By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
With bankruptcy hearings on one side, and a federal criminal indictment looming ever closer on the other, Arizona Governor J. Fife Symington III's future lies largely in the hands of his Washington, D.C., criminal defense attorney, John M. Dowd.
During the next 30 to 45 days, Dowd is expected to lobby top Department of Justice officials in Washington, hoping to convince them that a federal grand jury, led by the U.S. Attorney's Office in Los Angeles, should not indict Arizona's governor.
A source close to the Justice Department probe says Los Angeles prosecutors are poised to seek a grand jury indictment against Symington by late November or early December--after Symington's attorneys make their final plea in Washington.
"I think it is a very high likelihood that he will be indicted. Very high," the well-placed source tells New Times.
The grand jury has been investigating conflicting financial statements filed by Symington in connection with obtaining loans from banks and other sources. It is a felony to falsify a personal financial statement submitted to a federally insured lending institution.
If Dowd is successful in thwarting an indictment, it will mark the second time he has pulled Symington out of the line of fire. The governor was sued in 1991 by the federal Resolution Trust Corporation over his role in the failure of Southwest Savings and Loan. Dowd led Symington's defense in the case, which was settled in 1994 with the governor admitting no wrongdoing.
The circumstances facing Symington today, however, are complicated by the governor's Chapter 7 bankruptcy filing submitted last month.
If it elects not to seek an indictment, the Justice Department runs a risk of being embarrassed as attorneys for six union pension funds seek to collect $11.5 million owed by the governor as a result of his failed Mercado minimall in downtown Phoenix.
Pension fund attorneys plan to closely examine Symington's assets and financial statements during the bankruptcy case. One of their goals, attorneys in the case say, is to prove to the bankruptcy judge that the governor obtained a $10 million pension fund loan by submitting false or misleading financial statements. Such a finding could remove Symington's pension funds debt from bankruptcy, allowing the funds to continue collection efforts indefinitely.
If no grand jury indictment is issued, a successful bankruptcy challenge by the pension funds could also raise questions about political interference at the Justice Department.
Symington's political pull in Washington is considerable, if his past supporters enter the fray. Symington's administration has drawn strong backing from House Speaker Newt Gingrich for the governor's aggressive attempts to implement aspects of the Contract With America.
The governor also has deep ties to U.S. Senator John McCain. Symington's chief of staff, Wes Gullett, is a former top McCain aide. McCain and Symington have teamed up to support Texas Senator Phil Gramm as the Republican presidential nominee. Symington is chairman of Gramm's Arizona campaign, which has raised $400,000 so far.
But it is Dowd--a former head of the Justice Department's white-collar criminal task force--who will likely carry Symington's case directly to the department.
An attorney familiar with Symington's defense says Dowd is expected to try to convince top Justice Department officials that the grand jury, which has been investigating the governor since at least July 1993, has failed to collect sufficient evidence to bring an indictment.
If that approach doesn't sway Justice Department officials, Dowd is expected to ask the department to consider whether an indictment of Arizona's governor is in the best public interest, given the political and financial turmoil the state has undergone during the last five years.
"He'll try to make this appear as such a momentous and negative decision for the state that apolitical law enforcement ought to weigh that, and give Symington the benefit of the doubt," says a source familiar with Symington's defense strategy.
Dowd is a partner with the politically powerful Washington, D.C., law firm of Aiken, Gump, Strauss, Hauer & Feld. A high-profile attorney whose bellicose nature is legendary, Dowd defended McCain during the 1990 "Keating Five" Senate Ethics Committee hearings. McCain received a mild rebuke from the committee for intervening with federal banking regulators on behalf of convicted Phoenix financier Charles H Keating Jr.
Dowd also was the attorney hired by Major League Baseball during its 1989 gambling investigation and subsequent banishment of all-time leading hitter Pete Rose.
Contacts between the Justice Department and the defense attorneys for high-profile figures such as the governor are not unusual in the final stages of a grand jury white-collar criminal investigation, Justice Department officials say.
Government attorneys typically hold detailed discussions with defense attorneys in white-collar criminal investigations to make sure the government has not overlooked any evidence that would convince it to forgo an indictment and an expensive criminal trial.
The government is particularly cautious prior to seeking an indictment against a prominent individual or political figure, because of the reputational damage that results. Such cases are generally reviewed by a number of high-ranking Justice Department officials before an indictment is sought.
At the same time Symington is fending off a possible criminal indictment, the governor is making final preparations to take the witness stand Tuesday in his Chapter 7 federal bankruptcy case.