Shallow Victories

Symington's lawyers seem to be scoring points--until the record is examined

For most of the past seven weeks, Governor J. Fife Symington III has spent his days in U.S. District Court busy scribbling in a black, loose-leaf binder, seldom raising his head.

But on Friday, June 27, Symington leaned back in his chair, stared at the witness and jury and thoroughly enjoyed himself.

The third pillar of his grand defense plan was taking shape, and he and his attorneys could barely suppress their glee.

After attempting to shift blame for Symington's many inaccurate financial statements to his longtime secretary, Joyce Riebel, and former chief financial officer, Jim Cockerham, Symington's defense was now attacking the work of a dead man.

Beaming with delight as the lunch recess was called, Symington stood up from his defendant's chair and leaned over to his defense attorney to express his pleasure.

"There it is," Symington said to John Dowd, one of Symington's three defense attorneys from the high-powered Washington, D.C., firm of Aiken, Gump, Strauss, Hauer & Feld.

The "it" that so excited Symington was testimony by former Coopers & Lybrand accountant Katherine Wrigley, who had avowed that she consulted her firm's tax department in the late 1980s when she was assisting Symington in the preparation of his personal financial statements.

Symington's primary defense in his 22-count criminal trial is that he relied on Coopers & Lybrand personnel to alert him to any errors in his 1987, 1988 and 1989 financial statements. Symington's attorneys argue that once his accountants checked off on the statements, Symington had every reason to believe they were accurate.

Witnesses have already established that Coopers & Lybrand's tax department had detailed business records of The Symington Company and Symington's personal tax returns. Close examination of those records by Coopers & Lybrand personnel should have revealed Symington's financial statements were filled with inaccuracies.

Symington, Dowd has repeatedly claimed, was unaware of the mistakes because he was preparing the financial statements from memory. Now, Symington was hearing testimony that Wrigley indeed had asked the chief of the tax department to look at Symington's financial statements for "a reality check."

Wrigley turned to John Yeoman, Symington's friend and tax accountant who later became Symington's gubernatorial campaign treasurer.

Yeoman, Wrigley testified, "was familiar with much more of Mr. Symington's personal affairs than anyone" in Wrigley's audit department.

Wrigley testified that Yeoman looked over Symington's 1987, 1988 and 1989 personal financial statements, and only one time did he make an adjustment--a relatively minor one at that--to what Symington had prepared.

To Symington's defense team, Wrigley's testimony about the tax department's involvement was a godsend.

"Now, if they have all this information and only come back and correct [one partnership], and that's conveyed to Fife Symington, don't you think he's entitled to believe everything else is okay?" defense attorney Terry Lynam told reporters outside the courthouse.

No one has testified about how closely Yeoman examined Symington's financial statements, although Wrigley testified that Yeoman returned the 1987 statements to her in "less than two hours."

Yeoman won't testify. He was killed in April 1996 after running a stop sign and being struck by a speeding, three-quarter-ton pickup truck.

Delighted as Symington and his hired guns were last week, other evidence undercuts their contention that it was a naive Symington who blindly accepted Coopers & Lybrand's stamp of approval on his financial statements.

Symington's handwritten notes reveal he understood exactly what was at stake--and what he wanted to avoid at all costs--when he hired Coopers & Lybrand in the fall of 1987.

By the spring of 1987, Symington's real estate business was faltering. It needed another injection of cash. And the only way that would come was to build another building and collect developer fees.

Symington's potential cash cow was the Camelback Esplanade. After being spurned by Arizona lenders who refused to lend money on such a massive project as the Phoenix real estate market was sliding into recession, Symington turned to Japan.

In May 1987, he was in the final stage of negotiations with two Japanese corporations that would provide more than $100 million to get construction rolling, and, more important, start generating developer fees.

The principal lender was Dai-Ichi Kangyo Bank, one of the 10 largest banks in the world at the time. Evidence introduced in the trial shows that while Dai-Ichi Kangyo Bank was willing to lend Symington $79 million for the first phase of the project, it also wanted assurance from Symington that he had sufficient wealth to chip in up to $9 million if needed.

The bank insisted that Symington maintain a minimum net worth of $4 million throughout the term of the construction loan, or face default. This requirement didn't pose an immediate problem for Symington because he was reporting a net worth of about $10 million on the financial statements he prepared and circulated to Arizona lenders.

But Dai-Ichi wasn't satisfied to accept the financial statements prepared by Symington. Dai-Ichi wanted the statements reviewed by a major accounting firm that would issue a letter certifying the accuracy of Symington's statements to the bank. Unlike the net-worth requirement, this stipulation was a huge concern for Symington.

His handwritten memos dated May 20, 1987, reveal the quandary Symington faced if his personal financial statement was subjected to a formal accounting.

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