By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
Records show the notes paid off handsomely--returning about 25 percent plus principal.
Until UDC filed for Chapter 11 protection this May.
Now, with $6 million still owed to the Little Funds, UDC has stopped paying, Najafi says. And the $45 million in land is bogged down in a bankruptcy plan that's currently under challenge in a Delaware bankruptcy court.
Not to worry, says Najafi. "In the worst-case scenario," he says, "we'll get the land."
Phoenix attorney Mike Tiffany and Pat Cantelme, head of the Phoenix Firefighters' Union, went to St. Mary's High School together. That was a long time ago, but the two guys have kept in touch. They are not close friends, says Cantelme, but they're friends, nevertheless. Tiffany is a guy he trusts.
So a few years back, when Tiffany learned Cantelme was on the board of the Little Funds, he called him up, pitched an idea for a good real estate deal with a Canadian investor.
"I don't care if it's my brother if it's a good investment," says Cantelme.
Cantelme introduced Tiffany to Cross and the board, which approved the Canadian deal. Ultimately, that deal never materialized, but Tiffany had developed an inside track to the board.
Cantelme left the board in 1994. Shortly after he stepped down, Tiffany and a mortgage broker worked out a deal with the Little Funds. The broker, RRH Financial, agreed to participate in loans to third parties with the retirement funds. All the loans are secured with land. The retirement funds kicked in a total of $17 million for seven projects.
Tiffany's law firm received $65,000 in legal fees--from the broker.
And if Tiffany used his high school chum to get in the door, well, what of it?
"We had a relationship of trust," says Tiffany. "Business people will always use their connections because it gives them credibility. . . . It's one thing to use a connection and another to abuse it.
"I don't know how you could get to the retirement system without knowing someone," he says.