By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
A source familiar with a federal grand jury investigation of Symington tells New Times that government prosecutors have built a powerful criminal case against the governor and are eager to file a "slew" of meticulously documented charges.
"This guy is going to get indicted," the source says. "When people read this indictment, he is going to be underground for a week."
The first major shot in a war that could bring down Symington's governorship, and, perhaps, send him to prison, was fired last week.
The March 14 federal grand jury indictments against Symington's closest political adviser, George Edward Leckie, and the governor's personal accountant, John David Yeoman, leave little doubt that Symington is the ultimate target of government prosecutors.
Leckie and Yeoman were indicted on seven counts of fraud stemming from the alleged rigging of a $1.53 million state contract awarded in September 1991 to Coopers & Lybrand, an accounting firm in which Yeoman was a partner. The contract was to provide consulting services for Project SLIM, Symington's initiative to streamline government.
Yeoman also faces charges of lying to a grand jury and obstruction of justice.
The grand jury has been probing Symington's finances since at least July 1992 and was prepared to indict Symington late last year on charges stemming from the filing of false financial documents, the source tells New Times. But the Symington indictment was postponed after new information about Project SLIM surfaced.
The indictment against Leckie and Yeoman details how the government believes the crimes were committed, including a new allegation that they exchanged information during a face-to-face meeting on September 7, 1991, at Paradise Valley Country Club. Earlier disclosures centered on phone calls between the two while bids were being evaluated.
Two days after the meeting at the country club, Coopers & Lybrand won the contract--after lowering its bid by $443,000, or 29 percent.
The 13-page indictment does not elaborate about possible motives. It merely claims that Leckie's and Yeoman's actions provided Coopers & Lybrand "an illegal and unfair competitive advantage in connection with the award of the Project SLIM contract."
While Coopers & Lybrand benefited by winning the contract, the indictment makes no mention of how Leckie personally benefited from the alleged scheme, says Tom Connelly, a former assistant U.S. attorney who is Leckie's defense lawyer.
"Normally, there is a modus operandi, a quid pro quo, and I don't see it here," Connelly says.
Documents in the hands of federal prosecutors, however, indicate that Symington may have financially benefited. Symington owed Coopers & Lybrand at least $45,000 in 1991. After the Project SLIM contract was awarded in September 1991, the firm not only substantially reduced Symington's accrued debt, it continued to do new work for him.
By 1993, Symington's debt to the accounting firm had risen to $88,000. But Coopers & Lybrand didn't press for payment. Instead, the firm wrote off $83,000 of Symington's debt.
Symington may have had other reasons to steer the Project SLIM contract to Coopers & Lybrand. The firm had served as his business accountant for many years, doing everything from preparing income tax returns to reviewing the personal financial statements he used to obtain loans. The firm also managed his campaign finances and helped prepare disclosure statements candidates and elected officials must submit annually to the state.
It was Coopers & Lybrand that signed off on a May 31, 1991, financial compilation that showed Symington had a personal net worth of minus $23.2million. Symington used the report to fend off a consortium of union pension funds seeking repayment of a $10 million loan he had personally guaranteed. A year earlier--on May 4, 1990--when the pension funds issued the loan, Symington presented a financial statement saying he was worth $11.95million.
Perhaps Symington felt he owed Coopers & Lybrand a favor after the national accounting firm checked off on his precipitous financial collapse: $35 million in 12 months.
While these documents--and others in possession of federal prosecutors--raise serious questions about Symington's financial dealings, it is likely that the government is waiting for an insider to tell the whole story. That story may soon emerge as Leckie and Yeoman ponder the possibility of going to prison.
Tactics typically used by federal prosecutors in public corruption cases are straightforward, somewhat brutal and frequently effective: Indict several underlings close to the ultimate target and wait for one of them to cut a deal that includes implicating the kingpin.
Prosecutors often raise the stakes by telling the indicted lackeys that the government will only cut a plea bargain with one party--usually the first to come clean.
Leckie and Yeoman, no doubt, spent the past week wondering which of them would sing first. Neither can relish the prospect of spending several years in a federal prison and facing huge fines to save a bankrupt, apparently lameduck governor.
While the former aides sweat, the federal government continues its criminal investigation into Symington's messy financial affairs. Already, enough details have emerged to leave little doubt that the feds could indict Symington tomorrow--if they wished.
Which raises the stakes for Leckie and Yeoman. If they wait too long to cut a deal with prosecutors and spill the beans, the government could indict Symington anyway, foreclosing Leckie's and Yeoman's chances to avoid, or significantly reduce, prison terms.
Yeoman is particularly vulnerable. The fraud and perjury charges each carry five-year maximum prison terms; the obstruction charge could bring ten years. Each count also carries a fine of up to $250,000.
