By Ray Stern
By Ray Stern
By New Times
By Amy Silverman
By Stephen Lemons
By Stephen Lemons
By Monica Alonzo
By Chris Parker
Fiesta Flowers opened for business in late 1983.
Jennifer Spies reconciled with Ortloff months later and joined him in Tempe. The pair lived in a home on West Cornell Drive with Ortloff's brother, Michael, about 10 minutes from the flower shop.
Next to the new store was a Subway restaurant that Rick Schibler had opened with his then-wife Judy in 1983 — the chain's first franchise in Arizona.
Schibler also took on the responsibility for finding potential franchisees around the state, which he still does.
Ortloff approached Schibler about opening his own Subway. Schibler later said he'd rejected the idea because Ortloff was "a little immature" and didn't seem to have the necessary capital.
But that changed when Kathleen Smith came into the picture in February 1984. That month, Ortloff and Kathleen met with David Smith at his home in Pinetop.
Carol Smith later told a private investigator on tape that Kathleen "really didn't want to do business with her father because, quite frankly, she didn't trust him."
But the young woman desperately needed David Smith's financial help in getting the venture kick-started.
At that meeting, Ortloff promised to cover the initial $7,500 Subway franchise fee. In turn, Smith agreed to co-sign a $50,000 line of credit with First Interstate (with $35,000 immediately available for withdrawal) to cover the extensive start-up costs.
Ortloff borrowed the $7,500 from his paternal grandfather, Anthony, in late February. (The theft by Ortloff of another $7,500 from Anthony came later.)
ROKS was incorporated with the state of Arizona in March 1984, with Kathleen listed as president, Ortloff as secretary, and David Smith as a director.
That month, Ortloff and Kathleen went to Connecticut for a seminar on how to operate a Subway shop
Kathleen and Ortloff had identified what they thought would be a perfect site for their restaurant, at Dobson and Broadway.
But, according to Ortloff, Carol Smith, and others, Rick Schibler convinced them that a new strip mall at University and Country Club in Mesa would be far better.
Kathleen later learned that Schibler snatched up their preferred site — the one he'd pooh-poohed — for a member of his own family. Kathleen told her mother that she had confronted Schibler about the deception.
"She was more than annoyed, yes," Carol Smith said in 1985. "She felt that the people at [Subway] corporate headquarters should know how [Schibler] was acting."
She said she didn't know if Kathleen ever contacted Subway, but was certain the daughter would have gotten in Schibler's face about it.
Carol Smith also said Kathleen and Schibler had "spent some time looking for locations and also had dinner on several occasions."
Donna Lowe, a close friend of Kathleen's, said in 1985, "Rick had made a few advances toward Kathleen, and Kathleen kind of turned them down. I had one conversation with Rick the whole time Kathleen was getting in the Subway business.
"I said, 'I'm a friend of Kathleen's. How you doing?' And he goes, 'Oh, you're a friend of that bitch' . . . And he goes, 'I'm only joking, I'm only joking.' That kind of took me off-guard when he said that."
That allegedly happened a few weeks before Kathleen was murdered.
Rick Schibler negotiated the lease for the ROKS Subway in Mesa, with a target opening date of October 1, 1984.
In August 1984, Kathleen Smith met with a New England Life agent about buying $25,000 each in "key man" insurance policies on her and Robert Ortloff's life.
It works like individual life insurance, in that when an insured dies, the policy pays out a benefit. But instead of an individual insuring him or herself or a family member, the business owns the policy and pays the premium, $37.15 monthly in this instance.
New England Life approved the key-man policies, which went into effect in September 1984.
Even the Smiths later conceded that the policies had been a boilerplate business move. But the family and police long have suspected that a $100,000 life insurance policy Ortloff took out on Kathleen's life in late August was part of his motive for murder.
Kathleen signed a State Farm policy, which listed Ortloff as sole beneficiary. He had no such reciprocal insurance policy on his life with Kathleen as beneficiary.
"She just thought it was really unnecessary," Carol Smith said of Kathleen's attitude about the additional coverage.
But Ortloff's mother, Claire, told police that Kathleen had wanted the larger policy to ensure that if something happened to her, Ortloff would have enough money to keep the business out of her father's hands.
State Farm issued the $100,000 policy in Kathleen Smith's name on September 13, 1984, three weeks before the murder.
Kathleen continued to take classes at Mesa Community College and worked four hours a day at a real estate office. She also started dating Tempe resident Sam Caley Jr.
Robert Ortloff and girlfriend Jennifer Spies were working at the flower shop as he sorted out how he'd find time to run two businesses, Fiesta Flowers and the new Subway.
That May, Ortloff had repaid his grandfather the $7,500 he had borrowed from the older man for the Subway franchise fee. The repayment came via a check written on the ROKS account and signed by Kathleen Smith.