He's Back

Ex-governor Symington seems blissful despite the damning evidence that mounts at his bankruptcy trial. What's up his sleeve?

"No lender that was serious about reunderwriting the credit would sit through a meeting like that and march forward without asking its borrower or guarantor detailed financial information," Symington says in a taped interview.

"The fact of the matter is there were no questions. And I put everything on the table. When I say everything, I mean we discussed the very simple fact, it was a very simple statement, that I did not have the liquidity," he adds.

Others familiar with the June 8, 1990, meeting have a different interpretation. Manning says Symington did not indicate that he personally was unable to pay the $1.2 million shortfall.

Timothy Archibald
Symington lawyer Robert Shull says mistakes were made, but it doesn't matter.
Leah Fasten
Symington lawyer Robert Shull says mistakes were made, but it doesn't matter.

Instead, Manning says Symington indicated that the real estate partnership that controlled the Mercado was incapable of covering the gap. That made sense, Manning says, because the Mercado was just beginning to lease space and was not generating income for the partnership.

Manning claims that Symington never told the pension funds that he personally could not cover the $1.2 million gap. If he had, Manning says, the pension funds would have canceled their loan.

"He told White that [on June 7], but he never told the pension funds," Manning says.

Former federal prosecutor David Schindler, the lead attorney in Symington's criminal trial, also says the critical meeting between Symington, the pension funds and First Interstate focused on the Mercado partnership's attempts -- not Symington personally -- to avoid covering the shortfall.

"His real estate development partnership was looking not to take money out of its pocket," Schindler says.

The conflicting views of the meeting may be resolved with the testimony of Sam Coppersmith, an attorney who represented the pension funds at the June 8, 1990, meeting. Coppersmith is a former congressman.

Both Manning and Symington's attorney, Rob Shull, believe Coppersmith's testimony will strengthen their cases. Manning says in 1990 Coppersmith was a key adviser to Democratic gubernatorial candidate Terry Goddard, making it unlikely that Symington, a Republican, would tell Coppersmith that he was having severe personal financial problems.

"The truth is, no one told Coppersmith or anyone else in the pension fund that Fife was unable to pay on that gap in June of 1990," Manning says.

Shull says he expects Coppersmith's testimony to support Symington's version of the events.

"I find some potential sweet irony in Mr. Coppersmith testifying for us," Shull says.

While there remains some question over how much the pension funds knew about Symington's financial condition in early June 1990, there is no doubt First Interstate Bank understood he was in trouble.

First Interstate Bank required Symington to submit an amended personal financial statement to the bank on June 26, 1990, three days before the pension fund loan was scheduled to close. While the new statement still reflected a net worth of $12 million, Symington attached two important disclaimers.

First, Symington amended the standard certification language attesting that the information on the statement is truthful. Instead, Symington told First Interstate Bank that his financial statement was a "best efforts" evaluation of his financial condition. Symington alerted the bank that the "current depression in the real estate market makes it difficult to determine real estate values, thus any evaluation is highly subjective."

Second, Symington attached a letter from a family attorney who told the bank that Symington's purported readily marketable securities were indeed locked up in four trusts and could not be used to repay Symington's debts.

Symington, however, did not pass along the same disclaimers about "highly subjective" real estate values to the pension funds, nor did he tell the pension funds that the $800,000 in securities were untouchable to creditors.

Manning asked Symington why he didn't provide the pension funds the same information about his financial statement as he gave First Interstate Bank three days before the pension funds issued the $10 million loan.

"The pension funds never asked me for it, so I never provided it," Symington testified.

Instead, Symington signed a personal guarantee on June 29, 1990, promising to repay the $10 million loan. In the guarantee, Symington states that he was not aware of any "material adverse changes" to his financial condition and that his "financial condition was sound."

Symington also signed a borrower's certificate stating that "no material adverse change" has occurred in his financial condition from the time the original loan commitment was signed in 1987 and the funding date of June 29, 1990.

The pension funds issued the loan to Symington believing they were ethically and legally required to "fund so long as the Borrower complied with all the terms of the loan commitment," according to a July 9, 1990, letter from McMorgan & Company to trustees for the union pension funds.

Manning claims Symington lied to the pension funds about this financial condition on June 29, 1990, which constituted a clear violation of the loan commitment provisions.

Symington's actions the ensuing months support Manning's contention.

Less than two months after the pension-fund loan was issued, Symington submitted another December 31, 1989, financial statement, this time to Security Pacific Bank. The statement was identical to the financial statement submitted to the pension funds showing a $12 million net worth, except for a one-page disclaimer Symington attached.

Blaming a real estate depression, Symington warned the bank that his net worth was "not an accurate statement of my financial condition as of August 23, 1990." Symington told the bank that the "value of the assets and net worth shown on the financial statement are now materially and dramatically overstated."

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