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By New Times
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Charlie Hoover seemed to be at the top of his game in early 1984.
The big-money Phoenix attorney had just concluded a massive deal on behalf of First Federal Savings and Loan (now MeraBank). It was the bank's largest deal ever--a $400 million loan to the Marriott Hotel chain for construction of a New York City hotel. Hoover's work--and his $275,000 in billings--had made his partners at the blue-blooded Phoenix firm of Jennings, Strouss & Salmon extremely pleased.
But Charlie Hoover had become a thief. He had used his firm's VISA card in late 1983 to buy thousands of dollars of personal items--camera equipment, cigars, shirts, a globe.
Then, Hoover stole more than $61,000 from his firm's trust account. He paid off a personal loan, made an investment for a son, gave his secretaries a bonus and pocketed the rest.
Hoover--then 54--resigned from his firm after his partners confronted him in September 1984. Still, he maintained his innocence for a time after the State Bar brought allegations against him a year later.
The thefts didn't make sense. Hoover didn't have problems with drugs or alcohol. He was making $350,000 a year, and he didn't appear to have financial woes. What's more, his miserly spending habits were the stuff of legend.
Whatever his motives, it appeared that Hoover would be disbarred. Prison wasn't out of the question.
Theft is theft, isn't it? Not when you're Charlie Hoover, the former chairman of a committee that considers the "character and fitness" of Arizona's lawyers.
Five years after his thefts, Hoover successfully dodged everything but a perfunctory slap on the wrist, thanks to several things that went his way: the secret process by which the State Bar of Arizona disciplines its attorneys; an imaginative insanity defense aided by one of Phoenix's most respected psychiatrists; and the self-protective instincts of the old-boy network that operates among many of Phoenix's attorneys.
Hoover's only punishment was a six-month suspension from practicing law, a verdict soft-pedaled by the comments that accompanied it.
"Disbarment or a long suspension would accomplish nothing more than the needless destruction of [Hoover's] career," Supreme Court Justice Stanley Feldman wrote for the 3-2 majority in the July 28 ruling.
Even before the high court's ruling, lawyers at the County Attorney's Office had decided not to prosecute Hoover.
"We thought the Bar would be doing more with Hoover than it did," says county prosecutor Howard Schwartz, explaining his office's reluctance. "You take on that kind of high-profile individual like Hoover, you'd better have a very good case, or you'll look bad."
Some familiar with the little-publicized Hoover case can't believe he got away with it.
University of Arizona official Richard Salvatierra, for instance--not a lawyer--was a member of the state Disciplinary Commission that considered Hoover's case. During the proceedings, Salvatierra expressed a feeling about lawyers no doubt common among the public.
"Here's a lawyer," he angrily told Hoover's attorney, "who involved himself in what the record shows to be a series of complicated false billings. This then leads to some treatment that suddenly makes this gentleman well. You're suggesting that all this be washed aside, that the man simply be put on probation.
"The public, if it had the record, would conclude that here we have a bunch of smart lawyers who have found a way to get around what you keep talking about as being due process. If there's any vendetta going on, it's a vendetta by you and your people against the general interest and the general public."
IN THAT NETHERWORLD where Valley lawyers roam, Charlie Hoover long had been a moneymaker among moneymakers, a tireless and skilled litigator.
Corporate lawyers early in their careers sometimes take a whirl at defending the downtrodden before they start stalking dollars. Not Hoover. From the moment in 1957 that he took his law degree with distinction at the University of Arizona, the Oklahoma native rarely sided with the little guy. For three decades, he represented mostly big-shot clients--the E.F. Huttons, the Shamrock Dairies, the MeraBanks, the Salt River Projects.
(Hoover declined an interview with New Times on the advice of his lawyers. The information for this story comes from interviews and court records.)
Hoover and his first wife, Ann, moved to Phoenix after he graduated from law school. The law firm of Jennings, Strouss & Salmon--then the state's largest with fifteen attorneys--hired him to look after antitrust and securities clients.
Hoover's reputation as an able and insatiable worker soon grew and earned him a partnership in the Phoenix firm as he turned thirty.
As the Hoovers raised a family (the last of their three children was born in 1963), it also became common knowledge that Hoover was a cheapskate.
When his peers were buying Mercedes, Hoover continued to drive a Volkswagen bug.
