THE GOVERNOR'S 800-POUND GORILLA
Last month the MacNeil/Lehrer NewsHour devoted a segment to Arizona. The idea of the broadcast, loosely speaking, was to discuss the sheer wonder of living in a state where seemingly normal adults have actually elected into office the stunted race-baiter Evan Mecham, tsetse fly survivor Rose Mofford, a Shriners' caravan of state legislators videotaped stuffing wads of cash into their pockets in exchange for votes, two of the Keating Five and notorious savings and loan freebooter J. Fife Symington III.
I was interviewed for the telecast.
The PBS host, Spencer Michels, draped questions around his guests like a worried uncle might offer a comfortable old cardigan, but behind his polite eyes you could see the thought blinking: How long can it possibly be until Randy Newman writes a song about the people of Arizona?
During the broadcast, I suggested that our governor's business record did not rival Ross Perot's.
Now I am told that my statements on MacNeil/Lehrer about Governor Symington were "malicious," "false" and "defamatory." These are not terms often linked with the network that brought us Jacques Cousteau.
Writing to me on behalf of the governor, Washington, D.C., attorney John Dowd demanded a front-page retraction in New Times explaining that my "statements have caused obvious and irreparable damage to Governor Symington's reputation."
Dowd is defending this very governor against the $197 million lawsuit filed by the Resolution Trust Corporation over Symington's role in the collapse of Southwest Savings and Loan Association, a collapse that also triggered criminal referrals which are under investigation by the justice department and the FBI. Dowd also represented Symington in the Congressional probe into Southwest's demise.
This is the reputation that has been damaged? I think the real dilemma is that Fife Symington simply refuses to face the fact that he is a scoundrel. Like an alcoholic, the governor refuses to admit there is a problem.
No one can possibly believe that Fife Symington is a victim of "irreparable damage," no one except John Dowd.
Once New Times publishes a front-page retraction, Dowd says he "will be prepared to discuss an amount sufficient to settle and compensate Governor Symington for his damages and expenses."
There are a number of legal responses to such sentiments but plain English covers the situation best: When pigs fly, Mr. Dowd, when pigs fly.
We must put aside for a second the question of airborne swine; let us also ignore the clumsy suggestion that New Times retract something that ran on MacNeil/Lehrer. It is worth pausing to note that Mr. Dowd is at least correct on a minor point regarding the broadcast and that I was wrong. But the issue hardly merits the attention of a high-priced Washington lawyer.
Dowd is one of those larger-than-life characters, an attorney used to locking horns with Mafia chieftains, baseball heroes and FBI directors.
Today, Dowd has been hired by our governor to direct Symington's performances in the savings and loan drama.
This theatrical production is not limited to a single stage; instead there are three venues: the media, the courts and Congress. The chief roles are taken by journalists, Congressional investigators and lawyers from the RTC, all of whom are competing to read the S&L script to an American audience that has sat through this overlong matinee with just one thought: What the hell happened to all that money? As Dowd gathers his energies for the dnouement with the RTC and its lawsuit against Symington, he must simultaneously showcase the governor's work while preventing journalists and politicians from stealing Symington's scenes. Dowd's tools include avalanches of paperwork, threats of litigation and a remarkable ability to distract attention from the critical issue to the trivial detail.
His reputation as a six-foot-three-inch, 240-pound tough guy doesn't hurt either.
Dowd's bravura interpretation of events has, on occasion, rendered Congress and the media speechless. To the extent that Dowd is able to, in effect, pull the plug on the microphones used by other voices in the savings and loan drama, it is Symington's reading of events that occupies center stage.
And our governor is proving to be quite the hambone Hamlet.
"As you know, they're suing about, what, over 100,000 people across our fair land and they've made something like 40,000 criminal referrals as well. It's the biggest legal juggernaut that's ever been created in the country," Symington told the accommodating MacNeil/Lehrer host. "In fact, they're almost, I think, trying to say it's against the law to lose money."
Bravo! Bravo! In this world-class production, Dowd's letter of demand for retraction to me is not an isolated event.
Susan Schmidt at the Washington Post said she had been targeted with a half dozen of Dowd's letters. Her immediate editor as well as the Post's executive editor, Leonard Downey, have also been upbraided by Dowd. John Dougherty said his paper, the Mesa Tribune, has at least six of Dowd's letters. In New York, Institutional Investor was asked to retract; closer to home, the Arizona Republic's Mary Jo Pitzl was also singled out by Dowd for a letter of demand.
Nor has Dowd confined his threats to journalists; Arizona's Secretary of State Dick Mahoney, who was quoted in stories regarding Symington's recordkeeping, was warned of courthouse retribution.
And now that MacNeil/Lehrer and New Times have also received correction demands, the informal count of cranky Dowd letters has climbed to approximately 19. No one has retracted, and Dowd has not sued.
Asked directly about press targets, Dowd was close-mouthed: "I am not at liberty to comment."
The response is surprising because Dowd is not above publicizing his bellicose correspondence.
On January 27 he wrote to Jeff Bruce, executive editor of the Mesa Tribune: ". . . Please be advised that this letter and my letters of January 22, 1992, will be distributed to all members of the media and the public so that we can keep your conduct out in the sunshine where it belongs. This is not a leak. It is an open, public disclosure, unlike the anonymous sources in the government who provide false information to the Washington Post and others . . ."
And with that, Dowd faxed his complaints with the Tribune to assorted Arizona media.
This particular tactic of Dowd's serves two purposes: Letters of demand for retraction copied to other papers damage a reporter's reputation for competence by providing competitors with a one-sided interpretation of an article; Dowd's letters also serve notice on every journalist who sees one of the attorney's densely packed legal missiles that Governor Symington, deep pockets and all, is feeling highly litigious.
Finally, Dowd openly boasts that he has instructed the governor to simply refuse to answer any questions put forth by a reporter who has given offense.
For instance, in his letter of demand for retractions to the Arizona Republic, Dowd writes, ". . . it will be my recommendation to Governor Symington that he simply have no further dealings with Mary Jo Pitzl."
