Bankers Dozin'

Testimony at the governor's criminal trial and a new civil complaint suggest that First Interstate helped Symington dupe other lenders

Jim Cockerham's reluctant testimony during the fifth week of Governor J. Fife Symington III's criminal trial exploded yet another Symington myth: that he was a successful developer who got blindsided by a collapsing real estate market.

Not so, testified Cockerham, who was chief financial officer of The Symington Company. In reality, nearly all of Symington's real estate projects were losing money years before the Arizona real estate market plunged off the map in the late 1980s.

Last week was a miserable one for Cockerham. Day after day, the accountant was forced to dredge up more damning evidence supporting the federal government's 22-count indictment against Symington.

Cockerham's testimony provided insight into The Symington Company's internal operations and Symington's strategy to keep the business afloat.

Combined with allegations made in a civil lawsuit filed June 6 in Maricopa County Superior Court by a consortium of union pension funds who lent money to Symington's failed Mercado project, Cockerham's testimony suggests that Symington was the architect of a protracted Ponzi scheme.

As one real estate project after another faltered, Symington made a crucial decision. Rather than pulling back and riding out the vagaries of the marketplace, Symington pushed forward, continuing to build more office buildings in a glutted market.

His company raked in development fees as the buildings were built, and later gleaned management and leasing commissions from them. Symington clearly believed that if he could keep building throughout the real estate downturn, he might weather the storm.

But to do this, Symington had to convince lenders that his personal finances were stable. Cockerham testified that he and Symington were aware that the real estate projects were failing.

Nevertheless, Cockerham testified that he didn't know what values Symington was placing on those buildings when Symington submitted his personal financial statements to lenders.

The reason? The real estate projects were held in Symington's name, not The Symington Company's. Therefore, Cockerham and other Symington Company officials never had reason to review Symington's valuations.

The government was expected to continue questioning Cockerham this week, focusing on the project that has caused Symington the most trouble--the Mercado.

Meanwhile, the union pension funds' civil suit accuses First Interstate Bank (now Wells Fargo) of defrauding the pension funds, which lent $10 million to Symington for his Mercado project.

Wells Fargo failed last month to obtain a court order preventing the pension funds from filing the fraud suit. Wells Fargo spokesman Dan Conway did not respond to New Times' requests for comment on the pension funds' suit.

The suit was filed by Phoenix attorney Michael Manning, who has doggedly pursued Symington since the governor filed for bankruptcy protection in September 1995. Manning has filed a four-count fraud case against the governor in U.S. Bankruptcy Court seeking to prevent Symington from erasing a $12 million debt owed to the pension funds.

Manning's latest suit is well-documented and provides further evidence that Symington intended to mislead lenders to keep his real estate treadmill spinning and his political ambitions alive.

Cockerham considers Symington a friend. And why not? Soon after Symington was elected governor in 1991, he gave Cockerham a plum job in state government. Cockerham was promoted last month to an $87,269-a-year state job as an assistant director at AHCCCS, Arizona's health-care agency for indigents.

Cockerham's lawyer, Phoenix attorney Ivan Mathews, is in Symington's camp as well, also representing Symington's former secretary, Joyce Riebel, who had a joint defense agreement with Symington.

Testifying has become old hat to Cockerham. He appeared eight times before the federal grand jury that indicted Symington, and was subjected to lengthy interviews with government investigators.

Not surprisingly, Cockerham admitted to the jury last week that he would rather not be in U.S. District Judge Roger Strand's courtroom. But there he was, on the witness stand, carefully answering each question posed by assistant U.S. attorney George Cardona.

Cockerham testified that nearly all of Symington's real estate projects were floundering by the time he joined Symington's real estate development company in July 1985. Cockerham's job was to bail water.

To do that, Cockerham generated detailed financial reports on each project and provided regular updates to Symington. The reports included loan balances, appraisals, cash-flow updates, leasing rates, vacancy rates, long-term projections and offers to buy and sell the various projects.

Cardona presented evidence to the jury showing Symington's handwriting on several of Cockerham's detailed reports. Federal prosecutors contend that Cockerham's analyses provided Symington with precise information that Symington could have--and should have--disclosed when he prepared numerous personal financial statements for lenders.

Instead, prosecutors allege Symington defrauded lenders when he disregarded or suppressed detailed financial information that showed his share in the various projects was worthless. Instead, prosecutors allege Symington inflated the market values of his buildings and understated the loan balances on them to manufacture an illusory net worth exceeding $10 million.

Cockerham told the jury that he never saw Symington's personal financial statements, although he frequently forwarded the statements to lenders. Symington's financial statements, Cockerham testified, were always given to him in a "sealed envelope."

Cockerham also revealed how unlikely it was that Symington would ever profit from his real estate projects. Symington, Cockerham explained, was at the end of a long line of people who would get any profits. Symington did not receive any income from any of the nine real estate projects Cockerham has testified about.

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