MeraBank chairman Gene Rice says of his long-time friend: "If there were ten of us who went to dinner somewhere, Charlie wasn't the first guy to pull out his credit card and want to pay for dinner."
Paul Beer, Hoover's lawyer, describes him as "the kind of guy who would spend thirty minutes trying to balance a six-cent error in his checking account."
At the same time, Hoover was gaining repute as an honest man.
"Charlie is one of the few people I know that I would trust with my wife or my wallet," Gene Rice testified in 1986. "He has an impeccable reputation."
That earned Hoover a spot on the Supreme Court's Committee on Character and Fitness, a position that made subsequent events all the more surprising.
While his career was flourishing, however, his personal life was foundering. He and Ann had broken up in the late 1960s, and a depressed Hoover had consulted a psychiatrist to help him through the tough times.
He remarried in December 1971, but he and new wife Jo Ann had their ups and downs. Part of the problem may have been that work always came first. Hoover told a committee hearing his case in 1986 that he had taken his law books along on their honeymoon to prepare for a class he was teaching.
While Hoover's home life wasn't the greatest, his law practice was doing just fine. In the mid-1970s, however, something changed.
"He got rid of his Volkswagen," Gene Rice says of Hoover, "and he bought some kind of fancy car, and he began to buy different kinds of shoes . . . We began to see a real change in his personality."
Although the "change" was never satisfactorily explained--even by the psychiatrists who testified later--it bothered Rice so much that in 1975, he asked Jennings, Strouss to assign another attorney to First Federal. Hoover also was asked late that year to take a three-month leave of absence after he allegedly made an "improper sexual advance" toward a female employee at work.
Hoover's roller-coaster ride continued in the early 1980s, when he and Jo Ann separated, then divorced. Around that time, however, Rice--who had stayed friendly with Hoover over the years--convinced Jennings, Strouss to reassign him as First Federal's lead lawyer.
That made Hoover the bank's negotiator in a deal Rice has called "the most important loan that we've ever done in the history of our sixty-some years."
THE HEAT WAS on Charlie Hoover to close the Marriott Hotel loan by the end of 1983.
Marriott was seeking $400 million from First Federal for a proposed fifty-story hotel in New York. The paperwork was mind-boggling, the negotiations fierce. Hoover drove himself and those around him.
"I got a foam-rubber pad, and I put it in the office," he testified in 1986. "I would just work until the late hours, and then lie down and take a few hours sleep, and get up and get back to work . . . I just dove in all the way."
Hoover spent more and more time in New York as the deadline approached. Gene Rice heard stories that Hoover had become an arrogant tyrant, but he didn't intervene. Hoover always had been a hard-driving perfectionist anyway, and Rice knew that the Marriott deal was particularly demanding.
Around Christmas 1983, with the deal almost done, Hoover tried a last-minute bargaining maneuver, one apparently so unusual that Hoover's lawyers later raised the incident as an example of how wacky he was at the time.
Hoover explained later that he'd read about the "greenhouse effect's" causing widespread flooding. The next day, he had demanded that Marriott pay for flood insurance before he would close the deal. The Marriott people laughed it off, and Hoover dropped it.
"Sometimes," says Gene Rice, shrugging off what appeared to be Hoover's odd conduct, "I would be in positions where Charlie would throw out something wild, and then negotiate from that in order to get a better position, as you negotiate in those big transactions."
(Rice asked Jennings, Strouss much later to assess Hoover's performance in the Marriott loan. "They had reviewed it," Rice testified, "and said it was impeccable.")
The honchos inked the $400 million loan papers December 30, 1983. Hoover returned to Phoenix with a $275,000 check made out to him by Marriott--which was footing the legal bills. An office manager at Jennings, Strouss office deposited the check into the firm's trust account.
Then, the conduct that may have started years earlier when Charlie Hoover traded in his VW bug for a Mercedes reached its startling conclusion. He began to steal.
From January until June 1984, Hoover illegally tapped into that trust by asking bookkeepers at the firm to deposit four checks totaling more than $61,000 into his account at First Federal.
Hoover cashed the first check--for $15,876--at First Federal, where he had a checking account. He gave $5,000 to three secretaries who had worked with him on the Marriott loan and pocketed the rest.
