Official Secrecy Acts

Fighting a legal war on multiple fronts, Symington and his attorneys turn to a time-honored tactic: stonewalling

But that's not all.
The governor also insists that Shimizu agree to an unusual consulting contract. Symington asks Shimizu to pay his former business partner, Stephen R. Todd, a $60,000 fee for one month of consulting. The consulting deal includes a remarkable stipulation--the money will be paid even if Todd renders no services.

The deal closes in January 1994, and Todd receives a $60,000 payment from Shimizu. A month later, Todd's new company, Core Properties, sends a $57,500 check to the governor's business, The Symington Company.

The Symington Company then, in turn, sends a $14,325 check to the governor's former Esplanade business partner, Jerome Hirsch. The payment is supposed to cover Hirsch's 25 percent share of the commission on the sale of the Esplanade.

Hirsch has since filed a fraud suit against Symington in bankruptcy court, claiming the governor concealed that he actually received nearly $1 million for the sale of his partnership interest in the Esplanade by transferring the Shimizu payments to his mother and Todd.

The Shimizu transaction raises yet another round of serious questions about Symington's financial conduct while serving as governor. And Manning is using that transaction and Symington's relationship with Todd as a battering ram against the stone wall the governor's attorneys have tried to build around his telephone records. Manning claims he needs those records to properly investigate whether Symington has additional assets that have not been reported to the bankruptcy court.

"Mr. Symington's support, assistance, and communications with Core and Mr. Todd appears to go beyond a proactive and concerned Governor seeking to support an Arizona businessman . . ." Manning says in court documents.

Todd did not return phone calls seeking comment. But Symington's bankruptcy attorney says the Shimizu transaction is nothing more than a routine business deal that was fully disclosed by the governor.

"There is nothing sinister about this," Symington attorney Robert Shull says in bankruptcy pleadings.

And there may not be. The bankruptcy judge has not yet ruled on Manning's request. The fight over the telephone records, however, has brought more than the Shimizu deal into public question.

Manning's recent filings in bankruptcy court suggest the possibility the governor secretly controlled Core Properties and used it to solicit business in Mexico and Arizona, and through the state Department of Commerce.

Public records outline a close financial relationship between Symington and Todd that sometimes spilled over into official state business.

Symington was majority shareholder in The Symington Company when he was elected governor in February 1991. The company's primary function was real estate development and leasing activities. Over the preceding decade, The Symington Company had received millions of dollars in development fees, leasing commissions and property management fees.

After his initial election, Symington announced he was winding down his activities in The Symington Company. Todd, who served as president of The Symington Company, started his own company, Core Properties, on July 31, 1991.

State Corporation Commission records show that within a year after Todd formed Core Properties, Symington's two remaining top officers in The Symington Company had left and joined Core Properties.

About the time the executives left The Symington Company, Core Properties obtained control over all of The Symington Company's property management contracts, Manning states in bankruptcy records.

Core Properties also kept The Symington Company's books and records, and the two firms used the same attorneys and accountants for advice, Manning claims in court filings.

"Though The Symington Company remained in business, its management and development fees, and leasing commissions previously received by The Symington Company, were paid over to Core," Manning states.

The Symington Company not only turned over all of its major assets to Core Properties, the governor and his company also paid Core more than $94,000 in 1992, court filings claim. The payments were unusual, Manning claims in court documents, because they were made after Todd was aware that Symington's personal finances had collapsed. By that time, the governor was telling some lenders he had a net worth of negative $23 million.

Immediately after his 1991 election, Symington named another former Symington Company executive, Jim Marsh, as director of the state Department of Commerce. Beginning in early 1992 and continuing at least through that year, Core Properties repeatedly sought business assistance and contracts from the Commerce Department, Manning claims in bankruptcy documents.

"Clearly, his [Todd's] former employer, The Symington Company, would have had an unavoidable conflict of interest in soliciting and bidding those contracts," Manning states in the pleadings.

Core Properties was particularly interested in developing business in Mexico. As Core Properties was expanding its presence in Mexico in 1992, Symington was advancing major state initiatives to develop strong business ties between Arizona and Mexico and was traveling frequently to Mexico.

In his frequent correspondence with the agency, Todd underscored the necessity of obtaining Commerce Department assistance in conducting Core Properties business, particularly in Mexico.

"As Core Properties' activities in Mexico increase, the importance of contacts at the state and federal agencies becomes more and more important," Todd wrote in a January 1992 letter to the Commerce Department's business development representative.

Todd told the Commerce Department his company was "negotiating the development of a five-star business hotel" in Monterrey, Mexico. Symington, according to published reports, later met with a Mexican businessman seeking to develop a Ritz-Carlton hotel with Core Properties in Monterrey. The hotel project never got off the ground.

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