"This Has Wrecked My Career"

Jack Rose was a golden boy, a precocious businessman and political insider. Then he ran into a buzz saw at the Arizona Corporation Commission.

"I gotta put food on the table," West would say to explain his tactics.

West was forced to resign from the commission in June 1999 because he illegally held a securities license. Commissioners are not allowed to hold securities licenses because they regulate securities. (Governor Jane Hull replaced West with Bill Mundell, a moderate Republican attorney and former state senator who is said to have a calming influence on the warring Kunasek and Irvin.)

But before West was kicked out of office, embarrassing details about Jack Rose and Jim Irvin were beginning to surface.


In early January 1999, executives from Oneok traveled to Phoenix to cozy up to commissioners. Because Southwest Gas serves Arizona, it would be necessary to get the Arizona Corporation Commission's approval for the merger.

The officials met West and Kunasek at the commission office. But Irvin insisted on a lunch meeting at the Arizona Country Club. The executives claim they were surprised that the lunch was also attended by Jack Rose. Irvin announced that on matters relating to the merger, they could "go through" Jack Rose. Rose was more or less a "loaned executive" again, and he had entree into Oneok's offices.

Kunasek and West knew Rose was Irvin's point man on the merger as early as February 1999. Later, Kunasek would be blamed for sitting on the scandal for his own political advantage. Oneok officials, for instance, question why Kunasek did not warn them of his suspicions about Rose early on. To Kunasek's credit, he kept his mouth shut because there was really nothing illegal about Rose acting as Irvin's unofficial adviser. At the time, Kunasek didn't know about Rose's financial arrangement with Prudential.

Kunasek knew the merger was high-stakes: The company that acquired Southwest Gas would be the largest gas company in the United States. Southwest Gas had 1.2 million customers in mushrooming Arizona and Nevada.

Oneok offered to buy Southwest Gas at $28.50 per share. Southern Union, which had been wooing Southwest for months, announced that it would pay about $100 million more than Oneok -- about $32 per share -- for Southwest Gas. The Southwest Gas Board of Directors planned to meet in early April 1999 to consider which offer to accept.

Southern Union claims that prior to the key meeting, Rose and Irvin lobbied out-of-state regulators to favor Oneok over Southern Union. Rose and Irvin wanted to persuade the regulators to sign a letter addressed to the Southwest Board allegedly hinting that powerful commissioners from three states favored the Oneok deal, and that Southern Union would have a tough time getting regulatory approval for the merger.

Oneok hired two Arizona lawyers to assist with the potential merger: Michael Grant, a seasoned attorney with a sterling reputation who often appeared before the commission, and Mark Dioguardi, who sources say is a friend and associate of Jack Rose. Grant got the standard job -- working with commissioners and filing the necessary papers; and Dioguardi edited letters.

Those letters ultimately would be used by Southern Union to allege a pattern of racketeering, fraud and improper lobbying by Rose, Irvin and executives from Oneok and Southwest Gas.

No evidence has surfaced that suggests that Irvin stood to profit from the deal. And since Irvin isn't talking, except to profess his innocence through his attorney, we don't know what motivated him to get involved in the alleged scheme. Was he simply supporting his friend, Jack Rose? Did he know that Rose stood to profit from the deal? If Irvin knew about Rose's contract with Prudential, did he expose himself to criminal liability by joining Rose to lobby regulators? Or did he sincerely believe that Oneok was the superior suitor?

Rose knows all the answers, but he won't respond to specific questions about the case.

So the story of what happened next is unfolding in federal court.


On March 2, 1999, Oneok and Southwest formally filed papers asking the Arizona Corporation Commission to approve the merger.

On March 16, Rose and Irvin visited San Francisco with a draft letter to the Southwest Board. They wanted California regulators to sign the pro-Oneok letter.

The trip was a secret one. The day that Irvin and Rose visited San Francisco, Irvin's official calendar said he was at his commission office. And Irvin uncharacteristically failed to seek commission reimbursement for expenses. Months later, Irvin told the Wall Street Journal that Rose just "happened" to be in San Francisco, so he invited Rose along to his meeting with California regulators. But America West Airlines records show the two traveled from Phoenix on the same plane and sat in the same row.

Southern Union would later charge that the letter Irvin delivered to the California regulators, a letter that had been reviewed by Dioguardi and Oneok attorneys, was "false and fraudulent," that Rose and Irvin had corrupted the regulatory process against Southern Union to favor Oneok. The spin that Rose and Irvin allegedly employed was that Oneok was financially stronger than Southern Union, and would have fewer obstacles to getting regulatory approval.

But the San Francisco trip failed. Even after Irvin made a follow-up phone call, California officials ultimately chose not to sign the letter, fearing impropriety.

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