He's Back

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"I saw an episode of Star Trek one time where something similar was talked about but I have never seen it in real life," Manning says, taking a dig at one of Symington's favorite shows. "It's absolutely absurd."

Symington hired Phoenix attorney Rob Shull to craft his unique defense. (Ann Symington is footing the legal bill.) Symington's defense hinges on the assertion that the pension funds were locked into providing Symington the $10 million loan by a 1987 agreement. Symington claims his December 31, 1989, financial statement was essentially meaningless. Symington and Shull claim the pension funds were obligated to fund the $10 million loan -- as long as Symington was solvent.

"They knew they had to fund the loan, basically no matter what. They were locked in," Symington says.

In any case, Symington says, the pension funds did not rely on his financial statement. Instead, he says, the pension funds made the loan based on the value of the already constructed Mercado -- a project built nearly entirely with union labor.

Whether the pension funds reasonably relied on Symington's financial statement is an important issue. If Symington can prove the pension funds did not reasonably rely on his financial statement before making the loan, his chances for victory increase considerably.

Symington says no one from the pension funds asked him a single question about his financial statement from the time he signed it on May 4, 1990, to the time the pension funds issued the $10 million loan, on June 29, 1990.

"If they would have asked questions, we would have provided answers," Symington says.

Shull says the pension funds will have a difficult time proving reliance.

"If we look at the files of the pension fund at the time leading up to the loan, where are the pieces of paper that indicate they looked at Symington's creditworthiness?" Shull asks. "They are not there."

Manning promises to prove that the pension funds did reasonably rely on Symington's financial statement.

"There was a lot more investigation [by the pension funds] than Symington and his attorney are telling you," Manning says.

Presiding U.S. District Bankruptcy Court Judge George Nielsen will decide the case, which is expected to conclude in late July. Nielsen has shown infinite patience during Symington's frequently heated testimony, which progresses at an excruciating pace.

Symington's frequent memory lapses force Manning to attempt to "refresh" Symington's recollection by introducing into evidence documents and testimony from depositions and Symington's criminal trial. Shull, meanwhile, objects to many of Manning's questions -- which frequently begin with rhetorical statements -- requiring Nielsen to hear legal arguments from both lawyers before making a ruling.

The trial is difficult to follow and significant points can easily get lost in histrionics. Such fodder is unlikely to distract Nielsen, who has taken more than 135 pages of notes. Calmly, yet firmly and usually with a wry sense of humor, Nielsen is providing a fair forum for the barristers to argue their cases.

"Let me assure counsel . . . I've done this before," Nielsen states after yet another nasty exchange between the lawyers. "Let's proceed in a manner that will likely produce useful information."

By early 1990, Symington's real estate company -- The Symington Company -- was in serious financial trouble. Evidence reveals Symington's top aides -- chief financial officer Jim Cockerham and vice president Randy Todd -- were formulating an operating budget that "assumed a wage and hiring freeze for the entire year."

The company was being slammed by Phoenix's real estate market, which was in a free fall that Symington characterized as "cataclysmic" in a 1989 letter to a partner.

Cockerham raised doubt about the company's future in a January 31, 1990, memo to Todd in which Cockerham expressed concern over Symington's desire that his gubernatorial campaign get free office space in the Camelback Esplanade.

At the time, The Symington Company and Symington personally were unable to meet their financial obligations in the Esplanade. The Esplanade was the cornerstone of Symington's development business and accounted for nearly half the $15 million in real estate assets that he claimed on his December 31, 1989, financial statement.

In the memo, Cockerham appeared concerned that Symington's office space grab contradicted Symington's financial commitment to the Esplanade and to his own company. The Symington Company derived much of its income from leasing commissions, and the Esplanade was the company's most important building.

"The company is in the process of downsizing its current space and now Fife is signing a totally separate lease that calls for free rent and no security deposit," Cockerham wrote.

Cockerham fretted that Symington was slashing his employees' compensation to help underwrite his gubernatorial campaign.

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John Dougherty
Contact: John Dougherty