THE WEST HILLS COCAINE CAPER

* A year after the celebrated drug bust, investigators begin to unravel what
really happened.

Just over a year ago, certain members of the exclusive Multnomah Athletic
Club broke into a major sweat.

The treadmills hadn't been amped up, and the sauna wasn't stuck on high.
Instead, a number of these well-to-do Portlanders were worried because a
cocaine dealer named Michael Hipps had been busted. With that late-May
arrest, not only were their drug supplies cut off, but their futures were in
jeopardy as well.

Hipps, it turns out, had kept his customers' names and phone numbers in
several address books. Looking through the books, authorities found listings
for doctors, lawyers, stockbrokers and other professionals, some of them
members of the Multnomah Club, according to the cops' almost gleeful public
statements.

Multnomah County Deputy District Attorney Dave Peters was the first
well-known Portlander to fall. Finding Peters' direct-dial work phone number
in one of the so-called "black books," police in September searched his
house. They found cocaine residue and marijuana.

"This is the tip of what may turn out to be a very prominent iceberg," The
Oregonian editorialized at the time. "Peters' tragic experience serves as a
reminder that the drug problem is not limited to the young, unfortunate or
ill-informed. And it also indicates that the prominent cannot necessarily
escape the consequences of involvement with drugs."

Michael Hipps once told an informant, "We run a pretty straight deal. ... We
can keep you happy."A year later, however, it would appear that the
prominent have escaped the consequences. Of course, the dealers were
punished: This week, Hipps received a 16-month prison sentence, and in July,
Adam Wylie, Hipps' sometime partner, received 13 months. Yet none of the
other well-to-do buyers listed in the black books has been prosecuted,
although many have been interrogated.

Behind the scenes, however, law enforcement authorities have been building a
case that may eventually put even more affluent people behind bars.

Willamette Week has learned that the investigation has grown significantly
and now involves the Internal Revenue Service, as well as the Portland
Police Department. In July, a federal grand jury issued a secret indictment
charging three people--the owner of a Portland bed and breakfast, a Napa,
Calif., wine merchant and his wife--with an extortion plot that allegedly
cost Hipps $55,000. Additionally, a Portland CPA has been implicated in a
money-laundering scheme with Hipps97a scheme in which other Portlanders may
have been involved.

The case still isn't over. Authorities have renewed their interest in the
black books and are again interviewing alleged customers with vigor. While
it's highly unlikely that any of them will be charged for merely using
drugs, authorities say they may issue indictments for those whose crimes are
more serious.

Michael Hipps is by no means the biggest cocaine dealer in Portland, but his
arrest sent shock waves through the West Hills crowd. Now, a year after the
investigation began, it has developed as many twists and turns as Skyline
Boulevard and includes "scenery" that's just as fascinating.

If he hadn't spent his time selling drugs, Michael Hipps would have made a
great corporate manager. At 6 feet 3 inches, he has an imposing presence,
although his sweatshirt-and-shorts style of dress reveals an easygoing
demeanor. With a master's in business administration, Hipps also had an air
of Republican toughness about him. Forty-eight years old and unmarried, he
was never a strong supporter of social programs. He is said to believe that
people should pull themselves up by their bootstraps. Friends say he has a
harsh attitude towards criminals--but only those of the violent sort.

Until the early '90s, Hipps ran his own business, Sterling and Associates,
which provided financial consulting services to small companies.

In 1994, he got another offer. For several years, according to federal court
documents, Hipps had been buying cocaine from Wayne Oppenheimer, a North
Portland man who, as a cover, claimed to own a landscaping business. By the
early '90s, Oppenheimer reportedly wanted out of the drug trade. So, just
like a dentist who might sell his practice before retiring, Oppenheimer
allegedly decided to sell his client base--his list of drug customers--to
Hipps.

"I've never seen that before," says Sgt. John Cordell, the Drug and Vice
Division officer who broke the case against Hipps.

After being introduced to Oppenheimer's clients, Hipps took over, building a
healthy business. He later enlisted the occasional help of a partner, Adam
Wylie. According to police, by 1997 they had developed an impressive list of
customers. "These guys were pretty damn unique," Cordell says. "They were
dealing with prominent people in Portland."