Symington's policy of media intimidation is not limited to threats of libel. When first contacted by the producers of MacNeil/Lehrer, the governor quickly accepted the chance for national exposure. But when he learned that PBS also intended to interview journalists at New Times, Symington haughtily informed MacNeil/Lehrer that he would be unavailable if anyone from this publication went on the air. Of course, once MacNeil/Lehrer refused to buckle under to the governor's threats, Symington quickly changed his mind and talked a blue streak before the cameras. Symington's thin-skinned arrogance is not shocking to those he governs, but John Dowd is a relative newcomer to Arizona's political landscape.
@body:John Dowd is, perhaps, best known as the controversial attorney who handled baseball's investigation of Pete Rose in 1989.
In his erudite book on baseball commissioner Bart Giamatti and Pete Rose, author James Reston Jr. paints Dowd as the hard-nosed attorney who nailed "Charlie Hustle" for gambling.
After reading Reston's account of the Rose investigation, Collision at Home Plate, one can fairly conclude that Dowd was ruthless. For example, when a key witness against Rose flunked a lie-detector test administered by a retired FBI agent with 25 years' experience, Dowd brought in a different polygrapher. The second examination bolstered Dowd's case.
Dowd described Reston's account of the lie-detector test "demonstrably erroneous" and said that, "Richard Arther, the dean of polygraphers, was always our first choice. He was unavailable and I believe overseas at the beginning of our investigation."
The biggest issue of the case, however, concerned testimony against Rose by a convicted felon who was up for sentencing at the time. Dowd arranged to have Commissioner Giamatti write a letter to the judge vouching for the man. The volatile letter was conceived and written by Dowd.
The baseball player's attorneys erupted, claiming that Dowd's witness simply traded questionable information in exchange for the commissioner's help with the sentencing judge. Furthermore, Giamatti's endorsement of this unsavory character, argued Rose's attorneys, destroyed any pretext of neutrality on the commissioner's part. Giamatti, after all, was charged with sitting in judgment of Rose once the investigation was completed.
The courts agreed with Pete Rose and issued an injunction halting the proceedings.
Dowd's famous report on Rose was disputed as much as "Giamatti's letter." One of Rose's attorneys, Robert Stachler, called as an expert witness the former chief counsel and staff director of the Senate Watergate Committee, Sam Dash.
In a withering attack on Dowd's report, investigative techniques and witnesses against Rose, Dash testified that, "Frankly, this report was, in fact, so flawed that if it had been given to me as chief counsel of the Senate Watergate Committee by one of my deputies or investigators, I would have fired them." Three years later, Dash's comments still rankle Dowd.
"The testimony of Mr. Dash was ludicrous," said Dowd last week. "Mr. Dash never read my report to the commissioner before he testified for his old classmate, Reuven Katz, who was representing Pete Rose."
Dash was incredulous at Dowd's remarks.
"I had thoroughly read his report," countered Dash. "The work was not only inadequate, it was fallacious. It was absolutely outrageous. He actually withheld quite a bit of information from the commissioner, exculpatory information which tended to exonerate Mr. Rose was not included. . . . I did not make a conclusion as to Pete Rose's guilt. I was testifying on what kind of a job John Dowd did."
Dowd claims Dash overlooked exhibits that contained the missing information.
"If what John Dowd is saying is that I would do an unethical act for an old friend, that is outrageous. Reuven Katz is not an old friend. We are not in touch. We were not in touch. We were classmates at Harvard but that was 42 years ago. When his call first came in, it was left on our answering machine. You may not want to believe this, but when I played the tape, I asked my wife, 'Who's Reuven Katz? Who's Pete Rose?'" After Dowd's report was finally issued, Rose's lawyers, not unexpectedly, blasted it. But they also singled out Dowd's conduct for comment, concluding, "If this report is your idea of fair play and natural justice, I feel sorry for you."
Today, Dowd is stoic and imperial: "A review of the complete record shows that the criticisms by the attorneys for Mr. Rose to be without merit."
Whatever opinions exist regarding Dowd's tactics, the fact is that he prevailed. Even Dowd's detractors concede that it was the attorney's tenacious pursuit that nailed Rose. If baseball did not cover itself with glory, Pete Rose was, nonetheless, banned.
To his supporters, the harsh opinions of Dowd's tactics that live on in the wake of the Rose investigation are somewhat mystifying.
"A lot of people were upset with him about the Pete Rose investigation. A lot was said about that," said former Attorney General Griffin Bell. "But you have to remember that Pete Rose had a lot of friends. I knew John Dowd when he worked for me at the justice department. He's a fearless prosecutor and a very good lawyer. I would be glad to have him represent me. I would have been aware if there were problems at the justice department and I never heard anything like that. I can't imagine he'd have been as successful as he was if he was at all underhanded."
Prior to handling the Rose investigation, Dowd was with the U.S. Department of Justice from 1969 to 1978. There he distinguished himself in tax cases and RICO prosecutions aimed at mobsters. In his last four years, he was in charge of one of that agency's Organized Crime Task Forces.
In 1976 Dowd looked into allegations of FBI corruption. Agents were accused of making home improvements for J. Edgar Hoover's successor, Clarence Kelley. The new director was also accused of accepting expensive gifts from subordinates.
At the conclusion of his investigation, Dowd made the front page of the Washington Post with his recommendation that Kelley be fired.
When asked, Dowd told the press recently that President Gerald Ford, who appointed Kelley, wanted Dowd's head following the investigation.
The implication, of course, is that the President of the United States was infuriated by Dowd's unflinching quest for justice.
It is just as likely that Ford was upset because Dowd looked like a knothead.
Terming the incidents "common and trivial," the Washington Post in a 1976 editorial characterized Dowd's call for Kelley's dismissal the result of "excessive zeal and undiscriminating righteousness."
The paper noted that when Kelley accepted the job his first wife was mortally ill with cancer and that overeager agents installed window covers, at an expense of $335, to ease the couple's harried move into the nation's capital.
"The gifts involved--including an $83.48 clock, a $105 easy chair and a walnut table--do sound expensive," wrote the Post, "until one learns that they were purchased by a group of FBI executives, each of whom chipped in $10 or $15, and were given to the boss at Christmas or an anniversary . . ."
