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"I think it is just about time to stand up to Mr. Manning, and that's exactly what I did and what I'm going to continue to do," Symington says after rising to his feet during his testimony four times in one day. "I'm not going to sit there and have him glower down at me. I'm going to stand up to him and I'm going to look him right in the eye and we're going to go at it."
After seven days of testimony under Manning's grueling -- although sometimes confusing -- questioning, it is clear that Symington submitted a personal financial statement to the pension funds that was riddled with errors and omissions.
"About the only truthful thing on his financial statement was his name and social security number," Manning says.
Symington admits there are mistakes on his December 31, 1989, personal financial statement, but he says the cumulative impact on his then-claimed $12 million net worth was minor. More important, he says, they were unintentional mistakes that were "never intended to hurt or harm anyone."
Manning alleges the financial statement inflicted tremendous harm on the union pension funds. Symington's personal financial statement, Manning says, was given to "induce" the funds to lend a Symington-controlled partnership $10 million in June 1990. In addition, Symington personally guaranteed to repay the loan, which paid off the construction lender for the Mercado retail and office development in downtown Phoenix.
The Mercado project failed from the start, and Symington's partnership defaulted on the pension fund loan in 1991. When the pension funds tried to collect on Symington's personal guarantee, Symington, who was by then governor, refused to pay, saying he was broke. The pension funds sued Symington and won an $11.5 million judgment in 1995 that, with interest, is now worth $18 million.
In September 1995, Symington offered to pay $285,000 to settle the debt and agreed to contribute 25 percent of his governor's salary to the claim. At that rate, it would have taken 600 years to settle the judgment. The pension funds rejected his offer.
Two days later, on September 20, 1995, Symington filed for Chapter 7 bankruptcy, claiming $26 million in debts and $69,000 in assets. Most creditors forgave his debts. The pension funds, however, vowed "to leave no stone unturned" to prove Symington defrauded the unions. The pension funds filed a bankruptcy civil fraud suit in 1996 in an attempt to block dismissal of Symington's debt.
The pension funds hired Manning, who has earned a national reputation for cracking complex financial fraud cases against bank swindlers Mario Renda and Charles H Keating Jr. Manning's expertise doesn't come cheaply, and the union pension funds have spent several million dollars on the case.
Manning's case is straightforward. He says the pension funds had the right to review and approve Symington's personal financial statement in the spring of 1990, and if they hadn't liked what they saw, they could have refused to lend Symington's Mercado partnership the $10 million. Symington, Manning alleges, knowingly gave the pension funds a materially false financial statement to make it appear he was worth millions when in fact he was in desperate financial trouble.
Manning also alleges Symington signed a personal guarantee to repay the loan knowing he neither intended nor had the ability to uphold the guarantee.
"They [pension funds] promised to make the loan on certain conditions being fulfilled, and those conditions were not honestly fulfilled," Manning says.
The 50-year-old Manning, who is rumored to have political ambitions himself, doesn't hide his disdain for Symington, whom he frequently refers to as "this guy." He marvels at Symington's ability to deflect questions with "stump speech" responses but vows to persist in his line of questioning.
"I'm going to get an answer from this guy until the judge tells me I can't ask the question anymore," Manning says.
Manning says many of Symington's explanations are based on "la-la land logic." He lampoons Symington's methodology for valuing real estate assets based on "future hoped-for values" as an approach more suitable to science fiction than high-stakes finance.
"I saw an episode of Star Trekone time where something similar was talked about but I have never seen it in real life," Manning says, taking a dig at one of Symington's favorite shows. "It's absolutely absurd."
Symington hired Phoenix attorney Rob Shull to craft his unique defense. (Ann Symington is footing the legal bill.) Symington's defense hinges on the assertion that the pension funds were locked into providing Symington the $10 million loan by a 1987 agreement. Symington claims his December 31, 1989, financial statement was essentially meaningless. Symington and Shull claim the pension funds were obligated to fund the $10 million loan -- as long as Symington was solvent.
"They knew they had to fund the loan, basically no matter what. They were locked in," Symington says.
In any case, Symington says, the pension funds did not rely on his financial statement. Instead, he says, the pension funds made the loan based on the value of the already constructed Mercado -- a project built nearly entirely with union labor.
Whether the pension funds reasonably relied on Symington's financial statement is an important issue. If Symington can prove the pension funds did not reasonably rely on his financial statement before making the loan, his chances for victory increase considerably.