Covington boat maker’s fraud persists, authorities say

SEATTLE — Philip Warnock’s deceptions go back decades.

Prosecutors and police say the 70-year-old Covington man ripped off customers, landlords, investors, employees and suppliers. He sold people boats that didn’t exist and boats made with shoddy, unsafe materials. He made hundreds of thousands of dollars from victims all over Western Washington, including Snohomish County.

Warnock “kept their money and simply would not, will not stop the fraudulent boat building business,” King County sheriff’s detective Robin Fry wrote in court papers.

Warnock was running “fantasy businesses,” Fry wrote.

Warnock last summer pleaded guilty to seven counts of first-degree theft in King County. In November he was sentenced to roughly 1.5 years in state prison.

That means he shouldn’t be able to sell any more boats until at least December 2015. That’s his earliest release date.

This isn’t the first time that Warnock’s business practices have come under scrutiny or landed him behind bars. Warnock has been in trouble with police and with consumer-protection agencies dating back to the 1980s. He served time in prison for fraud in the 1990s.

He also was under investigation for manslaughter in the 2009 drowning of a woman whose boat sank in Lake Stevens. Snohomish County prosecutors declined to file charges in the case.

Over the years, Warnock has owned marine-related businesses with various names and addresses across Western Washington. In the most recent criminal conviction, prosecutors say, he sold victims nonexistent boats, making at least $368,600 in King County alone.

“The clients never received the boats or parts they paid for and despite numerous requests for their money back, refunds were never delivered either,” Fry wrote.

When victims questioned Warnock, he appealed to their compassion by claiming he was in poor health and had money problems, Fry said in an interview. Even when checks bounced, the victims were good-hearted people who wanted to give Warnock a chance to do the right thing, she said.

“He was playing on their emotions,” she said. “There was a betrayal there, a business betrayal.”

Last year, as the detective wrapped up her case, Warnock still was telling victims he was trying to get his business up and running again, she said.

Warnock also failed to pay rent at his commercial properties and didn’t pay employees for their work, writing them checks that bounced, court papers show. Former employees told police that in months of working for Warnock, they never saw him deliver a boat to a buyer.

In court proceedings in 2012, Warnock admitted he had not finished building a boat in years.

One of his former landlords told police, “We never saw anything being produced (at the work site.) It was like a big shell game … There were boats in a row that he had drug from place to place. We never saw him complete a single boat.”

Fry went to Warnock’s listed business addresses. One, in Monroe, belonged to a real boat shop that had no connection to Warnock.

There also was nearly a decade where he didn’t file any reports with the state or pay taxes related to employee pay and benefits. He never obtained environmental permits required for boat-building.

In the past, customers, landlords and others owed money by Warnock have sued him, with varying degrees of success. Warnock still has skipped out on some of those debts, even after being ordered to repay in court, records show. As part of his Nov. 14 sentence, he was ordered to pay $286,500 in restitution to the victims in the King County case.

Three years ago, a Snohomish County sheriff’s detective sought manslaughter charges against Warnock, alleging the man knowingly built and sold a ski boat made with unsafe materials.

Cindy Tate, 48, died when the boat capsized on Lake Stevens. Detectives determined that the boat was built to include a less-expensive type of foam not approved for marine use. The foam became saturated with water, and the boat sank in two minutes.

Police alleged that as the boat sank, Tate was trapped between the seat and the steering wheel. They said that was due to a faulty latch used in the boat’s construction.

Prosecutors declined to file charges against Warnock in the Lake Stevens case, saying there wasn’t enough evidence to prove he was criminally liable for the death.

At the time, experts said that if the case had gone to trial, it likely would have been the first time a Washington product manufacturer faced criminal charges for a product linked to a death. Such cases are rare across the country.

In 2001, one of Warnock’s customers returned a boat for repairs, citing problems with its construction, court papers show.

The front end of the bow dipped too far down when afloat, causing water to flow over the bow and into the hull, the man later told police.

The man said he was concerned for his family’s safety using the boat. Warnock promised him a new boat. It never arrived, and the man sued.

Websites still exist for at least two of Warnock’s businesses, Mirageboats and Global Marine Specialties, selling “Tiger Trax” boats.

The Mirageboats site promises “high quality, reasonably priced boats with superior performance.”

Rikki King: 425-339-3449; rking@heraldnet.com.