From her Missouri home, the second Mrs. Kelley said her husband no longer gives interviews because of a series of strokes.
But Shirley Kelley, who was courted by the FBI director during the justice department probe, had a distinct recollection of the investigation.
She said agents worked on the windows because the FBI took the position that having a private interior decorator inside the director's home posed a security risk.
Mrs. Kelley said that if you could only see the sort of clunky construction executed by the FBI agents who did the work, you would find it laughable that anyone would actually choose this particular perk as a form of corruption.
"What ran up the costs was that all these people from the FBI's prop department were sent out to measure [the windows] and they charged at $50 an hour. Rough plywood valances were put over the window and spray-painted hunter green. They were so ugly no woman would have them in the house," said Mrs. Kelley.
Mrs. Kelley, a former teacher with degrees in political science and theology, said a justice department official had the director sign papers while he was still under the influence of morphine following back surgery.
"These people were no good," said Mrs. Kelley. "It was nit-picky stuff and I was shocked at the tactics. And you can quote me on that."
Dowd said last week that he was unaware of any contention that the FBI installed the valances to prevent a breach of security. He denied any recollection of statements taken from Kelley immediately following surgery.
"I do know that Director Kelley was interviewed on the record by me and an FBI inspector in his office at FBI headquarters in Washington, D.C., during working hours," said Dowd. "Mrs. Kelley's characterization of my conduct of the examination and the investigation is simply not supported by the record."
Dowd defended his call for Kelley's dismissal, noting that, "All of the FBI inspectors assigned to this inquiry were of the view that Mr. Kelley should not continue as director of the FBI." Special agent Wilburn DeBruler, retired, disagrees.
Brought in as part of the small group under Dowd investigating allegations of FBI corruption, DeBruler said he was "shocked" at the call for Kelley's dismissal.
"It took a great deal of prosecutorial imagination to think this was a case," said DeBruler. "The agents who did it, did it in good faith. They thought they were doing something for the new director and his dying wife. It was wrong. But in my mind it was done unbeknownst to Mr. Kelley. But when Dowd heard about the incident, this excited Mr. Dowd. "Mr. Dowd was a very vigorous prosecutor. Very much so. He'd go after any kind of detail to make his case. I don't know if he was overzealous but he was concerned with the minute."
DeBruler also confirmed the postoperative interview.
"A statement was taken from Kelley shortly after surgery," said the ex-agent. "It probably wasn't wise to take it in his weakened condition but Mr. Kelley wasn't one to back off. He doesn't withhold the truth. I've never known Mr. Kelley to lie; if it was going to kill him, he would tell it like it is." If Dowd's critics think the Kelley investigation highlights the ex-prosecutor's obsession with the picayune, his champions can cite chapter and verse on Dowd's fearless prosecution of dangerous criminals.
"John Dowd is the best. He is brilliant, hardworking, terrific," said Richard P. Crane, who ran the Organized Crime and Racketeering Section of the Criminal Division of the U.S. Department of Justice covering California, Nevada, Arizona and other Western states.
Crane, who headed the justice department's west-coast strike force from 1970 to 1975, said he found it impossible to believe that Dowd's work was less than professional in the cases of Pete Rose, Clarence Kelley or anyone else.
"I would never believe that," said Crane. "There were plenty of opportunities to overreach and I never saw that. I sat with this guy in very sensitive investigations and the wrong mentality could have taken a cheap shot."
And that never happened, claimed Crane.
Crane said he and Dowd worked together on the investigation in 1973 that put the top five mobsters in Los Angeles behind bars. He also said John Dowd worked casino investigations in Las Vegas and the seemingly endless pursuit of Meyer Lansky.
"Lansky claimed he was sick all the time," remembered Crane, "and to prove how sick he was, he died. But John Dowd was invaluable."
By the time of the savings and loan crisis, Dowd was no longer prosecuting wise guys, he was defending them.
When Arizona's U.S. Senator John McCain found himself under investigation by his colleagues last year for his ties to Charles Keating, he hired Dowd. The lawyer's aggressive defense of McCain appealed to Symington. With the advice of Arizona's Attorney General Grant Woods, the governor hired the D.C. litigator.
Dowd's strategy is compatible with Symington's long-term predilection for bully-boy tactics. In 1983 the well-respected city councilmember Ed Korrick represented the Phoenix district where Fife Symington and Southwest Savings wanted to erect the Esplanade. Symington wanted a zoning change from the city that would have allowed him to turn the massive project into one of gargantuan proportions. When residents of the area objected, Ed Korrick listened.
That was enough for Symington. Serving as Republican party treasurer, Symington slipped $15,000 into the campaign of Korrick's opponent Jim Gardiner. At the time this was a remarkable sum of cash to give to a council race. "Symington took five contributions from fellow developers on Camelback who, like Symington, wanted council approval to expand their project," recalled Korrick in a recent telephone call. "That was DevCor, right across the street from Symington's Esplanade. Symington laundered the funds through the Republican party and gave $15,000 to Gardiner so that you wouldn't be able to tell where the cash came from. At the time, that size contribution in a council race was pretty much limited to the Charlie Keatings."
Symington denied any wrongdoing at the time and the attorney general refused to prosecute.
Although Korrick won, the point is that Symington was prepared to crush the experienced councilmember and foist upon the City of Phoenix a monumentally naive candidate, Jim Gardiner, a gentleman whose qualification for the post was that he was a security guard. Later, when the Esplanade was erected, Symington was ruthless once again. He moved the only tenant from one of the smallest properties he managed, the Missouri Court, into the Esplanade. The switch killed Symington's partners in the Missouri Court, a project that quickly went into default.
The eight investors in the Missouri Court, who felt they were sacrificed by Symington for the ambitious Esplanade, say they faced threats when they voiced their concern.
"He told us that we wouldn't be seeing the lease and that if we pressed this question, or brought up this situation publicly and made a big deal about it before the election," one investor told New Times, "he would hit us individually with suits. I don't have time or money to fight the bottomless jar of lawyers that Symington could sic on me to file nuisance suits.
"All of this may not be illegal. Hell, he might even consider it good business. But it sure is unethical in my book. And it shows you that you don't need a mask and gun to hold somebody up."
