Cockerham told the jury that he never saw Symington's personal financial statements, although he frequently forwarded the statements to lenders. Symington's financial statements, Cockerham testified, were always given to him in a "sealed envelope."
Cockerham also revealed how unlikely it was that Symington would ever profit from his real estate projects. Symington, Cockerham explained, was at the end of a long line of people who would get any profits. Symington did not receive any income from any of the nine real estate projects Cockerham has testified about.
Symington managed the real estate developments through limited partnerships. He typically put no more than a few thousand dollars into these partnerships, which he controlled as the general partner. Instead, other investors, either individuals or institutional investors, put up substantial funds as limited partners.
The partnership would then borrow additional funds from banks, insurance companies or pension funds to finance the construction of office buildings.
The terms of the partnerships required the lender to be paid first if a building was sold. If there were any profit remaining, the limited partners would be repaid their investment plus interest.
Only then would Symington get a return of any significance. Unfortunately for Symington and his limited partners, the real estate projects rarely sold for enough money to cover the outstanding loans, Cockerham testified.
Symington also had a habit of diluting his ownership stake in the partnerships. For example, the Symington Partners Limited Partnership had a 0.5 percent ownership share in the Scottsdale Centre office development. But Symington only had a 50 percent share in Symington Partners Limited Partnership, reducing his personal stake in the Scottsdale Centre project to a minuscule 0.25 percent.
Despite his scant interest in the project, Symington claimed on his financial statements in the late 1980s that his equity in it was worth $1 million--meaning the project would have to have been worth more than $400 million. But at its peak, the project was worth only $35 million, and by 1991 it was returned to lenders when the Symington partnership defaulted on its $24 million debt.
Scottsdale Centre was no aberration.
On many of his financial statements, Symington claimed a 36 percent share in the Van Buren Industrial Park. But Cockerham testified that partnership records showed Symington only had a 1 percent stake in the property. And Symington was far down the list of those who would get any potential profits.
On his December 31, 1989, financial statement, Symington claimed the building was worth $1.85 million, and his 36 percent equity share was worth $400,000.
In reality, the industrial property located at 39th Avenue and Van Buren had few tenants and was burdened by nearly $2 million in loans and limited-partnership obligations. When Symington compiled his 1989 year-end financial statement, Symington had no equity in the property, and Symington knew it, Cockerham testified.
Cardona asked Cockerham if financial statements prepared for the Van Buren property and given to Symington ever showed a profit between 1985 and 1990.
"They all showed losses," Cockerham replied.
Although Symington would earn nothing from the operations and sale of the properties until after the limited partners and lenders were paid, his company did get a cut of the action up-front.
The Symington Company would get income from development fees, typically about 5 percent of the construction cost. The firm also got management fees and leasing commissions once office space was built.
Symington drew a $100,000-a-year salary from his company, and occasionally made additional withdrawals from the company of which he was the sole shareholder, Cockerham testified.
The only significant income generated by The Symington Company came from the construction of new office buildings and subsequent leasing and management fees. The dilemma Symington faced in the mid- to late 1980s was that his office buildings didn't generate enough money to pay back the loans.
Symington attempted to cover operating losses on projects, at least for a while, Cockerham testified. But since his only source of income was to build new projects, prosecutors allege he elected to inflate the values on his financial statements to impress lenders.
By the winter of 1989 and spring of 1990, all of Symington's real estate projects were in serious trouble, Cockerham testified. He said Symington sought legal advice about placing several partnerships into bankruptcy. Symington wanted to keep his financial troubles out of the public eye so as not to detract from his gubernatorial campaign, which was in full swing by December 31, 1989.
Perhaps more important, Symington was also facing crucial negotiations with two lenders involved with his high-profile downtown redevelopment project, the Mercado.