"Mr. Teets is aware of the transaction. Because there is no cost to Dial, he did not object to it."
"So now you have told me about this transaction?"
"Yes, I have."
But Jerry Ingalls, as always, was suspicious. With the September 1993 divorce trial just days away, a private investigator working for Ingalls posed as a real estate agent in a phone call to MRI. The investigator, Guy White, asked if the Biltmore house was for sale.
Cheryl Grafentin left a phone message for White.
"The unit is not for sale," she said. "It actually is occupied by the owner. [MRI] did a favor for one of our corporate clients with regard to that particular property. The owner ... will be taking title sometime in the future."
Grafentin explained in her deposition a few weeks later how the house deal had been structured:
"[We] purchase the house and then, obviously, we handle all of the expenses on the property. Those are billed to Dial. Joan would be leasing the property and at such time in the future [we'd] possibly [be] reselling the property to Joan."
"So, in effect, you were just acting as a middleman for Dial?" Rad Vucichevich asked her.
Court records show MRI billed Dial about $18,000 for expenses and costs through September 1993. The invoices included monthly interest on the home loan, property taxes, insurance and neighborhood-association fees. (It isn't known how much Dial paid from October 1993 until Potter bought the home in early 1994.)
Grafentin said Dial never disputed the billings, which her company sent to Joan Potter's human-resources unit for approval.
But this previously undisclosed arrangement was only the half of it. Court records reveal that MRI credited about $60,000 to Potter--her supposed "rent" payments--against the property's original $300,000 purchase price.
The $60,000 had come from community property, half of which still legally belonged to Jerry Ingalls. When Potter finally bought the home, the equity she'd secretly built in it allowed her to seek a reduced loan of $240,000.
New Times spoke with five seasoned divorce attorneys about the Biltmore situation. Each expressed amazement that a publicly owned corporation of Dial's stature would have agreed to this arrangement.
"Community property is community property, no matter how you try to hideit," says Iva Hirsch, a Phoenix attorney. "One spouse playing financial games with another spouse doesn't shock me. But this--with all of the questions it raises about the corporation's motivations--sure does."
Dial's version does not comport with the public record on the Biltmore house deal.
"Evidently, the divorce went on longer than what she expected," says spokesman William Peltier, "and, evidently, we helped her with a couple of mortgage payments--which she subsequently paid back. I think they lent her the money to do that. That's it."
But Potter's own mortgage payments didn't start until after the divorce was final. The Biltmore deal predates that by more than a year.
After three days of trial, Potter and Ingalls settled the divorce out of court. The settlement included Dial stock and $3,000 in monthly alimony payments from Potter to Ingalls, ending in March 1995.
But the litigation was reborn in February 1994, when Ingalls claimed Potter owed him half of a $150,000 incentive bonus Dial had paid her in 1993. New information about Dial's role in the divorce seeped out as the lawyers litigated the bonus issue.
The court would learn that Dial had withheld Potter's stock-option offerings and bonuses until after the divorce case ended--and with it her community-property obligations to give half of those assets to Jerry Ingalls. And there would be the bizarre matter of stolen documents and Dial Corp.
Despite Joan Potter's nagging legal problems, her career soared in 1994. That January, John Teets announced her appointment as an executive officer, which made her one of 22 "insiders"--directors and officers--at the 29,000-employee firm.
By August 1994, according to the federal Securities and Exchange Commission, Potter had become one of the largest of the "insider" shareholders at the firm.
By the end of the year, Dial informed the SEC that Potter held 76,000 shares of "beneficial ownership" in the company, worth about $1.5 million.
Her relationship with Teets seemed as strong as ever, and the two appeared in a 60Minutes story in October 1994. The story used Potter and Teets to make its point that Congress overregulates corporate pension programs, but allows U.S. senators and representatives rosy retirement packages. It portrayed outgoing Arizona senator Dennis DeConcini as a prime example of congressional excess.
Meanwhile, Jerry Ingalls was living in Payson, surrounded by mementos of happier times. Despite the rancorous divorce, he kept a photo of his ex-wife on a table in his study.