Symington's instinct for heavy-handed diplomacy suggests that when he found an attorney, John Dowd, who was capable of roughhouse tactics, it was more than a marriage of convenience. These two respond to what they perceive as unjust criticism of the governor with legal violence the way victims of Tourette's syndrome bark: instinctively, loudly, helplessly.
@body:How effective has Symington and Dowd's campaign of press intimidation been?
Dowd's most impressive victory was with the Mesa Tribune, which repeatedly crossed swords with the governor. After firing off a letter of demand for retraction, Dowd and Washington, D.C., publicist Jay Smith met with the Tribune's editors and journalists in the paper's Mesa office on February 18.
Reporter John Dougherty, who'd written articles critical of Symington, soon got into a heated discussion with Smith and Dowd. At one point the remarks escalated into argument and then degenerated into shouting.
Dougherty and Smith actually stood up and prepared to take their differences into the parking lot.
What followed was alarming.
Instead of allowing Dougherty to defend his honor--and then cutting the reporter a bonus check for understanding that journalists actually do have reputations worth protecting--the paper's executives escorted Dougherty from the room and took him off of the Symington story.
Once Dougherty allowed himself to be provoked, the paper became vulnerable to charges from the governor's men that the Tribune's reporter was simply a hothead out to avenge himself upon Symington.
The Mesa Tribune wanted to make sure readers had no questions regarding Dougherty's continued ability to be fair.
But this was not the end of the dustup.
When interviewed about the confrontation, Jay Smith said that it was the reporter who initiated the call to fists.
So Symington's team first attacked Dougherty's professional skills, then accused him of picking the fight. In the February 29 edition of the media trade publication Editor and Publisher, Smith said, "He [Dougherty] asked me to step outside. It is not my habit to invite people outside to fight . . ."
Nor, apparently, is it publicist Smith's habit to tell the truth. A tape recording of the meeting clearly captures Smith challenging Dougherty to "go outside."
Dougherty feels that Dowd and Smith calculatedly provoked a confrontation, hoping to get the reporter pulled from the story. His editors agree.
"The Symington people got what they wanted--but it has to be this way," Tribune managing editor John Genzale told New Times shortly after the incident. "Look, John Dowd came out to bully us--we knew that beforehand. We were kind of laughing about it: The high-powered lawyer from D.C. who comes to Hickville and pushes a lot of bumpkins around. I would have loved for them to have failed. But they didn't fail--not at pushing us around, but at getting our guy to react too emotionally."
Dowd rejects any suggestion that he and Jay Smith set out to set up Dougherty.
"The suggestion is erroneous. We met with the Mesa Tribune and except for the incident in which Mr. Dougherty lost his composure and had to be physically removed from the room by his editors, we had a very constructive session," said Dowd.
It certainly was constructive. It got Dowd the kind of soft coverage he wanted.
The day after the constructive session, on February 19, the Mesa Tribune ran a story under the headline: "Report will show Symington's actions legal, attorney says." The article was an uncritical regurgitation of the principal points contained in the massive briefing Dowd and Symington would submit to Congress.
Dougherty was yanked from further coverage of the governor the day before the journalist was scheduled to fly to Washington, D.C., and report on a House committee's probe into Symington. At the time, no other journalist in Arizona was as aggressive and informed about Symington and Southwest Savings and Loan. The response in other news organizations to Dowd's table-pounding has been less dramatic, but it does follow a pattern.
The editor at Institutional Investor described the typical reaction to Dowd's letters demanding retraction.
"You work really hard to get the story right and then you come to work and find one of these letters. It's very disappointing," said Kenneth Klee. "Dowd's letter was very deliberately threatening. It got my attention. You can't help but worry: Maybe these guys know something; maybe we screwed up."
Mary Jo Pitzl at the Arizona Republic recalled her brush with Dowd.
"I remember Doug MacEachern at the Mesa Tribune did a column and Dowd faxed to all the news organizations this letter of demand. It came across the fax to the capital press corps [reporters from all the media stationed at the legislature to cover state government] where I work, so in a sense it was published. I was surprised because MacEachern writes a column and I didn't know you could have a wrong opinion. "Then, I think it was Good Friday, Dowd went after one of my stories. He wanted a meeting with the editors for a front-page retraction. He used all the language you use for libel. We had to put together a memo defending the story and we had to sit down with the attorneys."
Dowd's threats of litigation coupled with demands for a meeting with the paper's editorial brass are sometimes coupled with another tool, a paper tidal wave.
"After we published the article, we got the letter of demand," said Institutional Investor's Klee. "We reviewed the article and our lawyer sent a response. Dowd answered with several boxes of materials. Meanwhile, I was in London on other work. The boxes of papers were not responsive to the point in the story. He sent a lot of papers, prepared at considerable expense, that didn't prove anything. Perhaps in one sense it's an effective tactic. You have to take it seriously. It complicates your life. It was as if he was trying to crush us under the paper."
In an era of hefty lawyers' fees, heftier libel insurance rates and imposing libel judgments, you have to ask if Dowd's saber-rattling has chilled news coverage or commentary.
"That's the sole purpose as far as I can see," said libel attorney Dan Barr, who represented the Mesa Tribune in its battles with Dowd. "It is intended to intimidate you, your editor and the publisher who pays the bills.
"The people who foot the cost have to send letters to me, I have to respond. After a while, it's human nature. You see an attitude: 'It's not worth the aggravation or money we have to pay the lawyers. To hell with it.'"
Despite the cost, despite the threats and despite Symington's ability to finance a lawsuit, most news organizations roll their eyes at the suggestion that they can be threatened.
"Dowd's letters had no effect on our reporting," said the Washington Post's Richard Weintraub, assistant financial editor. "I can't recall whether we've ever written back. If we had, it would have been a one-liner, 'Thanks for writing.'"
Which is, of course, the response you expect from an editor at the Washington Post.
But the journalist at the Post whose reporting was the subject of repeated letters from Dowd wasn't nearly so cocky. In fact, she declined to characterize the effect of Dowd upon coverage of Symington.
"I would hate to be quoted," said Susan Schmidt. "It's a sensitive thing around here with people because of all these letters."