Hoover used the cash from the next three checks to pay off a $15,790 loan at First Federal and to invest $12,250 for a son. He kept the rest of the booty.
"The money was very well-hidden," says the State Bar's chief counsel Harriet Turney. "The firm's lax bookkeeping system allowed it to happen--there was no countersigning of checks."
Hoover also had charged thousands of dollars in personal items to the firm's VISA card. But it would be months before a partner at Jennings, Strouss saw some bookkeeping numbers that didn't add up, and Hoover had to face the music.
Until then, Hoover had gone about his business without incident. E.F. Hutton district manager Paul Butt saw him every few weeks from February 1984 until that September.
"He got the work done just fine," Butt later testified. "My opinion is that he acts with complete integrity, always has."
Indeed, everyone was hard-pressed later on to recall examples of Hoover's madness, or even of behavior inconsistent with how he'd always been. That made his thefts even more inexplicable to everyone after his law partners unhappily confronted him in September 1984.
When that happened, Hoover quit the firm and immediately sought legal and mental-health help. It took months for the State Bar to crank up its case against him.
THE STATE BAR'S secret disciplinary proceedings against Charlie Hoover started as they would with any other lawyer.
Jennings, Strouss filed an official complaint against Hoover soon after he left the firm. Investigators looked into the case, and in September 1985--a year after he was caught--the State Bar formally charged him.
During that year, Hoover attended regular sessions with psychologist Gregory Crow and met twice with psychiatrist Robert Shapiro. He didn't work for a few months, then returned in January 1985 as a sole practitioner. Business wasn't great, but he still had his law license.
Hoover's old firm had tried to smooth things over with First Federal by reimbursing it $153,523 (no one has explained how they came up with that figure). Jennings, Strouss & Salmon also quietly had settled their financial differences with former partner Hoover in an arrangement that never has been made public. Although the tale of Hoover's fall soon made the rounds in Phoenix's legal circles, the public would learn nothing about it for years.
At first, Hoover told the State Bar he'd done nothing wrong. Then, he admitted his guilt and announced he would try an insanity defense at his disciplinary hearings.
A local committee of three lawyers took testimony at a closed-door hearing that began in March 1986. That committee's job is to make recommendations to a statewide Disciplinary Commission of nine people--including two non-lawyers. The commission then issues its recommendations to the Arizona Supreme Court, which makes the binding decision about a lawyer's fate.
William French--the former judge who later prosecuted Governor Evan Mecham at the 1988 impeachment hearings--was serving in 1986 as voluntary counsel for the State Bar. French turned out to be much more conciliatory toward Charlie Hoover than he would be toward Ev Mecham.
In response to a question from French, a chastened Hoover told the local committee: "I don't have any questions that what I did was wrong. Setting aside the mental aspects of it, it violated all sorts of things, including professional conduct."
French soon concluded that Hoover's mental state--not his thefts--was all the local committee should consider.
"The appropriate sanction is probation for a period of time," French wrote, "with reasonable safeguards to insure that Hoover's mental disorder is completely resolved and will not recur."
Three mental-health experts also excused Hoover's conduct by agreeing he had suffered from mental problems.
Psychologist Gregory Crow, for example, said of Hoover: "He couldn't remember a lot of things that had happened. I felt that he would not be considered a full-blown manic-depressive, but that he was definitely in the ballpark . . . And they helped Hoover by testifying that his mental state had improved enough for him to resume the practice of law. Crow said: "As far as I know, he's back to his old self."
Added psychiatrist Robert Shapiro: "He has made more progress than I would have expected of the usual manic-depressive. I don't see any reason that he shouldn't practice law."
Hoover's defense was top drawer. He even got Otto Bendheim--the grand old man of Phoenix psychiatry and the founder of Camelback Hospitals--to vouch for his troubles. It was Bendheim--whom French hired as an independent examiner--who really sold the committee on Hoover's mental troubles.
"He was grandiose," said Bendheim, a member of the State Bar's Committee on Mental Health who often testifies at Superior Court criminal trials. "He felt that anything he did at the time was right for him to do--he couldn't do any wrong. He was the most intelligent lawyer in the country, the wisest. He was also the most energetic, could get along with the least sleep, could work harder than anybody else. And he could write checks if he felt like it."
