He's Back

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"The truth is, no one told Coppersmith or anyone else in the pension fund that Fife was unable to pay on that gap in June of 1990," Manning says.

Shull says he expects Coppersmith's testimony to support Symington's version of the events.

"I find some potential sweet irony in Mr. Coppersmith testifying for us," Shull says.

While there remains some question over how much the pension funds knew about Symington's financial condition in early June 1990, there is no doubt First Interstate Bank understood he was in trouble.

First Interstate Bank required Symington to submit an amended personal financial statement to the bank on June 26, 1990, three days before the pension fund loan was scheduled to close. While the new statement still reflected a net worth of $12 million, Symington attached two important disclaimers.

First, Symington amended the standard certification language attesting that the information on the statement is truthful. Instead, Symington told First Interstate Bank that his financial statement was a "best efforts" evaluation of his financial condition. Symington alerted the bank that the "current depression in the real estate market makes it difficult to determine real estate values, thus any evaluation is highly subjective."

Second, Symington attached a letter from a family attorney who told the bank that Symington's purported readily marketable securities were indeed locked up in four trusts and could not be used to repay Symington's debts.

Symington, however, did not pass along the same disclaimers about "highly subjective" real estate values to the pension funds, nor did he tell the pension funds that the $800,000 in securities were untouchable to creditors.

Manning asked Symington why he didn't provide the pension funds the same information about his financial statement as he gave First Interstate Bank three days before the pension funds issued the $10 million loan.

"The pension funds never asked me for it, so I never provided it," Symington testified.

Instead, Symington signed a personal guarantee on June 29, 1990, promising to repay the $10 million loan. In the guarantee, Symington states that he was not aware of any "material adverse changes" to his financial condition and that his "financial condition was sound."

Symington also signed a borrower's certificate stating that "no material adverse change" has occurred in his financial condition from the time the original loan commitment was signed in 1987 and the funding date of June 29, 1990.

The pension funds issued the loan to Symington believing they were ethically and legally required to "fund so long as the Borrower complied with all the terms of the loan commitment," according to a July 9, 1990, letter from McMorgan & Company to trustees for the union pension funds.

Manning claims Symington lied to the pension funds about this financial condition on June 29, 1990, which constituted a clear violation of the loan commitment provisions.

Symington's actions the ensuing months support Manning's contention.

Less than two months after the pension-fund loan was issued, Symington submitted another December 31, 1989, financial statement, this time to Security Pacific Bank. The statement was identical to the financial statement submitted to the pension funds showing a $12 million net worth, except for a one-page disclaimer Symington attached.

Blaming a real estate depression, Symington warned the bank that his net worth was "not an accurate statement of my financial condition as of August 23, 1990." Symington told the bank that the "value of the assets and net worth shown on the financial statement are now materially and dramatically overstated."

Symington gave the statement to Security Pacific Bank to discourage the bank from using as collateral a $4.2 million promissory note Symington had given a former business partner.

A month later, Symington issued yet another financial statement -- again dated December 31, 1989 -- to First Interstate Bank, which had grown anxious about Symington's inability to repay the Alta Mesa loan or cover the $1.2 million Mercado shortfall.

Just weeks after Symington had won the Republican nomination for governor, touting himself as a successful businessman, Symington slashed his net worth on a September 19, 1990, financial statement to $4.5 million -- a 60 percent reduction in value from the statement he gave the pension funds fewer than three months earlier.

Manning repeatedly asked Symington if he could point to an event that caused his net worth to deteriorate so rapidly in the summer of 1990. Symington could not identify any events. Instead, Symington pointed to the different ways he determined the values of his real estate.

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John Dougherty
Contact: John Dougherty