Their service was top-notch, too. Hipps maintained a strict noon-to-nine,
six-days-a-week schedule and would gladly make deliveries--but not at
taverns and not to groups of people. Sometimes he'd arrange to meet his
customers in the parking lot at Zupan's Market at the foot of the West
Hills, where exchanges of drugs for money would take place on the leather
seats of Saabs and BMWs. Never interested in being a Hollywood-style drug
kingpin, Hipps sold his cocaine in small quantities and chose his customers
wisely so as not to attract attention. At the same time, he did well enough
to buy a condo in Breckenridge, Colo. Cordell says Hipps claimed to have
sold an ounce or two of cocaine each week, although Cordell believes the
amount to be somewhat higher. If what Hipps says is accurate, he would have
grossed between $54,000 and $208,000 a year.

"Hipps was a good businessman," Cordell said. "It wasn't as though you were
meeting somebody in a dark alley. He would deliver it to you, your home,
your business. He provided a service in that regard."

Being at heart a businessman rather than a street-smart dealer, Hipps
couldn't have been more surprised when the police came knocking on his door.

Something about John Cordell makes him different from most other Portland
cops. Maybe it's his style. A slim, balding man of 47, he has the slow and
meticulous approach of a solitary rock climber, plotting every move with a
single goal in mind. As many cops will attest, he is one of the more dogged
members of the force.

"He's a hard-working guy who doesn't like to let go," says one Portland cop.

As a drug and vice officer Cordell has taken down his share of dealers, but
until he stumbled onto Hipps he never made any headline-grabbing busts. "It
was the case of a lifetime," says one defense lawyer who is involved with
the case. In June of this year, after two decades on the force, he was
promoted to sergeant and reassigned to East Precinct.

Cordell got to Hipps with the help of an informant, which is common practice
in investigations of more sophisticated drug dealers. "It's more difficult
to get into those circles than somebody on a street corner," Cordell says.
"I've always been interested in developing an informant into those circles."

Ray Carpenter was Cordell's man. Although authorities won't reveal any
details about Carpenter, they will concede that he has helped the Portland
Police Bureau several times in the past. In April of 1997, Cordell had
Carpenter looking for cocaine connections. Carpenter came across Hipps after
a Southwest Portland realtor gave him the dealer's pager number.
(Authorities have refused to reveal the name of the realtor.)

In April 1997, Carpenter called the pager and reached Adam Wylie, who by
chance was filling in for Hipps that day - one of just a dozen or so
occasions on which Wylie acted as Hipps' emissary. That's where the the
drug-dealing duo got into trouble. Normally, Hipps wouldn't sell to a total
stranger. In this case, Wylie assumed that Hipps knew Carpenter. And when
Carpenter later contacted Hipps, Hipps assumed Carpenter was a friend of
Wylie's.

Over the next few weeks, Carpenter wound up buying drugs from Hipps three
different times, according to police reports.

By May, Cordell had enough evidence to obtain a search warrant for Hipps'
apartment at 2320 SW Cactus Drive. According to a police report, authorities
found 212 grams of cocaine. They also found $10,000 in cash, numerous
business documents and the now-infamous black books.

The documents and address books gave Cordell and IRS special agent Michael
Maney enough work to keep them busy for months.

Although they had both been working in Portland for years, Maney and Cordell
had never met. Michael Hipps brought them together.

By coincidence Cordell was digging into the Hipps case around the same time
Maney was investigating Wayne Oppenheimer, 36, who moved from Portland to
Napa with his wife, Pamela, in 1995.

Oppenheimer's tax statements didn't match up with his lifestyle.

Between 1993 and 1994, Oppenheimer claimed to net less than $6,500 from his
landscaping business, the only source of income he reported, according to
court documents. In 1995, Oppenheimer's finances were so poor that he was
represented by a public defender when he was charged with Assault IV. (He
had accidentally run over a cop's foot after the cop had given him a ticket.
He later plead no contest to reckless endangering, a lesser charge, and was
sentenced to probation.)

Maney now thinks Oppenheimer's landscaping business was a front, according
to court documents. Oppenheimer owned landscaping equipment and a truck, but
"the truck never moved," Maney's search warrant affidavit quotes a friend as
saying. Another friend allegedly told authorities he only knew of one job
that OPI Landscaping had completed: Oppenheimer's own yard at 1610 North
Portland Blvd.

