By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
"The safeguards are in place," Napolitano says. "And no matter where things went in the past, the fact is they have excellent people making good plans that are good for Buckeye."
"I haven't seen a single Englishman since then," Hull says. "So things are moving forward just fine."
As Phoenix Holdings II was out courting Hull and Buckeye, Robert Burns was in court battling his wife.
And as it turned out, Paige Burns, a soft-spoken, affable, religious mother of two, was arguably a tougher foe than the U.S. government.
The couple's marriage had eroded through the troubles of the 1990s. They filed for divorce in 1997. She wanted to return to Alabama and start over. In a 1998 Arizona Republic story, she says her husband told her he "just wanted to make a hundred million dollars in the next five years."
But Mrs. Burns sensed something else was going on. She hired a private eye. She soon had evidence that her husband had a girlfriend.
The fight turned ugly. Paige sought $10,000 a month in spousal support plus $4,000 more for the children. Robert said he didn't have that kind of money.
But Paige had watched his lifestyle -- jet-setting around Europe, among other things, shopping trips to Valentino's boutique in Monaco and Charles Jourdan clothier in Paris, a stay at a swanky Italian resort.
In the Republic article, Burns' defamation lawyer, Kraig Marton, denied his client was living gratuitously well. He told the Republic that Burns' travel and expenses were business-related and paid for by employers. He said Burns did not have an ownership interest in any corporations, partnerships or trusts that hold property. And he once again reiterated a key point in the Burns saga: "What is significant about this is that nothing has ever come from any of those allegations" from the criminal investigations of Burns.
Mrs. Burns hired an accountant, Craig Reinmuth, to tear apart Burns' books looking for the assets she knew he had. They had an advantage over Burns' other creditors: She had a right to 54 boxes of privileged attorney records.
Burns fought his wife's attempts to explore his books. In particular, he fought attempts to look at the books of Phoenix Holdings II.
But Reinmuth had uncovered a critical piece of evidence showing Burns owned a trust that the developer had earlier said didn't exist. That trust owned most of a limited partnership called Phoenix Residential Land Holdings which in turn owned 99 percent of Phoenix Holdings II.
Court records show the judge in the case fined Burns $25,000 for abuse of the discovery and litigation process for not disclosing his ownership position in the trust.
Reinmuth got the Phoenix Holdings II books. He found assets. After more than a year of investigation, the accountant pieced together a dizzyingly complex matrix of Burns' entities.
Paige Burns settled for only a little more than $3,000 a month in child support, saying she was tired of the fight and pining to return to her friends and family in Alabama.
But Reinmuth's financial road map, on file in the divorce case, had the FDIC salivating.
So, in 1999, the FDIC went after Burns again. FDIC officials contended that although Burns owed millions of dollars, he had failed to make any substantial payments to his creditors. And he has never filed for bankruptcy.
Instead, the government said in a complaint filed against Burns, the developer protected and hid millions of dollars in assets from his creditors. "His plan is carried out through a complex web of limited liability companies and partnerships, closely held corporations, family-owned trusts and friends acting as nominees," the FDIC said.
The flagship entity for Burns' current business, and his most significant asset, was Phoenix Holdings II, the complaint alleged. And his most ambitious project was a "downsized resurrection of the failed Sun Valley development," it said.
Through Phoenix Holdings II, the government says, Burns participated in a multitude of real estate ventures, but rarely took direct ownership in any of them, instead creating companies and joint ventures to purchase or participate in transactions.
"Through Phoenix Holdings II, Burns manages and promotes these projects in exchange for consulting fees and profit interests once the property is ultimately sold," the complaint says. "A profit interest of 50 percent after expenses is common."
On September 2, 1999, a U.S. District Court judge approved the FDIC's motion for a temporary restraining order, which prohibited Burns and numerous associates from moving assets from any of the entities the government believed to be tied to Burns, including Phoenix Holdings II.
Sources close to the case say the temporary restraining order was never fully enforced by the FDIC. If it had been, Phoenix Holdings II would have been crippled, they say. However, the FDIC had an interest in keeping Phoenix Holdings II healthy. After all, if Burns entities such as Phoenix Holdings II were healthy, the government had hopes of getting some of its money from him.
In March, the FDIC and Burns began settlement discussions, and reached an agreement this summer, according to Burns' testimony in yet another lawsuit.
In a deposition in a defamation case Burns had filed against a Sedona man (their beef involved a right-of-way dispute in Sedona), Burns said he owed the government $2 million. Sources close to the settlement said the government also receives a percentage of certain sales made by some Burns-related entities.