Prez House Stench
Arizona State University failed to release crucial information related to the controversial sale of the ASU president's house when it didn't give New Times the transcript of a telephone call from a real estate broker who alleged serious misconduct in the sale of the property.
Rather than coming clean about its failure to comply with my May 2 public records request for all documents related to the sale of the house, ASU is now demanding that New Times make myriad unwarranted corrections to my original column on the sleazy real estate deal that shortchanged taxpayers more than half a million dollars ("Bleak House," June 8, 2006).
"ASU hereby demands that the New Times timely correct its false statements as required under A.R.S. S12-653.03," ASU General Counsel Paul Ward thundered in a June 28 letter to New Times. (An excerpt from that missive leads the Letters section of this week's edition.)
I've got bad news for you, Paul.
First of all, the statute you cite was ruled unconstitutional by the Arizona Supreme Court in 1986. So, go back and pound your law books.
Second, New Times, based on the facts at hand, stands by the June 8 column. (An earlier June 16 letter from ASU public affairs officer Terri Shafer requesting corrections and my point-by-point response are attached.)
A quick recap: As I reported last month, ASU sold the property in August 2005 for $1.375 million to John Bebbling, a prominent Tempe businessman with close ties to Tempe city hall and a longtime ASU booster.
Bebbling quickly obtained city approval to build eight luxury homes on the two-acre site without being subjected to potentially contentious public hearings from neighbors concerned about a higher-density development next door.
Bebbling then razed the home and, in January of this year, formally sold the property to a business partner, Phoenix custom home builder JC & Sons, for $2 million.
Bebbling grossed a $625,000 gain on the deal, which was put together by Tempe real estate agent Steve Tseffos. ASU contracted with Tseffos to sell the property after university officials provided Tseffos with inside information prior to ASU seeking public bids for brokerage services.
ASU sold the property to Bebbling, even though former state Representative Steve May submitted the highest net offer. The sale of the house to Bebbling handed Tseffos a $55,000 commission. Tseffos, according to his contract with ASU, would have only received a $27,080 commission if the property had been sold to May.
I submitted a detailed request for public records to ASU on May 2 seeking all documents related in any way to the sale of the property. I went through hundreds of pages of university documents and engaged in numerous e-mail and telephone conversations with ASU's Shafer concerning my request.
Despite my thorough review and requests for additional records, ASU failed to release a two-page transcript of a September 28, 2005, phone call from a Tempe real estate broker that would have shed glaring light on the president's house situation.
I obtained the transcript on June 28 only after having submitted a second request for records on June 15. That request was spurred by calls I received from several readers of my June 8 column who provided additional information.
The transcript documents a voice mail to ASU general counsel Ward from Mike Ratliff, a real estate broker who lives near the president's house property. According to the transcript, Ratliff alleged that there was "definitely some subterfuge" in the sale of the property at 2400 South College Avenue in Tempe and that he thought "John Bebbling was in cahoots with Steve Tseffos".
Neither Bebbling nor Tseffos would respond to questions I posed to them.
Remember, Ratliff complained to ASU months before my original column was written. Ratliff's voice mail should have triggered an immediate investigation of the sale of the property. Instead, ASU chose not to act on Ratliff's serious allegations of "fraud" and "collusion" and then violated the state public records law by at least initially withholding the Ratliff transcript from New Times.
Shafer denies that ASU failed to disclose the transcript to New Times in a timely manner.
"The university did not withhold this document," she claims in a June 28 e-mail when she finally released the transcript. "The Office of General Counsel forwarded it to me after you told me you finished your story. I did not forward it because I thought you no longer needed it."
Now that's laughable.
Ward and his minions in the Office of General Counsel reviewed my public records request in early May. ASU attorneys surely knew that Ratliff's phone call was relevant to my public records request, yet they didn't release it until after my column was published nearly five weeks later.
Could it be that Ward buried the transcript because he knew it was extremely damaging to ASU's position and raised questions about the legality of the transaction?
Ratliff's voice message to Ward details two conversations he had with Tseffos during the time that the house was listed for sale in June and July 2005.