For a guy who a never seemed to work, according to a neighbor, he lived
pretty well.

When Oppenheimer left Portland for Napa, he had to rent a trailer just to
carry his collection of wine, some 2,500 bottles, federal court documents
say. Financial statements filed by Oppenheimer show he owned $15,000 in
stamps and $40,000 in art, according to those same documents. In Napa,
Oppenheimer bought a house for $175,000 and spent thousands on renovations.
He now runs a wine shop there.

Authorities now believe that at least some of Oppenheimer's money came from
drugs. They came to this conclusion after talking with Michael Hipps.

By last summer, Hipps knew he was in serious trouble. The U.S. Attorney's
office was looking to prosecute him in federal court, where the potential
sentence was significant. In order to avoid those federal charges, Hipps
agreed to talk.

His confession was startling. "I've been in this business a long time," said
Assistant U.S. Attorney Claire M Fay. "There's not too much that surprises
me. But there is kind of a different twist on this whole thing."

According to court documents, Oppenheimer did more than just sell Hipps his
drug-dealing business. He also allegedly told Hipps that he had been paying
off a Portland police officer for protection. Hipps would have to keep up
those payments if he wanted to avoid prison, Oppenheimer reportedly said.

Hipps complied. Over the course of the next year or two, he received four
different extortion notes, which police reportedly found when they searched
Hipps' house. One doubled the monthly payments from $500 to $1,000; another
demanded a $6,000 holiday bonus; the third demanded a summer cash bonus of
$12,500, and the fourth demanded an additional $10,000 in cash. In all,
Hipps sent 59 money orders to two different Portland post office boxes,
leaving the payee's name blank, according to court documents. In total, he
sent the unnamed cop $55,000.

In 1996, Hipps finally learned the truth. There was no dirty cop. Instead,
he allegedly found out from a customer that Oppenheimer had concocted the
scheme himself. When Hipps confronted Oppenheimer, Oppenheimer allegedly
threatened to expose him as a cocaine dealer. He also allegedly told Hipps
that for a final payment of $3,000, the demands for money would stop.

When authorities traced the money orders, Hipps' story seemed to check out.
The Oppenheimers had spent 52 of the 59 money orders, sometimes using them
to pay their mortgage or for renovations to their Napa house, according to
court documents.

The Oppenheimers allegedly weren't the only ones to profit from Hipps'
payments. Two friends, Paul Oliver and Archie Lanning Blanks Jr., let
Oppenheimer use their post office boxes in exchange for a cut of the
proceeds, according to an affidavit filed by Maney. Oliver, a North Portland
handyman, earned $200 for forwarding 10 money orders from his post office
box to Oppenheimer in California. Blanks, who until last year managed the
restaurant in the Mallory Hotel--and who, in 1997, bought Northeast
Portland's White House Bed and Breakfast with a partner--allegedly did the
same, earning an undisclosed amount for forwarding 44 money orders.

Last month, a federal grand jury issued a secret indictment charging Wayne
and Pamela Oppenheimer with mail fraud, money laundering, receiving the
proceeds of extortion and drug conspiracy. (The indictment has become public
since Oppenheimer's July arrest.) Blanks was charged with mail fraud, money
laundering and receiving the proceeds of extortion. Oliver has not been
charged with any crime.

Blanks referred all questions to his lawyer, Steve Houze, who declined to
comment. Oliver would not answer WW's questions about the case.

The Oppenheimers did not return several WW phone calls, but Wayne
Oppenheimer told The San Francisco Chronicle, "These are just stories from a
convicted drug dealer ... [Hipps is] full of baloney. [The indictment] is a
bunch of bull. These people in the federal government think they have a case
against us. Well, that remains to be seen." Their first scheduled appearance
in U.S. District Court is Sept. 10.

With the federal indictment, Maney had answered a lot of questions. But the
investigation still wasn't complete.

In order to be successful, a drug dealer needs two things: a regular
supplier and a way to disguise his income.

"Hipps knew he couldn't gain financially from dealing cocaine if he couldn't
get cocaine," Cordell said. "He also knew he couldn't gain financially if he
couldn't launder his cash."

