Bleak House

How two insiders made a tidy profit on the sale of Arizona State University's president's house

Honeycutt stated in an e-mail that she wanted Tseffos because "he has a lot of contacts" and "used to work for [former attorney general] Grant Woods" and "I know he's connected."

Tseffos is indeed connected.

The ex-East Valley Tribune reporter once served as former attorney general Grant Woods' press secretary during the 1990s. Angered over this newspaper's 1993 gag in which it photographed Woods, a notorious publicity hound, buying a hot dog from an escaped felon, Tseffos threatened to ignore the Arizona Public Records Law and discard requests from New Times reporters seeking public records.

Tseffos later resigned from the Attorney General's Office under a cloud of accusations of gambling and misappropriating funds stirred up by Woods' political nemesis, former Maricopa County Attorney Rick Romley. Tseffos denied wrongdoing and no charges were ever filed against him.

Out of the limelight, Tseffos turned his attention to real estate, and quickly assembled properties in the historic Maple-Ash neighborhood in Tempe. His plans for high-density development infuriated neighbors, who began purchasing property to keep it out of Tseffos' hands.

ASU's Shafer says it was Tseffos' familiarity with residential property near the campus that led Bott to contact Tseffos and show him the appraisal on one of the most unique development opportunities near downtown Tempe.

I contacted Royce and Mark Engelsman, two of the brokers who also submitted bids to market the president's house. They were not happy to hear that Tseffos had been given the inside scoop and reviewed the appraisal prior to submitting his bid for the job.

"He had the benefit of the appraisal?" Royce replied angrily when I told her what happened. "I did it the old-fashioned way and worked my butt off to try to find the value of that property. That's a huge, huge, huge advantage."

Royce told me that she spent weeks trying to determine the value of the property -- something Tseffos already had a leg up on prior to submitting his proposal to market the property.

"I'm sorry, that's not fair. That's not right," she said.

Engelsman said he had no idea that ASU already had an appraisal in hand. In fact, he says he was strongly urging the university to prepare an appraisal as soon as possible. The fact that Tseffos already had reviewed the appraisal prior to submitting his bid incensed Engelsman.

"That would be a major, major advantage," Engelsman tells me. "The whole thing smells big-time. It really does."

Tseffos' bid included a provision that he would accept a 2 percent commission for his role as representing the seller of the property and an additional 2 percent commission if the successful buyer was not represented by a broker. This provision would later prove to be a crucial clause in the deal that would transpire in the summer of 2005.

After several months of delay, the house was put on the market in early June 2005 with a selling price of $1.5 million. The offering price was well above what could be expected for a single-family residence; it would likely require a buyer to develop at least some of the property with new homes.

By late June 2005, Tseffos had received at least two legitimate offers for the property. Steve May, the former state legislator, submitted a bid of $1.15 million through real estate agent Timothy Norris. John Bebbling, who was not represented by a real estate agent, submitted a bid of $1.1 million.

Tseffos was now in position to receive a 2 percent commission from ASU for selling the property and an additional 2 percent commission if Bebbling was the buyer because Bebbling was not represented by a real estate agent in the deal.

Rather than accepting the high bid submitted by May, ASU rejected both offers and requested a second round of bidding beginning at a minimum of $1.3 million.

May and Bebbling submitted new bids on Monday, July 11, 2005, according to e-mails I obtained from ASU. This time, May submitted a bid for $1.355 million; Bebbling's bid came in slightly higher, at $1.375 million. Both bids were delivered to Tseffos, who then gave them to ASU's Bott.

Interestingly, May's offering price was typewritten on a bid contract while Bebbling's was handwritten. This is odd because during the first round of bidding, both May and Bebbling submitted typewritten offers.

The next day, Tseffos delivered the two offers in sealed envelopes to ASU real estate officials. Shortly after 5 p.m. on July 12, May's real estate agent called and told Tseffos that May would offer $10,000 more than any other bid up to $1.5 million.

"I called him and told him we wanted to put in an escalation clause," Norris, May's real estate agent, tells me. "His response was, 'Why aren't you paying $1.5 million?'"

Tseffos did not relay Norris' offer on behalf of May to ASU officials. Instead, Tseffos stated in a July 12 e-mail to ASU real estate director Bott that Norris was asking to "add in an escalation clause allowing him to pay $10,000 over any $1.5 million offer."

Norris tells me Tseffos misrepresented his offer because no one had submitted a bid over $1.5 million, thereby making the escalation clause meaningless. Tseffos did note in his e-mail to Bott that it appeared that May would pay $1.5 million if ASU wanted to continue the bidding past ASU's self-imposed July 12 deadline.

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