French, probably wondering if Bendheim wasn't stretching it some, asked him if Hoover's defense had been "thought up after the fact, after the lawyers got into the act."
"I hope you know me well enough, Judge French," Bendheim quickly replied, "that I wouldn't be a party to whitewashing."
THINGS WERE LOOKING rosy for Charlie Hoover after Otto Bendheim and the others testified on his behalf. The local committee had sided with Hoover in May 1986, voting unanimously that he "presently is fit to engage in the active practice of law."
But the tide began to turn against him after Harriet Turney moved to Arizona in 1986 to become the State Bar's full-time chief counsel. Turney took the Hoover case over from Bill French after it had gone to the Disciplinary Commission--the second step. And, as Turney says, "I went for the throat."
"I didn't know Charlie Hoover from Archie Bunker. I didn't have a sense of who of the important players were in town, and the Board of Governors told me to vigorously pursue the case. I did. To me, somebody very involved in Bar activities like Charlie ought to know better--that ought to be an aggravating factor."
Turney argued before the Disciplinary Commission in late 1986 for Hoover's disbarment. Hoover's defense remained the same. Why should Hoover face sanctions, his attorney Paul Beer argued, if he erred because he was insane?
"You've got a man who had an absolutely clear record," Beer told the commission, "who has done everything he could do to work for the State Bar, and he has one aberration, due to an illness that is not of his product or making . . . It isn't that hee-hee-ha, he gets away with it because he was crazy when he did it. This man has lived through hell over this situation, and he still is."
But some commission members expressed doubts, including Phoenix television newsman Bill Close, who took the common-sense approach.
"As a non-lawyer, I don't know what the hell I'm doing here," said Close--one of two non-lawyers on the nine-member commission. "[But] what is to keep that person from going off the treatment and revert to a prior situation, in this case, one in which he was not aware?"
The case that began with Hoover's thefts in 1983 and 1984 dragged on and on. The commission decided in October 1986 that it didn't have enough information to say whether Hoover had been insane. It asked that a new local committee hear the case.
Hoover's lawyers appealed to the Arizona Supreme Court. In July 1987, the high court said it wouldn't order a new hearing but also said Hoover couldn't raise the insanity defense as a complete bar against discipline. The court returned the case to the Disciplinary Commission. "Permitting him to continue uninterrupted in the practice of law," Harriet Turney argued when the commission reconvened, "invites public disdain for our profession and justified public cynicism about the effectiveness of our self-regulating system."
The commission, however, was lenient. It voted 5-3 in April 1988 to recommend a six-month suspension against Hoover, to be followed by a reinstatement hearing. It cited Hoover's "long and meritorious record of voluntary service to his profession" to justify its decision.
THE ARIZONA SUPREME COURT was ready in 1988 to sort through the morass wrought by Hoover's "insanity" plea and to bring the five years of legal wrangling to an end. The court issued its ruling July 28, and it showed little sympathy with Hoover's claims of mental illness.
"One can suffer from manic-depressive disease without stealing from one's clients," Justice Stanley Feldman wrote in the majority 3-2 opinion.
"We have difficulty accepting the argument that a lawyer, who is effectively managing and closing a multimillion-dollar real-estate transaction, can misappropriate funds, defraud his clients and then escape sanctions by claiming he was unaware of what he was doing or could not appreciate the impropriety of his conduct. None of the mental-health experts indicated that [Hoover] suffered from delusions so severe he was unaware of the implications of his conduct."
But Feldman and two colleagues stopped short of calling for Hoover's disbarment. The court also declined to subject Hoover to a reinstatement hearing after he completes his six-month suspension early next year.
And so, the legal saga of Charlie Hoover ended not with a bang but a whimper.
The public was let in on what had transpired only after the high court had made its decision. Only then could those involved in the case publicly reflect on whether justice had been done.
Hoover's lawyer Paul Beer pauses when asked if his defense would have worked had his client been a common bank robber.
"I'm an advocate, okay, and I'll frame my answer accordingly," he says circumspectly. "Charlie was treated very fairly."
And Harriet Turney, while trying to defend the honor of the State Bar's self-policing system, gives Charlie Hoover high grades for his immensely clever--and largely successful--defense.
"Let's put it this way," she says. "If Charlie was crazy, he was crazy like a fox.