Cordell says Hipps had both ends sewn up. He allegedly got his cocaine from
Shawnee Arbogast and her boyfriend, Fidel Cortez-Hernandez, both of
Washington County. As part of his deal with authorities, Hipps gave up his
supplier's identity and led police to Arbogast last December. Arbogast and
Hernandez were charged in Washington County with distribution of a
controlled substance. Earlier this year Arbogast was sentenced to two years
probation, and Hernandez received 22 months in prison.

Hipps enlisted friends to help him disguise his cash, according to Cordell.
The dealer's own documents allegedly helped to prove it.

Among Hipps' papers, Cordell found a promissory note for $60,000 signed by
David Tarlow, a certified public accountant. To the drug investigator, the
document was curious. Cordell decided to ask the Portland Police Bureau's
financial investigator for help.

In July, the police talked to Tarlow at the downtown accounting firm in
which he was a partner and asked him why a drug dealer owed him so much
money. He had a plausible explanation. According to a police report, Tarlow
told authorities that he lent Hipps $60,000 in 1996 to help Hipps buy a
condo in Breckenridge. Tarlow said that although he hadn't received any
payments from Hipps on the loan, he did receive a $9,000 loan fee. In
addition, Tarlow said he received a trust deed on the property.

Hipps told a different story.

To make the cash he earned from selling drugs look like legitimate income,
Hipps allegedly told authorities he got help from Tarlow. From statements in
federal court documents and police reports, it appears that Hipps gave
Tarlow $69,000 in cash and asked him to launder it. Tarlow allegedly
complied, taking the cash and giving Hipps a check in exchange.

It's unclear how Tarlow may have accomplished this task. As an accountant,
Tarlow didn't regularly deal in large amounts of cash, according to his
former partner, Ron Stefani. Therefore, doing the obvious--depositing the
money in his own bank account and writing a check on it--probably would have
looked suspicious. What was Tarlow's alleged technique? Police won't say for
sure. But it's reasonable to assume that if he couldn't do it alone, he may
have gotten help from other moneyed Portlanders.

Five months after he was first contacted by police, Tarlow told Stephani
that he was resigning from the firm "for personal reasons." Stephani says
Tarlow now works as a lumber broker.

Tarlow hasn't been charged with a crime. His lawyer, Norman Sepenuk, refused
to comment on the case.

Sitting behind bars in Snake River Correctional Institution, Adam Wylie, who
assisted Hipps in selling cocaine, is not an unbiased observer in this war
on West Hills drug dealing. But he makes an interesting argument as to why
the efforts may have been misdirected.

The way he tells it, he sold cocaine on just 10 to 15 occasions. Even the
cops say that most of his customers were occasional users, not addicts, and
they had developed their fondness for the drug long before he made his
deliveries. The deals were done discreetly, so they didn't affect the city's
livability - a common complaint about other drug dealers.

"I'm still kind of struggling with who's the victim in this, except for the
people I've let down," he said. "Are any of Hipps' customers victims? Does
the state of Oregon feel like a victim?"

Wylie was by no means a high-level dealer. He had no prior convictions, held
a full-time job and has a family, including two young daughters. Under state
sentencing guidelines, he could have gotten probation. Yet he was sentenced
to 13 months in prison, a comparatively long sentence for someone with that
profile.

Wylie says his sentence is the result less of his behavior than of the
public frenzy surrounding the bust. The involvement of a deputy DA didn't
help matters, either. "My attorney said, Adam, you don't mess with the West
Hills crowd. Because you're perceived to have done that, you're probably
going to do some time."

Cordell has little sympathy. "Wylie's an intelligent man, has a pleasant
personality, is educated and had a substantial income," he says. "So what's
the excuse?

Besides, Cordell thinks that the law shouldn't let middle-class white guys
slide. "I think a lot of wannabe drug dealers aspire to be the wealthy
sophisticated drug dealer they see on TV. It's my belief that we need to go
after that image because it is that image which causes a lot of these
youngsters out there to try and emulate that."

Hipps normally sold cocaine by the sixteenth of an ounce for between $65 and
$125. He sold the drug not in balloons, as is common today, but in
1980s-style paper folds.

Most cocaine on the street is sold in smaller quantities; a half gram might
cost $40. (One-sixteenth of an ounce is 1.7 grams.)

After his arrest, Dave Peters went through a five-week intensive outpatient
treatment program.