Dowd, too, disagrees with Weintraub's high-minded assertion that the lawyer's letters "had no effect on our reporting."
"The Post was gracious to meet with us and subsequently ran a long story presenting both sides of the controversy," said Dowd. Schmidt's longest article on Southwest and Symington appeared shortly after the sit-down with Dowd and quoted the governor extensively.
Dowd said there is nothing heavy-handed about his methods. "I am not aware of any member of the media complaining about being intimidated. I have not observed any intimidation. On the contrary, the letters have led to very constructive meetings, a willingness to listen and a better understanding of the facts with the Washington Post, the Mesa Tribune and the Arizona Republic, for which we are grateful. Since the governor is a public person and has been the subject of defamatory stories, we are obliged to make an effort to set the record straight."
The media that have faced the threat of litigation from Dowd invariably turn the demands over to their libel attorneys. From that quarter, however, a less-flattering perspective on Dowd's tactics has emerged.
"It seemed to me that he has an ignorance of certain First Amendment protections to which the media is entitled," said David Sternlicht, staff attorney for Capital Cities ABC Inc., the giant media conglomerate that owns Institutional Investor.
Dowd will not tolerate such criticism.
"I lost my brother and risked the life of my son and was prepared to risk my life--all for my country to preserve, protect and defend the Constitution and its amendments, including the free press. I was for 13 years sworn to uphold and defend the freedom of the press. I never violated that oath. I resent anyone questioning my commitment to the Constitution or preaching to me about the First Amendment . . . the press is not free to destroy the reputation of a man with false information." Assertions of patriotism did not enter into Sternlicht's assessment of Dowd. "Dowd has an excellent reputation in his field," says Sternlicht. "He's very aggressive, but what his letter said to me was that this guy is not a libel attorney."
Mesa Tribune libel attorney Dan Barr concurred. "When you first read one of his letters, you are taken aback by his tone," said Barr. "But once you get over the initial shock value, there is not much there."
@body:Expert legal counsel may think that Dowd is not the libel bar's Pavarotti, but that has not kept Dowd off the stage. Worse, those ensnared in one of Dowd's grand operas find themselves exchanging arias with someone who appears tone deaf.
Consider for a moment a Dowd outburst that is irrelevant to Symington's ultimate guilt or innocence.
Arizona was astounded on September 13 last year when the Washington Post revealed the contents of an internal RTC document. In the article, Susan Schmidt cited point after embarrassing point that federal lawyers were alleging in an effort to persuade superiors to sue Symington.
Three months later, the top echelon at the RTC was persuaded, and in December, Symington was named in a lawsuit for his actions on the board of Southwest Savings and Loan.
At a televised press conference that same month, the governor went on the offensive, attacking federal regulators who brought the suit because neither the governor nor his attorney had been given the opportunity to tell his side of the Esplanade investment prior to being sued.
Now, in fact, this is a smoke screen. The government has no obligation to consult with Symington on a case that is so clearly built on the record.
Still, if you listened to Symington in December, when he was sued, you would think he was the victim--instead of the taxpayers who will have to foot the bill for the outrageous losses.
"All they had to do was pick up the phone," said Symington, referring to the RTC and sounding hurt. "And they never, they have not asked me, they have not asked my attorney to clarify this transaction."
Yes, federal regulators could have met with the targets of the lawsuits to gather more information; yes, they could have sat down to negotiate a settlement. They were obligated to do neither.
One month later the Mesa Tribune discovered that Governor Symington was less than truthful in his pose of wounded nobility.
On January 19, John Dougherty wrote that Symington's lawyer, Jim Vieh, had met with regulators, all the way back in September, following the release of the controversial RTC memo that was leaked to the Washington Post. "The September 20 meeting in Washington contradicts repeated statements by the governor that neither he nor his attorneys had an opportunity to present their case to federal regulators before the Resolution Trust Corporation filed a $140 million civil suit [since amended to $197 million] in December against Symington and other board members of the failed thrift," the article said. The next day Dowd blasted Dougherty and the Tribune, describing the Tribune article as "false and defamatory."
Despite a four-page, single-spaced letter of demand for retraction and damages in which Dowd characterizes the story as "ugly and unforgivable," Dowd himself confirms the September 20 meeting and its subject matter: "On September 20, 1991, Jim Vieh met with Alfred Byrne, chief counsel of the Federal Deposit Insurance Corporation; Mr. James Roether, counsel to the Resolution Trust Corporation; and a representative of the Inspector General," wrote Dowd.
"Mr. Vieh demanded the meeting to address the false allegations in the press about Governor Symington. Mr. Vieh furnished a memo to Mr. Byrne addressing all allegations in the press." Well, the "allegations in the press" were the allegations in the RTC memo. Most of these same allegations became the basis for the lawsuit.
Responding to Dowd's correspondence on January 22, Tribune attorney Dan Barr said, "What Dowd complained about are facts that were not only true, he admitted they were true in his own letters." Dowd argued that there should have been a second meeting, that government lawyers even agreed to, and then reneged on, a second meeting and that it just goes to show, well, something when a second meeting didn't occur.
After enough of this debate your eyeballs begin to rotate. The governor claimed no meeting ever occurred when, in fact, one did. After news of that meeting was printed, Dowd insisted the government of the United States should have held Fife Symington's hand through a second meeting, ignoring the fact that no meeting, whatsoever, was mandated by statute.
You spend enough time in the company of Mr. Dowd's Chinese-water-torture tactics and you begin to understand why Meyer Lansky died rather than take any more of it.
@body:The relentlessness that Dowd demonstrated in the Rose case, the ability to focus upon and magnify minutiae he showed in the Kelley investigation, combined with his muscular approach to libel--it all was coming together for Symington's benefit.
Two days after the conference where Dougherty was bounced off the story, Symington and Dowd walked into the U.S. House of Representatives.
In order for Symington and Dowd to advance the case for the governor's innocence in the Southwest Savings and Loan collapse, it would not be enough to contain the press.