"In my opinion, [Tseffos] engaged in dual representation, engaged in collusion and also fraud," the transcript of Ratliff's voice mail states.
In the initial conversation, Ratliff says Tseffos "became extremely bellicose" and "slammed the phone down in my ear" after Tseffos learned that Ratliff expected to earn a commission if his client bought the property.
This, of course, would have meant less money for Tseffos. According to his contract with ASU, Tseffos would receive a 2 percent commission from ASU for selling the property and a 2 percent commission if the buyer was not represented by a broker. Bebbling was not represented, at least not formally, by a broker.
Ratliff called Tseffos a second time. And once again, Ratliff tells Ward, Tseffos brushed him off.
"He told me he didn't need my help," the transcript states.
The transcript indicates that Ratliff then made an offer to Tseffos to buy the property for $500,000 more than the list price of $1.5 million.
"I made him a verbal offer of two million dollars on the piece; told him it was my standing offer. I said that if nobody beats that I expect to hear from you," Ratliff says in his voice mail to Ward.
Ratliff then tells Ward he never heard back from Tseffos, but later learned that the house had been sold to Bebbling for far less. And, Ratliff says in the voice mail, Bebbling had already resold the property for $2 million.
Drawing an important conclusion, Ratliff says in his voice mail that he believes Tseffos "directed [the sale] to Bebbling in an effort to get a re-list on the backside and participate in a flip."
In other words, Ratliff is alleging that Tseffos had already reached an agreement with Bebbling to sell the president's house to him and then assist Bebbling with the resale of the property to JC & Sons, at which time Tseffos could collect another fee and Bebbling would pocket a handsome profit.
Ratliff acknowledges in the voice mail that he has no proof this is what happened, but says, "I would suspect that if somebody got on top of this and endeavored to create a paper trail on the various transactions that took place, they would quickly find out there was some impropriety there."
If there was impropriety, the result was that ASU should have received $2 million for the property if Tseffos had agreed to Ratliff's offer and Ratliff's buyer closed the deal. Instead, it only got $1.375 million.
"Tseffos has clearly violated his fiduciary responsibility to the Board of Regents and Arizona State University," Ratliff's transcript states.
Bebbling refused to answer my question of whether Tseffos represented him or received any compensation in connection with the resale of the property to JC & Sons. But I did learn that Don Vander Giessen, the broker typically used by JC & Sons for its real estate transactions, did not participate in the deal with Bebbling.
Vander Giessen tells me he did not handle this deal because Bebbling had approached JC & Sons on the sale of the property.
It is uncertain when Bebbling approached JC & Sons, but there is no doubt the two were working closely together soon after Bebbling closed on the property in August.
Tempe records, for example, show Bebbling and JC & Sons were submitting joint applications on the property, including detailed plat maps that were completed on October 8, two months after ASU closed the house sale with Bebbling. JC & Sons also notified the city on October 25 that "it is our [emphasis added] intent to remove the existing structure and develop the property into an eight home subdivision."
Ratliff's voice mail obviously raises very serious questions about the propriety of the sale.
In an interview, Ratliff says ASU called him a couple of times about his complaint, but that no one at the university appeared to take it seriously.
"I got nowhere with anybody down there," Ratliff tells me.
Ratliff says that Tseffos should have accepted his offer and begun the process to draw up a contract.
"A verbal offer between brokers is solid," Ratliff says.
ASU's Shafer says the university conducted an investigation based on Ratliff's voice mail.
Well, that's because Tseffos blew him off!
Ratliff isn't the only Tempe real estate broker claiming foul on this deal.
Treg Loyden, who lives across the street from the president's house and owns a real estate development company, also says Tseffos refused to discuss his offer to buy the property.
"[Tseffos] said that any offer I brought in would be matched by his own buyer. It was clear to me the fix was in," Loyden states in a June 9 e-mail to New Times.
Loyden says in an interview he was willing to pay $1.5 million.
There are plenty of indications that something went afoul in the sale of the ASU president's house. Rather than making noises about suing New Times if it doesn't make unwarranted corrections, ASU should consider suing Tseffos, who appears to have placed his personal financial interests ahead of his client's.
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