Sheriff Joe's Real Estate Game
How's this for a get-rich scheme?
You get elected to public office, say, sheriff.
You start scowling like John Wayne and jam the jails full. You put the cons in stripes and house them in surplus Army tents, where four guards oversee 1,800 inmates.
Your detention officers beat up prisoners, while feeding them food unfit for a dog. A paranoid public afraid of crime is grateful because it naively believes your abusive policies will scare people from committing that next robbery and shooting.
Who cares if this is all baloney?
You drum up a few death threats along the way, because that generates free publicity chronicling what a bad-ass you are.
Who cares if innocent people go to jail?
The voters love it. Even as your office is besieged by tens of millions of dollars in lawsuits stemming from beatings and deaths in your Mother of All Dungeons.
The dead guys were druggies anyway, your public relations machine claims. And, hey, that's what the county's insurance policy is for -- settling claims of distraught survivors.
What matters most is that your image as "toughest sheriff in America" has made you into a valuable commodity.
And that image is worth a lot.
Now you're making bank. Giving speeches. Writing books. Selling movie rights. Getting free trips to posh resorts scattered across the country. Hawking novelties like bobblehead dolls, and pink underwear that you autograph personally.
Suddenly, a lot of money starts rolling through the sheriff's office doors. Bags full of cash land on your chief deputy's desk. No one's keeping track.
Any time county auditors come over snooping inside your operation, you chase them off and refuse to provide access to the books. No one's going to get an unfettered look at the financial operations of your $140 million-a-year empire as long as you're in charge.
Everything I have written so far about Arpaio's 12-year run as the Maricopa County sheriff has been documented in countless stories in this newspaper.
Which is why I'm very interested in old man Joe's extensive real estate holdings. Especially after I discovered he's got $690,000 in cold, hard cash invested in two small commercial properties in Scottsdale and Fountain Hills.
The total amount of cash slippery Joe has stashed into at least six other real estate investments may be much more than this. How much more, I don't know. That's because the 72-year-old has taken unusual steps to make sure the public can't find out the amount of cash he's stashed into Maricopa County real estate.
Rather than disclosing details of his real estate investments -- as the rest of us who might dabble in dirt must do -- Arpaio got his records purged from the Maricopa County Recorder's Office. The redacted records include such key information as deeds, mortgages, affidavits of value and conveyances of title.
Everything needed to determine if a deal is done fair and square.
You know, like what's the sales price? Is there a mortgage? What are the terms? The county keeps such records for a reason: It's hoped that full disclosure will keep the marketplace honest.
All of these records are normally available for public inspection. But not Arpaio's.
And neither are the real estate records for his top deputy, the twice-bankrupt, double-dipping David Hendershott, paid a $131,189 salary plus another $51,000 in annual pension money (he retired from the sheriff's office and was rehired as chief deputy by Arpaio). Hendershott enjoys his evenings in an upscale neighborhood of $400,000 homes in Peoria. How much did Hendershott pay for his nice pad at 24232 North 80th Lane? Did he pay cash? Can't tell, because Hendershott's real estate records also are sealed.
Arpaio says he's taking advantage of a law that allows cops, judges, prosecutors and public defenders to petition the Maricopa County Superior Court to issue an order that keeps their home addresses and telephone numbers out of records filed with county offices, including those of the recorder, treasurer and assessor.
Arpaio obtained such an order in July 2001. But rather than simply blocking out his home address on real estate records, all of the information has been removed, making it impossible to determine details of Arpaio's commercial and residential real estate holdings.
The sheriff says he got the records zapped because he was fearful that someone might be crouched behind the bushes near his home. "It's because of all the death threats," Arpaio told me in an interview last month inside the county jail. He later admitted that he was never "in that much danger" from any of the threats.
Why? We all know that the death threats are more grist for his publicity mill rather than any serious attempt on Joe's head. And now we know that the flimsy, and sometimes fabricated, death threats ("In the Crosshairs," June 24) are used as a convenient excuse to have Arpaio's real estate investments sealed from public inspection.
The county recorder's redaction clerks, however, missed a few of Arpaio's property records, which I'm happy to report I found.
These records raise a number of serious questions, especially since this is a guy who is making $78,000 a year as sheriff along with his federal Drug Enforcement Agency civil service retirement pay of about $65,000. His wife operates a small travel agency, Star World Travel, that doesn't appear to be much of a cash cow.
Even if Arpaio managed to save up $690,000 in cash (or inherited the money or won the lottery), why would he invest so much of it in two small projects? He could have spread that money around and purchased additional property. After all, the golden rule of commercial real estate investment is to use other people's money.
This means, invest as little of your own money as possible and borrow the rest, particularly when interest rates are low. Then, use the money collected from leasing the property to pay the mortgage. Whatever interest is paid is always deductible on income taxes. A few years down the road, sell the property and pocket the profit.
It's a pretty simple formula that has generated billions of dollars of profits for commercial real estate investors in the Phoenix area over the last decade.
Why is Arpaio doing the opposite in his commercial real estate deals made through his and his wife's company, AVA Investment Corp.?
