The Governor and the Lawyer

Document supporting indictment suggests senior partner at Snell & Wilmer aided governor in alleged bank fraud

A 1991 poll by the Arizona Republic placed him in the top ten most powerful individuals in Arizona.

Mallery's power base is linked to his friendships. One of his most important ties is with Symington. It is a relationship that dates back 25 years.

Symington and Mallery became friends in the early 1970s; they soon entered into business relationships, at first small but later huge.

Symington purchased a lot from Mallery in 1974, with Mallery carrying its $60,000 mortgage for six years.

The two men continued to work together during Symington's tenure on the Southwest Savings & Loan board of directors, which lasted from 1972 until 1984. The governor frequently obtained funds from Southwest Savings for his development projects.

Many of those projects--including the $200 million Esplanade development in the Camelback corridor--were built by HuntCor Inc., an Indianapolis-based construction company that included Mallery on its board of directors.

Mallery continued to be a close adviser to Symington after Symington was elected governor in February 1991. Six months into the new administration, Mallery accompanied Symington on a state trade mission to Japan.

During the ten-day excursion, Symington and Mallery met with officials of Shimizu Corporation, which had invested $35 million in Symington's Esplanade. It was an investment that Mallery was instrumental in putting together.

The public would not learn of the meeting for many months. When the meeting did become public, Symington administration officials said no private business had been discussed.

But the meetings occurred at a crucial time for Symington, whose finances were already collapsing. Bankruptcy records now show that Shimizu was covering millions of dollars in Esplanade partnership payments that were to have been made by Symington.

Mallery remained in proximity to Symington--and to state business. In March 1993, Mallery, on behalf of Snell & Wilmer and two other firms, proposed a $3.75 billion plan to build private toll roads to speed completion of the Valley's freeway system.

The companies involved in the proposal included Symington's accounting firm, Coopers & Lybrand, which later became embroiled in the Project SLIM bid-rigging scandal. Coopers agreed last summer to pay a $725,000 penalty to the state to settle bid-rigging charges.

The freeway proposal was immediately attacked as a political deal that would favor firms and individuals close to the governor.

A Symington aide, however, defended the plan.
"Just because certain individuals happen to know the governor, you cannot discount them from offering proposals to state government," Symington's press secretary, Douglas Cole, told a Valley newspaper.

It is far from certain that federal prosecutors will indict Richard Mallery in connection with the assistance he gave Symington on the Mercado loan. Although target letters are indicative of serious prosecutorial interest, they are not always precursors to criminal charges.

Receiving a target letter from a federal prosecutor will not burnish Mallery's image as Phoenix's most talented deal maker. But Mallery has encountered other deal-making disasters--and lived to deal again.

In 1984, Mallery was a member of a Phoenix business group seeking to build a domed stadium and cultural center near Seventh Street and Van Buren.

As the group worked toward the stadium, its members learned that Mallery and 24 other Snell & Wilmer attorneys had purchased a two-block parcel of land next to the Phoenix Union High School campus, which had been the proposed site for the stadium.

The group also discovered that Mallery was an officer in HuntCor Inc., the construction firm set to bid on the contract to build the facilities.

Mallery was forced to resign from the group. His resignation marked the end of efforts to build the stadium.

A few years later, Mallery came under scrutiny by the State Bar of Arizona in regard to a real estate transaction in which he gained control of a key Phoenix intersection from two developers--developers Mallery had been hired to represent. Mallery emerged unscathed by the bar probe and went on to spearhead the $325 million Phoenix Gateway Center, located at the intersection of 44th Street and Washington.

In 1989, Mallery played a role in creating a controversial plan to build an amphitheatre in north Phoenix. It was subsequently revealed that a Snell & Wilmer secretary had obtained the liquor license for the proposed amphitheatre. Once again, HuntCor was expected to play a major construction role in the project.

The amphitheatre was eventually rejected by officials representing the City of Phoenix.

The City of Phoenix also was to play a significant role in Mallery's and Governor Symington's plans to salvage the Mercado, according to Taylor's 1991 memo.

Mallery proposed an exchange. If the pension funds released the governor from his personal guarantee to repay the $10 million loan, Mallery would "use all influence he could muster" to get the city to contribute to the project.

When Taylor pressed Mallery on what this meant, Symington reportedly said the city could "feed any downside" on the project by agreeing to lease retail space in the Mercado.

McMorgan officials were cool to the proposal, Taylor's memo indicates.
"My analysis indicates that today we received a lot of talk and good ideas however I doubt that both Fife Symington and Dick Mallery are in a position to have an acceptable workout agreement in place prior to Fife Symington defaulting on the Mercado," Taylor's memo concludes.

Symington defaulted on the Mercado in the fall of 1991.

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