Congress, which had legislated the S&L fiasco, now wanted to know what went wrong. As a high-profile example of the industry's problems, Governor Symington was called to testify on the Esplanade deal. While Dowd could not threaten representatives and senators with litigation the way he did the press, he understood that the February 20 appearance in the House was as much an opportunity as an obligation. The two did not lack for gall.
Amid a blizzard of documents Symington and Dowd obscured critical details and focused upon irrelevant trivia. They were like a Biblical development team from Babel.
After media coverage, Congress represented Symington's second front in the savings and loan debacle. At the conclusion of their appearance on the Hill, Dowd and Symington had vanquished their Congressional critics and press headlines shouted their victory. In the performance orchestrated by Dowd, the politicians and the journalists lost sight of the issues. Because Symington sat on the board of Southwest Savings and Loan, he could not have the S&L invest in his Esplanade project without approval from regional regulators in San Francisco.
To demonstrate Symington's compliance, Dowd dumped 17 and a half pounds of documents on each politician's desk.
Through page after countless page, from one exhibit to another, Symington and Dowd argued that they complied with federal conflict of interest regulations.
The governor's papers included written answers and indexed records provided to the chairman and each member of the House subcommittee on General Oversight and Investigation of the Committee on Banking, Finance and Urban Affairs. The avalanche of paper obscured the fact that Symington had neither the required audit nor written approval of federal regulators before embarking on the Esplanade deal.
Symington told Congress that, "Prior to the acquisition of the Camelback property, Donald Lewis, then CEO of Southwest, had discussions about Southwest's participation in the SSH Venture with Jack Pallen, then principal supervisory agent assigned to Southwest by the Federal Home Loan Bank Board . . ."
The regulations don't say anything about discussing the deals prior to acquisition. The regulations say specifically the deals must be approved "in advance" and "in writing."
This wasn't a yard-sale purchase of used lawn furniture contemplated by Southwest Savings and Loan. Symington was trying to engineer one of the largest commercial developments in the history of Phoenix. You cannot get federal regulatory approval of such a complicated deal by "discussing" the highlights over a few martinis and a couple of big cigars.
Even so, Symington secured Southwest's vote on the deal before he asked for regulatory approval. Symington told Congress how he met with the FHLBB in November to explain the Esplanade deal and how Southwest wrote to the FHLBB on the matter in December.
By November and December of 1983 the deal was done. Southwest Savings and Loan had voted to capitalize Fife Symington's Esplanade project on September 21, 1983. By November and December of 1983 Symington was attempting to get the federal government to "back date" approval. Symington did not obtain "prior written approval" of the Esplanade project. The violation was flagrant and clear.
Dowd also organized the documents for Congress to explain Symington's failure to get an appraisal for the project that was the largest investment in Southwest's 32-year history. In order to evaluate the investment in the Esplanade, Symington and the other members of the Southwest board relied upon a four-page "letter of opinion" from real estate appraisers, Burke, Hansen and Homan Inc.
In a deal this large, a four-page letter of opinion is such a thin document that it is the accounting equivalent of anorexia.
The federal memorandum that covered Symington's deal called for a full-blown narrative appraisal.
The four-page document executed for Symington was no such thing. Indeed, the appraiser who signed his name to the report acknowledged the truth in the paragraph above his signature: "This is a preliminary opinion of value. A narrative report containing all the data and analyses will be prepared upon your request." Symington and Southwest never requested an appraisal.
Understand that the federal guidelines that describe what an appraisal ought to entail contain more pages than the Esplanade letter of opinion.
In fact, at the end of 1985, when Southwest could no longer fund the Esplanade and Symington was forced into the private sector for continued financing, he had to produce an actual appraisal. It ran to nearly 260 pages.
And yet Symington and Dowd were intransigent in front of Congress, insisting that, "The July 1983 preliminary appraisal complied with FHLBB regulations, [and] was given to the FHLBB by Southwest in January 1984 . . ."
Only a congressman could swallow such nonsense. Attorneys at the RTC had made the absence of an appraisal and the failure to get prior written approval from regulators the basis of their lawsuit. The effort by our governor to cover his tracks by having the federal regulators approve, after the fact, the Esplanade adventure stumbled when the San Francisco office of the FHLBB requested a copy of the appraisal on December 21, 1983. Three weeks later, on January 9, Southwest's CEO, Don Lewis, responded to the federal regulators' demand by forwarding the four-page document from Burke, Hansen and Homan. Lewis did not even bother to try to characterize his anemic numbers sketch as an appraisal. He was honest enough to admit that it was merely "a preliminary opinion of value."
Lewis' explanation is astounding.
"To save money," wrote the CEO of Southwest to the regulators, "this preliminary opinion was not finalized but can be if it would better serve your needs."
In other words, when Southwest and Symington were using depositors' savings, insured by taxpayers, to strike out on the largest investment in the S&L's history, an investment the RTC now describes as the largest single loss in the institution's nearly $1 billion collapse, Symington and his colleagues didn't bother to get a comprehensive appraisal, opting instead to microwave some numbers in order "to save money."
After the San Francisco regulators requested a copy of the Esplanade appraisal, Symington finessed the problem of belated approval by resigning from the board of Southwest. In their appearance before Congress, Symington and Dowd gambled that defiance would overcome any questions on the governor's business dealings.
And it worked.
The Washington, D.C., politicians were ignorant, absent or partisan. Under the headline, "Symington enjoyed gentle treatment from House panel," Kim Kelliher of the Arizona Daily Star analyzed the governor's Congressional appearance on February 20.
Describing the uninformed questions of the subcommittee chair, Representative Carroll Hubbard, Democrat from Kentucky, Kelliher wrote, ". . . the 18-year veteran of Congress admitted later that he had not studied the lawsuit or read the complaint."
The other representatives on the committee, all Republican, were described lobbing softballs to the governor.
"For instance," wrote Kelliher, "Representative Frank Riggs, a freshman Republican from California, began his dialogue by asking the governor to expound upon his years as a 'successful real estate developer.'"
Headlines throughout Arizona declared Symington the victor over Congress: "Symington takes on Capitol Hill," "Self-dealing charges against governor put to rest at hearing," "Symington alleges panel chairman biased," "Symington defends role with S&L, berates RTC."
