"I think," says board member William Moroney, a Maricopa County Superior Court judge, "that it would be inappropriate to turn down something just because there is a disclosed relationship between friends on one side or another. . . . I don't see anything wrong in dealing with friends, as long as you don't shut the door on someone who's not." State Treasurer Tony West has a lot of friends. He made friends during his eight years as a state legislator and more friends during his four years in the state Senate, where, incidentally, he chaired the committee that oversees the state retirement funds.

Among the men Tony West says he counts as friends is real estate investor Michael Geddes, who sits on the board overseeing the Little Funds. Another friend is board member William Moroney, the Superior Court judge. Still another is developer Francis Najafi. And yet another is developer John Stiteler.

West has business connections with some of these friends.
In 1983, West bought into a limited partnership for land in west Phoenix offered by Geddes, who was the venture's general partner. That partnership still exists today.

West has also purchased pieces of three of Stiteler's "Exeter" real estate limited partnerships. In fact, the state treasurer works for Stiteler as a salesman. (He took the job after the state attorney general ruled West could sell for Stiteler and legally remain in office.)

And when it comes to the state pension systems, friendship and business seem to get all mixed up an awful lot of the time.

In 1988, when West was still a state senator, he tried to persuade the Big Fund to purchase a Stiteler real estate "opportunity" involving raw land on the east side. The land would soon be sold to the Department of Transportation because it was in the path of the freeway.

The large pension system didn't buy into the deal.
In 1990, though, West went to the Little Funds. There, he introduced his friends on the board to his friend Stiteler. West and Stiteler persuaded the fund to buy $600,000 worth of UDC Homes notes from Emerald Homes. Stiteler's company, Exeter Financial Corporation, earned a $5,847 commission for brokering the sale. West won't say how much he got.

It was a deal with unusual undertones.
Shortly after Emerald Homes sold the notes to the funds, the company was accused by the federal government of engaging in sham real estate transactions with Charles Keating's Lincoln Savings and Loan. Emerald eventually admitted that it violated federal campaign laws when company directors reimbursed employees for contributing money to Senator Dennis DeConcini, a member of the Keating Five, a group of U.S. senators whom Keating pressured to get federal regulators off his back. Emerald Homes later settled with the feds for $10 million.

Later, Stiteler introduced another of his and West's friends, developer Francis Najafi, to the board. Najafi says his company paid Stiteler $137,000 for the introduction. Najafi and associated interests subsequently obtained millions of dollars in financing from the funds to purchase UDC Homes notes that are now tied up in bankruptcy court.

West will not say how much money he got from Stiteler for his part in the deals. Stiteler is on vacation and unavailable for comment.

Questions about Stiteler, West and pension-system activity are not limited to the Little Funds.

In 1993, Governor Fife Symington appointed Stiteler to the investment board of the Big Fund, the Arizona State Retirement System. Stiteler resigned after other board members complained Stiteler wanted the fund to invest in risky real estate ventures. The resignation also followed news reports that linked Stiteler to six real-estate-related bankruptcies, six-figure tax liens and a still-pending federal lawsuit charging him with failure of fiduciary responsibility as a director of a failed Phoenix bank. While on the board, Stiteler borrowed but did not repay more than $500,000 from the bank, the government says. He seeks dismissal of the suit on a statute of limitations technicality.

During the Stiteler/Big Fund publicity, the director of the Big Fund accused West of trying to gain control of the retirement systems.

It is an allegation he denied then and still denies today. West says he saw no conflict in presenting Stiteler's deals to the Little Funds even though he counted board members as friends and was a limited partner in a Geddes real estate venture. "This is scandalous--that's tongue in cheek," says Tony West about his friendship and business relationships with Geddes and Stiteler.

"If John Dillinger comes through the door, you don't do business with him. You do business with people you know and respect," says West.

"This fund should get a gold medal for being run so well," he adds.
Geddes says he felt no conflict of interest in voting to approve the Stiteler deals because he had never done business with Stiteler.

As for his business relationship with West--Geddes terms it "remote." He says West owns less than 5 percent of a limited partnership that purchased 33 acres of land in Avondale, near the intersection of 99th Avenue and McDowell Road. The partnership, formed in 1983, still exists.

Geddes disclosed this land ownership when the retirement system lent $6 million to the developers of Crystal Gardens, an as-yet-unbuilt planned community just a few miles down the road from the land owned by the partnership.

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