By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
By New Times
The next month, Symington was negotiating with First Interstate over a $2.5 million construction loan he had guaranteed for a Mesa strip mall. Symington rejected First Interstate's request that he sign a statement saying he was aware of the penalties for issuing false financial statements to lenders. He then came up with a new financial statement.
On September 19, 1990, he submitted a statement saying his net worth had plummeted from $11.9 million on December 31, 1989, to $4.4 million. Before he signed the statement, Symington also scribbled out language saying that he was aware of the penalties for submitting false statements.
He allegedly submitted just such a statement the very next month. Once again, problems arose with Hirsch and the Esplanade.
Symington had borrowed more than $1.2 million from Valley National Bank (now Bank One) in the late 1980s. About $600,000 of that sum were dedicated to paying the interest on the $4.2 million promissory note to Hirsch.
In October 1990, Valley National was pressing Symington to pay down his debt and obtain collateral for the unsecured loans. To accomplish this in the weeks leading up to the gubernatorial election, Symington once again turned to his mother, Martha.
Symington convinced Martha Symington to pay him $700,000 for a 50 percent interest in the Scottsdale Seville real estate partnership he controlled. (Weeks earlier, another investor had rejected the deal, at $500,000.)
The day after Martha Symington's investment, Symington received a $574,000 distribution from the partnership. He used some of the money to reduce his Valley National debt by $301,000 and about $83,000 to fund his election campaign. (The money funneled to the campaign appears to have violated election laws. However, Symington last week swore in a deposition that many of the 1990 campaign financial records have been lost.)
Symington next convinced his mother to pledge stock held in her account at the Mercantile Safe Deposit and Trust in Baltimore, Maryland, as collateral against another $300,000 he owed to Valley National Bank. Mercantile, however, demanded that Symington submit a personal financial statement before it would issue a letter of credit as collateral for his loans to Valley National.
Symington took off the poor man's disguise he'd used a month earlier in negotiations with First Interstate and Security Pacific; he put on the wealthy face he had shown for the pension funds.
In October 1990, Symington submitted a December 31, 1989, personal financial statement to Mercantile showing his net worth to be $11.9 million. He also signed a statement saying the financial statement was "true and complete" and that Mercantile "may consider this statement as continuing to be true and correct until a written notice of a change."
The government alleges that by the time Symington issued these statements to Mercantile, "he had already told other institutions that it was no longer accurate."
Mercantile issued the letter of credit allowing Symington to avoid a possible default at Valley National Bank weeks before the November 1990 election.
In February 1991, Symington defeated Goddard in a special run-off election.
As governor, Symington attempted to keep his financial charade afloat. But as his first year in office unfolded, it became increasingly difficult to keep up appearances.
In May 1991, Symington submitted a financial statement to Valley National showing a net worth as of December 31, 1990, of $5.4 million, up from $4.4 million in September 1990. This claimed gain in value was remarkable, given the eroding market and his admission to Hirsch's attorney in August 1990 that his stake in the Esplanade, by far his biggest project, was worthless.
It is even more remarkable because Symington knew his net worth was far in the red, prosecutors allege.
In April 1991, a little more than a month before he told Valley National he was worth $5.4 million, a Symington Company employee prepared a list of his liabilities that exceeded $39 million, leaving Symington "with a substantial negative net worth," pleadings state.
A month after Symington told Valley National he was worth $5.4 million, negotiations with First Interstate about the Mesa strip mall resumed, with Symington pleading poverty. On June 26, 1991, he submitted a financial statement to First Interstate stating his net worth was a negative $4.1 million. Remarkably, the statement submitted to First Interstate has the same "as of" day as the $5.4 million statement he'd given to Valley National a month earlier.
The only difference was, he was suddenly worth $9.5 million less.
At the same time Symington was negotiating with Valley National and First Interstate, he was also talking with union pension funds. The Mercado was performing poorly and Symington wanted to renegotiate the terms of his loan.
The pension funds told him if his partnership didn't make payments, they would foreclose on the Mercado. On July 17, 1991, Symington and his attorney, Richard Mallery, met with two pension-fund money managers. During the meeting, Mallery told the pension-fund representatives that Symington's net worth was a negative $20 million.
The pension-fund managers refused to modify the loan terms.
"Symington then stated that if the pension funds went forward with their plans to foreclose on the Mercado and did not release him from his guarantee, he . . . might be forced to declare bankruptcy," federal prosecutors state in pleadings.
If that happened, Symington said, he would not be as influential with the Legislature in securing funding for Mercado's only major tenant, Arizona State University. But if the pension funds agreed to release him from his personal guarantee, Symington allegedly promised to pressure the City of Phoenix and Maricopa County to lease space at the Mercado.