By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
Default would have cost Symington his prized project and more than half of his reported net worth. A dip in his net worth would have scared off other lenders he needed for smaller development projects, plunging Symington into a tailspin.
But by the late 1980s, such a scenario loomed. Symington was in a bind.
So he decided to run for governor.
The only way Symington, a Republican, could finance his gubernatorial campaign was to hit up his wife and his mother.
It was illegal to accept more than $550 in contributions from a single contributor. And since Symington and his wife, Ann, kept their personal finances separate, her donor power was limited.
So the Symingtons huddled with lawyers and hatched a plan under which his mother and his wife said they lent money to the candidate and that he in turn lent it to his campaign. They drew up promissory notes requiring repayment in three years, with interest.
As many people suspected at the time, it was all a sham. Ann Symington now admits in sworn testimony that she never intended to collect on the loans.
Symington received more than $1.2 million from his wife and his mother in apparent violation of campaign-finance laws. The cash infusion bought a last-minute advertising campaign that accused his opponent, Terry Goddard, of violating campaign-finance laws.
But during his campaign, Symington did much more than deceive voters and flout campaign-finance laws. Federal prosecutors allege that Symington repeatedly committed fraud by lying to lenders to prop up his real estate company.
In the years following the 1986 Tax Reform Act, Symington always kept more than one version of his personal financial statement. They were secreted in a fireproof cabinet accessible only to him and his secretary.
Symington had two different versions of his April 1, 1986, statement; three different versions of his October 1986 statement; two different statements for December 31, 1987; and two more for December 31, 1988.
The year 1990 was critical for Symington. By then, he was issuing four different financial statements dated December 31, 1989.
Prosecutors say Symington used the various statements to deceive federally insured lenders; these documents compose the heart of the criminal case, accounting for 14 of 22 criminal counts.
"During the campaign, Symington began to present different pictures of his financial condition to different lenders, depending upon whether he was seeking additional financing, in which case he continued to show a large net worth, or whether he was seeking debt relief, in which case he presented himself as a victim of the Arizona real estate depression," prosecutors say in pleadings.
While stumping for office, Symington also was attempting to extricate himself from yet another errant development, the Mercado in downtown Phoenix.
Symington had personally guaranteed to repay a $10 million Mercado construction loan from First Interstate Bank (now Wells Fargo). He also personally guaranteed a $10 million long-term loan from a consortium of union pension funds that would replace the construction loan once the project was built.
In May 1990, the pension-funds managers indicated they would withhold $2.8 million of the loan intended to finance Mercado tenant improvements. This meant Symington lacked enough money to repay all of the First Interstate loan.
Symington pleaded poverty to First Interstate--despite the fact that he had just given it a financial statement, dated December 31, 1989, saying he was worth $11.9 million.
First Interstate demanded that Symington hand over a new financial statement and told him to disclose the market values and costs of his projects. Symington resubmitted the statement on June 26, 1990, again showing a net worth of $11.9 million but adding a disclaimer: "The current depression in the real estate market makes it difficult to determine real estate value, thus any evaluation is highly subjective . . ."
Three days later, Symington claimed he was flush, telling the pension funds that his December 31, 1989, statement was "true and correct" and that there had been "no material adverse changes."
The pension funds issued the long-term Mercado loan; Symington appeared to be off the hook.
I. Jerome Hirsch put him back on.
In August 1990, Hirsch tried to pledge as collateral a $4.2 million promissory note he had received from Symington for a portion of Hirsch's share in the Esplanade. Hirsch wanted to use the note as security for a loan from Security Pacific Bank.
Security Pacific wanted to see Symington's personal financial statement.
Symington took off the wealthy mask he'd worn for the pension funds a few months earlier and donned his pauper's mask again. On August 23, 1990, Symington submitted yet another version of his December 31, 1989, statement to Security Pacific, but with a new disclaimer: "Because of the current situation of the Arizona real estate economy . . . the value of the assets and net worth shown on the financial statement are now materially and dramatically overstated."
Security Pacific wouldn't accept Symington's promissory note as collateral; Hirsch demanded a meeting with Symington to determine the status of the $4.2 million note.
On August 31, 1990, Symington's attorney told Hirsch's attorney that Symington's stake in the Esplanade was worthless, even though Symington's personal financial statement said his share in the project was worth $7 million.
"Symington's attorney also said that Symington was aware of the federal statute regarding influencing financial institutions, and was avoiding overstating his assets in order not to mislead the bank," prosecutors state in pleadings.