Police won't prosecute Hipps' customers for drug use based merely on their
inclusion in the black books. Law enforcement would need to mount an
investigation, an expensive proposition that wouldn't be worth the effort.

Oppenheimer was sentenced to three years in prison in 1983 for theft and
burglary. He was also convicted of harassment in 1991.

Authorities say that several of their targets had something in common: They
were all tall. Hipps, Wylie, Oppenheimer and Blanks are all over six feet
two inches.

Although police say Hipps and Wylie sold in small quantities to maximize
their profit, neither had the lifestyles of some of their customers.

Officer John Cordell says, "Not all persons in the black books are
associated with drug activity. The vast majority are, but there are some who
are not."

Wayne Oppenheimer faces several years in federal prison for each count of
the indictment. He may lose his Napa house and some of his possessions under
federal forfeiture laws.

Lead Story Sidebar - Crime and Punishment

So far, a number of people have been ensnared in the West Hills cocaine
caper, and there could be more to come. Here's a look at the comparative
guilt and punishment of some of them

The Charges

Michael Hipps: Conspiracy to distribute cocaine, a felony

Adam Wylie: Conspiracy to distribute cocaine, a felony

Dave Peters: Attempted possession of cocaine, a violation

Hipps' Other Customers: None

The Story

Hipps had a financial consulting business, but police say that in recent
years cocaine dealing has been his full-time job. Although he didn't live a
lavish lifestyle, he earned at least $69,000 from selling cocaine.

Wylie was painted in headlines as a big-time drug dealer, but he says that
isn't accurate at all. Instead, according to court testimony, Wylie was a
friend and customer of Hipps'. But he was also a cocaine addict, snorting at
least one-sixteenth of an ounce of the stuff daily. Wylie held a full-time
job as a salesman but in 1997 agreed to fill in for Hipps when Hipps took
occasional days off. Wylie told the court that he did this 15 times, mainly
to get his hands on drugs to feed his habit. He claims he didn't make any
money dealing drugs and that he used any cash he did earn to buy drugs.

When officer John Cordell found Peters' name in Hipps' little black books,
he was dumbstruck. Peters was one of Multnomah County's toughest deputy
district attorneys. Cordell later found evidence of Peters' drug use,
including cocaine residue, in his curbside trash.

The names of between 50 and 100 of Hipps' customers were listed in several
address books found in his apartment. A federal search warrant affidavit
says they include stockbrokers, a doctor, a property manager, two
manufacturing representatives, an aerospace subcontractor and a newspaper
employee. Many of them have been interviewed by authorities.

The Sentence

On Monday, Multnomah County Circuit Judge Julie Frantz sentenced Hipps to 16
months in prison, chastizing him for "infus[ing] this society with an
unknown but substantial quantity of illegal drugs." Hipps didn't speak at
his sentencing, but his attorney, Whitney Boise, says he got into the
business because he was addicted to cocaine.

Many first-time drug offenders get probation, but Wylie got whacked with 13
months in prison. He mainly has Hipps to blame. Police found just a tiny
amount of cocaine in Wylie's house, but authorities hammered Wylie with a
"commercial drug offense" charge by calling him and Hipps co-conspirators.
Consequently, the drugs found at Hipps' house (more than 7 ounces) were, by
extension, Wylie's problem, too.

Because Wylie is a British citizen, he will be deported at the end of his
sentence. His wife and two children will probably leave the country to join
him.

Peters was sentenced to probation and ordered to pay $150 in fines and fees.
He also resigned from his job and is now working at the criminal defense
firm Squires and Lopez.

He was the only person named in the black books to be targeted with an
investigation for drug use. Was he singled out?

As an officer of the court, Peters should be held to a higher standard than
the average citizen, according to District Attorney Mike Schrunk.

There have been no charges filed against these drug users, although several
have reportedly entered treatment programs as a result of the investigation.
They've even avoided public embarrassment. WW submitted several
public-records requests for access to the names listed in the black books,
but authorities have repeatedly denied them. Assistant U.S. Attorney Claire
M. Fay, who is prosecuting the Oppenheimer case, justifies the denials by
saying that the matter is still under investigation. "I think it's prudent
for me not to disclose who those folks are," she told WW. But that excuse
doesn't make much sense. The U.S. Attorney's office does not prosecute
people for drug use.

Checked-by: Don Beck