Reporters were now covering the Southwest story as if the Congressional probe was a conspiracy of Democrats to embarrass the Republican Symington. In all honesty, much of the press coverage of Symington and Southwest has been on a par with Congressional questioning.
When the damaging RTC memo was leaked to the Washington Post, local papers did syndicate the bombshell story. But the Arizona Republic also turned over to the governor its Sunday opinion section, Perspective, so that Symington could write a lengthy reply characterized by its misleading irrelevance to the regulators' criticism.
Little wonder, then, that several months afterward, when Dowd went after the head of reporter Mary Jo Pitzl, the lawyer was quick to kiss the ring of Republic editors who have been cited nationally for their fawning coverage of the governor: ". . . Fife Symington believes he has always been treated fairly by the editorial section and editors of your paper."
Although John Dougherty at the Mesa Tribune has resumed looking into the governor's business dealings recently, the remainder of the media, from the state's largest daily to its weekly, has been largely silent on Symington's financial affairs.
Cowed by Dowd's campaign of intimidation and put off by the complexities of financial reporting--the longest article in the Arizona Republic on the Southwest collapse has been Symington's self-defense--journalists Mary Jo Pitzl and Kim Sue Lia Perkes were able to say, quite accurately, at a recent media round table that the story of the RTC and Symington had largely disappeared from the press.
Even the MacNeil/Lehrer show that got me my threatening letter from Dowd was far from being a penetrating look at Symington's role in the collapse of Southwest Savings. The comments on PBS were a mere sound bite in a telecast focused upon Arizona's larger-than-average share of misfortunes.
On June 9, on the MacNeil/Lehrer NewsHour, I said of Symington: "Here was a guy who, while he sat on the board of an S&L arranged for that S&L to give him the largest single loan in its history, okay. And with a total investment of $400 on his part, he then cut himself checks for approximately $4 to $5 million; erected a white elephant that sits primarily vacant, okay; has gone into default, dragged the S&L down with it . . ."
In his letter of demand for retraction, Dowd pounced on my characterization of the deal as a loan in default.
And he is correct.
In his Congressional appearance last winter, Symington informed the committee: "The RTC alleged that the Camelback project was Southwest's largest 'borrower.' It was this allegation that I stated was blatantly false. The Camelback project is not a 'borrower' transaction. It is a joint venture that was set up to acquire and develop the Camelback Esplanade. Southwest is an equity partner. As such, the Camelback project represented Southwest's largest 'investment' up to that time."
But Symington and Dowd are trying to take our eyes off the ball when they ask us to focus upon this distinction. The collapse of Southwest Savings and the $197 million lawsuit by the RTC that targets Symington are not matters that hinge upon the characterization of the financial instrument--loan or investment--though it is an investment.
The lawsuit points out Southwest sank $31.25 million into land acquisition for the Esplanade and another $23 million for zoning, planning and architectural costs. Millions more went into capitalized interest. When Southwest collapsed, the Esplanade and Symington deal represented the S&L's largest single loss, $40 million according to the RTC.
Not only did Symington and Southwest flout industry regulations, the lawsuit charges that Symington screwed Southwest and its depositors on the terms of the deal.
"The joint venture was inherently unsafe and unfair to Southwest [which] assumed virtually all of the risk of project failure but stood to receive only half the profits from the sale of the land. "At the same time Symington and his partner [Jerome] Hirsch put up a total of $432 yet stood to make 38 percent of the profits."
In other words, the S&L advanced $54 million plus millions more in interest, but got only 50 percent of the deal, while Symington and his partner put up $432 and took 38 percent. (The remaining 12 percent went to the original owner of the land.)
The lawsuit also notes that Symington operated on the Esplanade with an agreement for development fees that put $8 million in Fife's pockets with the approval of Southwest's board.
Dowd argues that Symington did not cut himself these development checks, that the project is not a white elephant (the term first used by Symington's partner, Hirsch, to describe the evolving events at the Esplanade), that Symington did not "arrange" for Southwest to do the deal.
Dowd argues long and he argues loud. He even argues points best left unmolested.
Dowd claims that Symington did not put up the $400 dollars I mentioned, the same $400 cited in court documents. Because that total was actually split with his partner Hirsch, Dowd argues that Symington really only wrote a check that "totaled $215.90."
Furthermore, says Dowd, ". . . Southwest has lost nothing."
"Southwest's participation in the Camelback Esplanade venture is an investment, not a loan, and there is no obligation on any party to repay Southwest's investment . . ."
Isn't that a charming sentiment?
Symington's position is that once the real estate market rebounds, however many years from now that turns out to be, everyone will get his money back. Symington's rationalization, according to an RTC attorney, ignores Lord Keynes' caution that in the long run we're all dead. Today, Southwest has collapsed, taxpayers are liable for the bill and the Esplanade deal is upside down.
While Congress is dithering through the S&L debacle and the press is being taught to heel by Dowd, the taxpayers' last hope for restitution resides with the RTC, where a small unit of attorneys has sued the former directors of the failed S&Ls to recover the squandered wealth.
The news on that front is unsettling.
Amid calls for increased staff, the RTC actually decimated its own ranks.
In a June 2 report to the U.S. Senate, the General Accounting Office supported doubling the number of attorneys pursuing restitution from former directors of failed savings and loan institutions.
The assistant director of the GAO, Ed Stephenson, praised the aggressive fieldwork of the understaffed RTC attorneys at the same time that he criticized the go-slow attitude of that agency's administrators.
The day after his testimony, however, Stephenson learned that instead of increasing staff, the RTC had done just the opposite. In the elite 75-member division of the RTC that prosecutes former S&L directors, 28 lawyers were transferred out.
In an interview last week, Stephenson told us that he found this shakeup "unbelievable."
"We had clearly met with the RTC people to talk about the adequacy of their staff and it was never brought to our attention that they were going to tell a number of their professional liability staff, particularly managers, to [leave]," said Stephenson.
Looking back at the RTC interviews, Stephenson characterized the remarks of the agency's administrators as "evasive."
In response to the startling upheaval within the RTC, Stephenson said the GAO has begun an investigation. Attorneys from the professional liability team have charged that politics is at the heart of the shakeup.
