The Handwriting's on the Wall

Fife Symington's own scrawls reveal a plot to suppress evidence of his plunging net worth

The heart of Governor J. Fife Symington III's criminal defense has been punctured by his own jottings. It would seem that only an emergency transplant by Symington's defense team can save him now.

But if the defense team, led by John Dowd, must continue to rely on compromised witnesses such as Symington's former secretary Joyce Riebel, the governor might as well start packing his bags for a stay in the federal pen.

It went that badly last week for Symington.
For a time, Symington's defense team appeared to be exposing holes in the government's case. Symington co-counsel Terry Lynam walked Riebel through a day and a half of tender testimony in which Riebel simply answered "yes" or "correct" to Lynam's questions.

Lynam's cross-examination was designed to show that Symington's fluctuating financial statements were simply the result of changing real estate markets, unclear directions from bankers on how to prepare the financial statements, typing errors, foul-ups by accountants and simple oversight.

A typical question from Lynam: "When these financial statements were prepared, do you believe they were prepared honestly?

A typical Riebel response: "Yes, I do."
And so it went for more than eight hours.
The fun ended for Riebel at 4 p.m. on Friday, when prosecutor David Schindler began his redirect examination. Twenty minutes later, Riebel's credibility had been sliced to ribbons.

First, Schindler forced Riebel to confirm she had no idea as to the veracity of the values Symington placed on the real estate schedule that is the core of Symington's financial statement.

Then, Schindler noted that Riebel had hired a criminal-defense lawyer after federal investigators began to probe Symington's finances. Riebel confirmed that the governor and his wife, Ann, had paid her legal fees, and that for a time, she and Symington had a "joint defense agreement." Finally, Schindler lowered the boom about Riebel's meeting with Symington's attorneys before she testified before the grand jury that would indict the governor.

Schindler: "Well, do you recall testifying before the grand jury and being asked the question about whether you had met with Mr. Symington's attorneys prior to testifying before the grand jury?"

Riebel: "Are you asking me do I recall?"
Schindler: "Yes, ma'am."
Riebel: "No, I don't recall the testimony. But . . ."

For the seventh time since Riebel took the witness stand, Schindler presented her with a transcript of her grand jury testimony to "refresh" her memory.

After reviewing her testimony, Riebel reluctantly responded, "Yes," she had told the grand jury that she had met with Symington's attorneys.

With that, U.S. District Court Judge Roger Strand adjourned court for the long Memorial Day weekend, leaving jurors to ponder Riebel's humiliation on the stand.

While Riebel's performance clearly hurt Symington's case, it may not be nearly as damaging in the long run as more than 75 pages of Symington's handwritten memos Schindler introduced as evidence last week.

The remarkable series of Symington's "To Do List" and "Symington Issues" memos written from the mid-1980s to 1991 suggests that Symington knew his financial statements were crucial to lending decisions and that the values he placed on them were grossly overstated.

Two memos in particular provide a snapshot of Symington's state of mind during a crucial period in May 1987.

The memos, apparently written for his own files, show that Symington was anxious to avoid an audit by a certified public accountant because it would likely have revealed the inflated values of his real estate assets. Nearly all of Symington's personal net worth was tied to those real estate values.

Instead, Symington wanted accountants to conduct a less rigorous review, known as a "compilation" of his finances, in which he would determine the value of his real estate projects--and thus his personal net worth.

Symington got what he wanted.
In late May 1987, Symington was involved in final negotiations with Dai-Ichi Kangyo Bank over a $77 million loan to build the first office tower and Ritz-Carlton hotel at Symington's Camelback Esplanade development.

According to Symington's handwritten notes dated May 20, 1987, Dai-Ichi appeared to be pressing for an accounting firm to conduct an audit of Symington's finances and issue a letter on its findings.

Symington was against the review.
"The CPA firm, in order to issue the letter, will, in the end, decide on the values of my property--not me!" Symington scrawled.

Symington appeared concerned that the accountants would subtract millions from his purported net worth of about $10 million. In fact, he worried that such an audit would put his net worth at less than $4 million--the limit at which several lenders, including Dai-Ichi, could declare him in default.

"I might disagree, for good reason, but, taken to the extreme, they could put me in default re 4.0 . . . ," Symington's notes state.

Instead, Symington's notes indicate he was prepared to insist that Dai-Ichi accept an accountant's compilation letter tied to his personal financial statement prepared on a Valley National Bank form.

"CPA will issue a typical compilation letter," his notes state. "Will do this for 2 yrs., then a review."

Symington also appeared ready to tell Dai-Ichi that other lenders had been content to accept his financial statement prepared on the Valley National form.

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