters to provide Oregon businesses with inexpensive workers' compensation insurance, is self-supporting and uses no state tax dollars.

However, Goldschmidt's involvement with SAIF came under fire after media reports that SAIF paid out more than $1 million in consulting fees to Goldschmidt's firm since 1998. Goldschmidt ended his firm's contract with SAIF in December of last year, saying its service to the government-owned workers compensation insurer "has become a liability."

A graduate of the University of Oregon, Goldschmidt was born on June 16, 1940 in Eugene. He is a co-founder of the Oregon Children's Foundation/SMART, an early literacy program for children. Married now to Diana Snowden Goldschmidt, they share four children and three grandchildren.

(The Associated Press contributed to this report.)