Bob's Hope

North Buckeye -- There's nothing to see here but high-voltage lines and empty highway heading nowhere between ho-hum Sonoran mountain and bone-dry gulch. You are way west of Phoenix without the vision of Robert Burns.

In 1986, at the height of the Arizona Land Rush, Burns, a young, brash, multimillionaire developer, bought this land on credit because he envisioned 300,000 people golfing and strolling and breathing clean air in affordable master-planned bliss. The empire builder had his empire: Sun Valley. He would be a billionaire by 40.

He drove out here often with potential investors and described his city. "You can really see it, can't you?" several of them asked. "Yes, I can," he'd say boldly. Then he'd make eye contact and from his mouth would flow statistics and from his essence would flow charisma and sales would be made because Robert Burns was the master at helping others see his vision.

Land prices in Sun Valley skyrocketed.

But there was no road. To complete the spine of a metropolis, to pay for the road, dozens of landowners solicited by Burns pulled together and agreed to assess themselves a per-acre charge every six months to pay off an $82 million bond, a deal ultimately guaranteed by Heron Financial Corporation, a subsidiary of London-based Heron International, which also owned Tucson-based Pima Savings and Loan.

Land values shot up to $12,000 an acre.

At the same time, though, lending and tax regulations were tightening and speculators were sobering. By 1988, savings and loans were going under. Land values were tanking. It was the beginning of the devastating Arizona land recession and the savings and loan debacle of the late 1980s.

Then a few landowners couldn't pay their assessments in Sun Valley. They discovered an awful little parasite deep in the contracts they had signed: When some of them couldn't pay, their share of the bond liability fell to the other landowners. Like a human pyramid supporting a faint white elephant, the whole deal collapsed, crushing everyone.

Some called it the most complicated, draconian bond in the history of U.S. bond underwriting, part of what has been called the biggest land fraud in the history of Arizona.

Heron, run by English billionaire Gerald Ronson, began foreclosing on landowners in 1989. As he did, accusations began flying that Ronson had surreptitiously inserted the reallocation provision to engineer a collapse. In this theory, Ronson would get all the land with little debt load, get rezoning from the town of Buckeye and resell the land for a huge profit. And Burns, who was still doing business with Ronson at the time, was being accused of facilitating the deal.

Dr. Lattimer Ford had $3 million of his and his employees' pension funds in Sun Valley land. The day after Heron foreclosed on his land, the prominent Phoenix eye surgeon and father of seven drove out into the desert and shot himself in the head. He did not leave a note blaming anyone. The vision placed in his head had just vanished.

Who was to blame? Attorneys who did or didn't disclose this clause, attorneys who did or didn't have conflicts of interest, investors who did or didn't know what they were getting into, S&Ls that did or didn't make arms'-length loans?

What many called the greatest financial disaster since 1929 was in full swing. The feds, in the form of the Resolution Trust Corporation, took over tanking S&Ls such as Western and Lincoln Savings and began digging for proof of illegal loans and false profits booked to make the S&Ls look healthier than they were. They found that some S&Ls and certain privileged clients had been illegally gambling with investors' money, much of which was backed by FDIC insurance. Names such as Charles Keating, Ivan Boesky, Michael Milken and, in Europe, Gerald Ronson became synonymous with a sort of post-industrial junk paper avarice. If the gamblers won big, they'd be fabulously rich, and if they lost big, the taxpayers would be fabulously poor.

The S&L bailout ultimately cost taxpayers a half a trillion dollars.

Back in Sun Valley, landowners sued banks, banks sued landowners, landowners sued landowners, landowners sued lawyers.

In 1990, a group of landowners sued Burns, Heron and a Phoenix law firm, Brown & Bain.

In 1992, the RTC brought its billion-dollar civil suit against Western Savings and numerous officers, accountants, lawyers and investors, one of whom was Burns. The government made sweeping claims of fraud, racketeering, negligence and breach of fiduciary duty. Burns apparently learned he had been named in the case while at a motivational sales seminar in Washington state.

In 1993, the RTC sued Burns on another loan, and, in 1994, on yet another.

In 1993, Burns sued one of the Sun Valley landowners for defamation. He was also suing banks that had lent him money saying they hadn't kept promises they made.

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Robert Nelson