One For The Books

Or how schoolchildren got gypped and nobody cared until it was an election year

Under the rules drawn up in the Land Department bid specifications, developers interested in the Scottsdale real estate had to meet stringent qualifications. Westcor told Shaw that his company did not qualify and if Pensus won the auction, Westcor would sue. Furthermore, even if Shaw lost the auction, Westcor promised to sue on the grounds that Pensus' unqualified bidding had driven up the cost. As the knot in Shaw's stomach took on geological proportions, he had to face one other multimillion-dollar dilemma.

Under the bid specifications, developers were told to show up with a cashier's check for $5.4 million. If the winning bidder was later determined to be unqualified, the $5.4 million automatically was forfeited to the state. And here was Westcor, a certified heavy-hitter, promising to prove in court that Pensus wasn't qualified.

All this occurred just minutes before the auction was to begin. One hundred rubbernecks from the industry had gathered to watch, and Shaw worried that he was about to look quite foolish in front of his peers no matter what he did. Also, he was about to be sued no matter what he did. And he might very well lose his partners' $5.4 million if he didn't do something smart.

Instead, he did something stupid.
Hoping to save face and to demonstrate to Westcor, one of Arizona's most prominent companies, that it couldn't just completely dominate him in negotiations, Shaw asked Murphy if Westcor would at least sell him ten to fifteen acres from the Scottsdale parcel somewhere down the line. This question presented the appearance of impropriety and suggested that Shaw would get something for dropping out of the auction. And this suggestion of something smarmy was created over what would have been an inconsequential parcel in a deal this big. Fifteen acres would have been peanuts to Pensus or Westcor. Clearly, Shaw wasn't thinking clearly. (Picture Orson Welles devouring a holiday goose, and as he lights up a cigar the busboy meekly asks the fat man if he might take a wing bone from the table to remember the occasion.)

If Shaw was a beaten man when he walked back into the auction, he at least was beginning to think on his feet. He opened the bidding by offering the bare minimum the state would accept. Shaw reasoned that by bidding at all he had demonstrated to observers that he was a serious player, but by offering the minimum bid he was also demonstrating to Westcor that there was no need to sue. Westcor's next offer of $17.9 million was not upped, and it won the bidding.

If Shaw was not particularly crafty at the auction, he would finally demonstrate that he was at least courageous. Most developers don't make waves over state land auctions, and they certainly don't speak out loud about allegations of bid rigging. At the heart of his ceaseless complaints to government officials was Shaw's contention that the bid specifications were so capricious, so strenuous, so bizarre, that 99 out of 100 businessmen could not have met them. This auction was the first, last and only time in the history of the Land Department that such rigid specifications were used.

You might wonder if the rules had been written with only one winner in mind.

Shaw was not alone in his concern over the bid specifications. Shortly before the auction, Dennis Knight of Denro Ltd. filed a letter of protest with the Land Department over the severe restrictions. Knight withdrew his objections immediately before the bidding, after reaching an understanding with Forest City of Scottsdale, a development team that entertained the idea of a venture in league with Westcor.

In the middle of this circling pack of developers floated Richard Campana, who had his own deal with Forest City. It was Campana who went out on the worst blind date in the history of Phoenix. Campana is a former city councilmember in Scottsdale, and his ex-wife currently holds the seat.

Richard Campana, in his relationship with Forest City, helped conceive the particular Scottsdale master plan that included the 261 acres of state land.

On the night of the auction, Richard Campana went out on a blind date. He took Mary Jane Boyd to dinner at Pronto's, where he is well-known. Afterward, the couple went to Timothy's for cocktails and jazz.

At the time of the date, Mary Jane was a CPA and a partner in the accounting firm of Peat Marwick. She is nobody's bimbo, and apparently takes it personally when she is treated as such.

Ms. Boyd contends that Dick Campana spent the entire evening trying to impress her with the $20 million killing he'd made on that day's land auction.

"While I was initially pleased for him, it soon became apparent that he was becoming boorish because he really wasn't interested in conversation as much as hearing himself talk about how `great' he was and how powerful and influential he was."

How influential was he, Mary Jane?
According to Boyd, Campana told her, "He was involved in preparing bid specifications. He stated that Westcor was important because he said only Westcor had enough assets to be a qualified bidder. It was my impression that he was instrumental in formulating the specifications as to who could or could not be a qualified bidder. He mentioned that he brought Westcor into the deal as a means of keeping others from bidding. The impression I received was that . . . the bid specifications were set with Westcor in mind."

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