Yeoman is also alone. Coopers & Lybrand fired him last week; he had been on administrative leave from the firm for months. Coopers & Lybrand is no longer providing Yeoman with legal counsel and, to make matters worse, the firm is cooperating with federal investigators.
And it is Yeoman who knows the intimate details of Symington's financial matters. New Times' source says these matters--particularly Symington's practice of preparing financial statements of varying net worths--are of great interest to the grand jury.
Yeoman's attorney, Douglas Behm, declined to comment on the indictments. Neither Leckie nor Symington returned phone calls.
As if the indictments of two former aides weren't enough, Symington continues to fare poorly in his federal bankruptcy case. Symington filed bankruptcy in September, seeking to erase $25 million in debts while claiming only $61,000 in assets.
The governor already has been accused of fraud in the bankruptcy case by his former business partner, Jerome Hirsch, who claims he was cheated out of hundreds of thousands of dollars in a business deal with Symington.
Bankruptcy court Judge George B. Nielsen has hinted in rulings that the extensive estate held by the governor's wife, Ann Symington, may be vulnerable to creditors. Ann Symington has not filed bankruptcy; she and her husband claim they maintain separate finances.
But the union pension funds' attorney has submitted documents that appear to show the Symingtons have commingled their finances and transferred assets back and forth during the past five years.
The pension funds also have discovered several examples in which Symington appears to have issued false and misleading financial statements to lending institutions. If true, the bankruptcy court could reject Symington's request to dismiss his debts. In addition, Symington could face federal bank-fraud charges.
Ironically, Symington is attempting to keep the pension funds from seeing his personal and business records by claiming they have been turned over to the grand jury and are therefore confidential.
The pension funds have asked a U.S. District Court in Phoenix to allow them to copy the records Symington has turned over to the grand jury. Significantly, the bankruptcy trustee, Louis Movitz, has joined the pension funds in asking that the documents be made available.
The U.S. Attorney's Office in Los Angeles, which is directing the investigation, has no objection to the pension funds' request.
Among the records the governor is refusing to release are income tax returns prepared by Yeoman.
Project SLIM dates to Symington's first campaign for governor. During the winter of 1990-91, Leckie, who was Symington's campaign finance chairman, and Yeoman, who was campaign treasurer, began discussing with Symington ways in which Coopers & Lybrand could obtain state business if Symington were elected.
Yeoman testified in a 1994 civil case that Symington reacted "positively" when told about the services Coopers & Lybrand could offer the state.
He testified that "almost immediately" after Symington was elected, the governor made Project SLIM "a high priority." Yeoman continued talks with Leckie and Symington concerning the "scope of services" Coopers & Lybrand could provide.
By June 5, 1991, Coopers & Lybrand officials were formally meeting to develop a strategy to win the Project SLIM contract. Yeoman continued to meet with Leckie and Symington and pressed them to "move forward with some of the things you talked about in the campaign" with the hope of Coopers & Lybrand landing some business, Yeoman testified.
Symington appointed Leckie in July 1991 to a state selection panel reviewing bids for the Project SLIM consulting contract.
The federal indictment alleges that Leckie, in violation of a confidentiality pledge he signed, met with Yeoman at Paradise Valley Country Club and illegally told Yeoman the amounts of other bids submitted.
Yeoman apparently was confident that Coopers & Lybrand would land the contract; five days before it was awarded, he sent an unsigned letter to Leckie discussing the accounting firm's "plans for the second phase of Project SLIM," according to the federal indictment.
The second phase of Project SLIM--implementation of the programs designed during the first phase--has been overlooked by the media as well as by investigators for Maricopa County Attorney Richard Romley and Attorney General Grant Woods. Neither prosecutor filed criminal charges, although Woods won a $725,000 civil settlement from Coopers & Lybrand and a $25,000 civil settlement from Leckie.
The second phase of Project SLIM was worth $3.1 million, nearly twice as much as the $1.53 million contract allegedly rigged by Leckie and Yeoman. Symington's role in making sure Coopers & Lybrand won the second-phase contract is clearly documented in the accounting firm's internal files.
Although the second phase had never been publicly advertised and Coopers & Lybrand had no contract to do such work, Symington and Leckie offered the firm a deal in early 1992.
"They asked that we begin implementation on one of the [state] agencies in good faith 'on the come' with the understanding that we would be paid in the next fiscal year," a January 1992 Coopers & Lybrand memo states.
Coopers & Lybrand agreed to the deal, butdidn't have to do the work "on the come." Instead, the company won an $80,960 no-bid contract from the Arizona Department of Transportation. The federal grand jury has subpoenaed ADOT's records concerning the awarding of the contract.
The ADOT contract served as a springboard for Coopers & Lybrand to land thestatewide implementation contract thatwas finally put out to bid in July 1992. That same month, Coopers & Lybrand won the bulk of the Project SLIM second-phase contract, which paid the firm more than $3.1million.