On April 14, 1995, Joe and Ava Arpaio paid $250,000 cash for two adjoining commercial spaces in a strip mall just northwest of the primo intersection of Scottsdale Road and Shea Boulevard. The Arpaios lease the spaces at 10612 North 71st Place to the Bravo Salon.
Arpaio never disclosed this purchase on his personal financial statement that elected officials are required to submit annually to the Maricopa County Clerk's Office. Instead, he just added the square footage of this property to a space he already owned next door.
The Bravo Salon is immediately north of a space Arpaio purchased in December 1993. This space is leased to Tuxedo Express at 10610 North 71st Place. I have no idea how much Arpaio paid for this property. That's because the records have been purged from the recorder's files.
Arpaio made an even bigger investment a few years later. On April 15, 2002, Joe and Ava dumped $440,000 in cash into a two-story commercial property across the street from the sheriff's substation in Fountain Hills. The 6,000-square-foot office building is at 16743 East Palisades Drive and is leased to several businesses.
The Fountain Hills investment came about a year after Joe and Ava sold their tract home near 67th Street and Thunderbird Road and purchased a faux-adobe in upscale Fountain Hills. The real estate records on both the sale of his old home and the purchase of the new one have also been redacted from the recorder's office.
It's safe to say that Joe and Ava aren't slumming it.
Their nest on North Via Del Sol has lake and mountain views and is surrounded by desert landscaping. Two neighboring homes sold in the $350,000 range in 2001. Did Joe pay cash for his new home?
Joe and Ava own four more commercial spaces in that Scottsdale strip mall, called Sundown Plaza. All of these properties were purchased before Arpaio became sheriff. However, most of the real estate records related to the properties have also been purged.
Did Arpaio purchase these properties with cash as well, or were their mortgages later paid off after he became sheriff? Arpaio reports on his personal financial disclosure statement that he has at least $200,000 in equity in these properties.
I asked the sheriff's office on June 22 to produce all of Arpaio's real estate records for New Times' inspection. In my letter to Sheriff's Public Information Officer Lisa Allen MacPherson, I noted it was okay to black out Arpaio's home address, since that is all the law is intended to protect.
No one from Joe's joint on the 19th floor of the Wells Fargo tower in downtown Phoenix has responded to my request.
The stonewalling raises a huge red flag.
Joe's become a worldwide marketing commodity on the backs of prisoners. His name recognition translates into political and financial power. He's sold books and movie rights to his life story. Tens of thousands of pairs of pink underwear have been sold, generating huge amounts of cash. Because of sloppy accounting, nobody knows how much revenue this one thing has brought in. The sheriff's office budget has been a mess for years, with no independent, outside audit on the horizon.
Now, it turns out, Joe has been dabbling in real estate in some of the most expensive parts of town. He's investing large amounts of cash, violating the cardinal rule of commercial real estate. And nearly all the records of his wheeling and dealing are conveniently sealed.
Come on, Joe! You're the "toughest sheriff in America." How about sitting down and showing us all of your real estate records? Tax returns would be nice, too. While you're at it, bring Hendershott's records, as well.
Explain to us where you -- a retired federal civil servant and county employee -- come up with so much cold, hard cash.
Otherwise, even one of your lamebrained posse members might think you're hiding something.
Repercussions continue in the wake of Maricopa County Attorney Rick Romley's recent decision to dismiss charges against nearly 60 women arrested in Sheriff Joe's ludicrous undercover investigation in which deputies and posse men got naked and frisky with alleged hookers.
Contrary to the sheriff's office's vigorous assertions that it's common for undercover officers to strip down in the course of a vice investigation, I've stumbled across sworn testimony by the sheriff's top aide that suggests otherwise.
In March 2002, Chief Deputy Hendershott gave a deposition in a dismissal hearing for sheriff's Deputy Mark Guemes, who had the bad luck to be getting off-duty service (or was it servic-ing?) inside a massage parlor when it was raided by the Phoenix Police Department vice squad.
The sheriff's office wanted to fire Guemes for engaging in "unbecoming conduct" and lying to superiors about his encounter with a couple of gals inside an Ahwatukee apartment. Guemes paid $140 for a massage and testified that he was expecting to be masturbated before the cops entered the apartment.
While Guemes was in one bedroom, a Phoenix vice cop was in another. The woman dealing with the Phoenix officer became suspicious when he refused to drop a towel from around his midsection. He also had paid the woman $140, but she returned it when she suspected the bust was about to occur.
During the deposition, Guemes' attorney, Clarisse McCormick, asked Hendershott why a cop doing undercover work in a vice operation would not be able to remove a towel covering his genitals.
"As a matter of policy now, most agencies will not allow their officers to remove the towel," testified Hendershott, who worked as an undercover vice cop for eight years.
"Basically, because it would be inappropriate?" McCormick asked.
"I believe . . . there is a lack of community acceptance to that without the towel being there as a buffer zone," Hendershott replied.
Eighteen months later, Arpaio went ahead with his big prostitution sting. Romley's decision makes it clear that the "community," which Hendershott referenced, won't condone the slimy investigative tactics he and Arpaio dumbly employed.
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