"We're evaluating that right now," said Stephenson. "There is some indication and they have given us some things to look at. And we are doing that as we speak. But I can say that that's going to be real tough to prove."
On July 13 the cover story in the National Law Journal reported on the upheaval within the RTC. The Journal wrote that the moves "reflect an apparent policy shift by the Bush administration to ease off aggressive lawsuits to recover millions of dollars from ex-officials of failed savings and loan institutions, according to the high-level government lawyers . . . one inside attorney said many colleagues perceived the shakeup as 'gross election-year interference by the White House' because so many targets of investigations and lawsuits happened to be prominent individuals with strong Republican ties."
Accompanied by a large photo of this state's chief executive, the article by Marianne Lavelle pointed out that, "The roster of defunct savings and loan directors includes high-profile figures in politics and business. Best-known is Arizona Governor Fife Symington . . ."
A spokesman for the RTC insisted the staff shift had nothing to do with politics and that vacancies created would be filled, not forgotten.
In the wake of the Journal article and the announcement of an investigation by the GAO, someone got nervous.
In a turn of events that the GAO's Stephenson described last week as "remarkable," the RTC suddenly reversed course and reinstated the attorneys who were transferred.
@body:John Dowd's press assault on behalf of Symington--letters of complaint, demands for retraction, threats of litigation--may not impress the attorneys that review them, but it is a mistake to dismiss Dowd as an ignorant intimidator in media matters.
On June 8, 1984, it was announced that Dowd and a fellow prosecutor with Department of Justice extracted an $800,000 settlement in a libel action directed at the Wall Street Journal. The sum is all the more remarkable given Dow Jones' long-standing policy against settlement. A statement by Peter R. Kahn, associate publisher of the Journal, explained, "In this case, where two important parts of the article turned out to be unproved, we thought it would be unwise for us and our people to undergo the financial and human costs of a long trial."
HarperCollins Publishers announced that the second printing of Collision at Home Plate by James Reston Jr. would contain four specific changes from the first edition. The statement from the publisher said, "Mr. Reston has agreed to delete or clarify certain of his statements which pertain to Mr. Dowd's investigation . . . these charges as well as other modifications to the text are being made by Mr. Reston for purposes of clarity, and in response to Mr. Dowd's specific concerns. Both Mr. Reston and HarperCollins regret any confusion stemming from the first printing of the book and both recognize that Major League Baseball has the right to investigate certain allegations and to impose sanctions." Four sections of the book's second edition were changed.
On February 14, 1992, the same day that Dowd issued the 17 and a half pounds of Symington documents, Playboy magazine issued a one-page press release. Playboy's statement announced a "correction and clarification" regarding an article it printed by Roger Kahn on the Pete Rose case. As the target of one of his current threats of litigation, I am comfortable with the notion that John Dowd knows all the libel law he needs to make him a real eye-gouger in the right alley.
If his correspondence on behalf of the governor does not win him the offers of settlement he solicits, the failure springs less from Dowd's ignorance of the law than the conduct of his client.
His client, J. Fife Symington III, is not an injured party. How many sitting governors, after all, are the targets of $197 million lawsuits by the federal government? Injured or not, Symington has benefited from a Dowd defense that is fierce.
Brendan Sullivan, the attorney who represented Oliver North, said, "Dowd is known in the defense bar as a zealous defender. He does everything he can for a client that is lawful, ethical. He never gives up."
The same cannot be said of the press. Or Congress. The hard tactics and harder lessons of the Pete Rose and Clarence Kelley investigations should have braced Symington's critics for what followed, once Dowd was hired by the governor.
Instead, Dowd has fought the politicians and the press to a standstill, leaving only the RTC to be corralled. Symington's third front, an RTC lawsuit, is pending. However, in the absence of noisier, more effective, attention from Congress or the press, Dowd will certainly have an easier time focusing his considerable energies.
And the palace coup within the RTC that temporarily shuffled lawyers prosecuting Symington and the other savings and loan highflyers is not a hopeful sign. Even though the agency backed off from the wholesale shakeup contemplated, the reversal came too late for several key attorneys who'd already departed rather than be reassigned. While the local press headlined Symington's accusation that he was the victim of partisan politics in the House, the political infighting described by the National Law Journal remains unreported in Arizona.
Dowd has said that he was unaware of the staff shakeup within the ranks of the RTC prosecutors.
And if that is true, I confess I am grateful. If I thought one lawyer, even a blustering bully like John Dowd, could monkey-wrench Congress, the press and the RTC, I'd feel like I needed a few weeks of rest at the Oliver Stone Dude Ranch.
And that's not how I feel.
I believe the RTC charges against Fife Symington are so dead-on that only an 800-pound gorilla like John Dowd can save him.
Dowd has refused to let Symington talk for this article and will, himself, only answer questions submitted in writing.
"A bully is a person who is habitually cruel to others who are weaker," responded Dowd last week. "I am not aware of any instance in which I have been cruel to anyone."
Dowd is correct. If the press is weak-kneed that is not the same as frail.
If Dowd insists on using libel threats on the media's soft tissue the way a thug uses a sap, it's the press's job to fight intimidation.
Since the MacNeil/Lehrer show, Governor Symington has been telling Arizona audiences that he is the hero of the working class because of his recently enacted tax cut.
The press agrees.
Each taxpayer will save, on the average, $3.90, not enough to purchase four lottery tickets.
The RTC says the collapse of Southwest Savings and Loan will cost taxpayers nearly $1 billion, part of the $500 billion some folks are projecting that taxpayers will foot to put the S&L crisis right.
You work it out: $3.90 versus $1 billion.
On July 4, I drove down Camelback Road past the Esplanade and there, between Symington's office towers, an enormous American flag was suspended. Even though I'd been in Boston during the nation's bicentennial, this was the largest American flag I'd ever seen.
I pulled over, parked and looked at the spectacle of Old Glory.
In the 18th century, Samuel Johnson created a clich when he said that patriotism was the last refuge of scoundrels. He anticipated J. Fife Symington III without ever having visited the boardroom of Southwest Savings and Loan.
LEMON PLEDGE EVAN DANDO PUTS A SHINE IN ... v7-29-92
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