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STATON V. WOODSTHE MUD MAY FLY, BUT IT SURE DON'T STICK

No candidate this year--with the notable exception of Evan Mecham--has been the target of more questions about his integrity, honor and past actions than Grant Woods, Republican candidate for attorney general. Each time Woods begins to build a substantial lead in the polls, another face from his past surfaces to hurl crippling allegations. The most recent was an accusation by disgraced developer Barry Wolfson that Woods extorted a legal settlement from him in 1986. Shortly after the Wolfson mud was slung, Woods dropped eight points in the polls.

Staton, while denying that her campaign is dishing the dirt, argues that where there's smoke, there's fire. "He's been compromised with these dealings," she commented recently.

With fully half the voters still uncommitted, questions about Woods' character could sink him in next Tuesday's election. More than anything else, it is the recurrence of doubt that is damaging, for the harder one examines the individual charges leveled against Woods, the more apparent it becomes that there is nothing more to them than smoke. Smoke and mirrors.

THE FIRST JOINT APPEARANCE by Woods and Staton following the primary, at Arizona State University's College of Law, was so bitter it left audience members gagging in disgust. The candidates muzzled their sniping in subsequent appearances, but the opener signaled that personal attacks--not issues--might dominate the campaign if the odds soured for either candidate.

And that's exactly what has happened, with Woods becoming the target of charges planted by backers of Staton, who is trailing in the polls by nearly two to one. Woods had already faced ugly charges in the primary, when rival David Eisenstein claimed that Woods had ripped off elderly investors in a Mesa development and had done business with a savings-and-loan racketeer named Mario Renda.

Days before the September primary, former investment partner Marion Widger, in conjunction with Eisenstein, called a press conference to accuse Woods of suckering innocent people into investing in an office building that later went bankrupt.

Eisenstein also purported to show that Woods and his father, millionaire Mesa developer Joe Woods, had gone into a hotel partnership with Renda, one of the most notorious figures in the multibillion dollar failure of the savings-and-loan industry. Renda is now serving time in a California prison for laundering mob profits through small S&Ls, which were then looted through huge loan defaults by Renda and his cronies.

Woods, who had built a substantial lead in the polls, denounced these accusations as distortions but barely made it past the primary. "There's no question that they hurt me," Woods says. "I think the only reason I survived was because the stories hadn't reached the out-counties by election day."

Eisenstein's information was supplied by a supporter of former Governor Evan Mecham, who made an unsuccessful comeback bid against Fife Symington. After losing the primary, Eisenstein called Woods to discuss the smear. "I now know the charges to be untrue," he says.

But that hasn't laid them to rest. Now backers of Democrat Georgia Staton are peddling the claims, saying Woods slid out from under them in the primary, and should be held accountable. "The dailies blew it," one Staton supporter tells New Times. "There's a helluva story there and they missed it." Staton did not return phone calls from New Times.

In the September press conference, Widger and several of his friends claimed they had been lured into investing in a partnership headed by Joe Woods, which owned a successful office development in downtown Mesa. Once they had invested their money in it, they claim they received no interest payments and their share was "squeezed down" as new investors were brought in.

So what does this have to do with Grant Woods, candidate for attorney general? Not much, says his ex-wife, attorney Barbara Ross. "Grant had invested some of his own money in the partnership, but he didn't handle any of the [partnership's] business," Ross says. "His expertise is as a litigator and in the area of public policy. I was the firm's business specialist and was legal counsel to the [development] partnership."

Shortly before the primary, the Attorney General's Office issued a legal opinion saying Woods should have reported his involvement in the project as a financial obligation, and Woods filed an amended campaign finance statement. Woods' opponents accused him of trying to evade responsibility by not reporting it, but Ross strongly disagrees. "He would never intentionally ignore an obligation," she says.

Ross considers Widger's claims so outrageous and "legally actionable" she demanded a retraction the day after he made them public. "I find your statements . . . false and defamatory on their face," Ross said in a September 5 letter to Widger. (To date, Widger has not complied with the retraction demand, nor has Ross initiated legal proceedings.)

Widger, who earlier had targeted Grant Woods in his complaints, is now reluctant to talk. "My lawyer doesn't want me talking about it because it's all in court now," Widger says, referring to a lawsuit he has filed against Charles Wahlheim, the person who introduced him to Joe Woods, and Zion Bank, which loaned him the investment capital. Neither Woods is a defendant, he acknowledges, but he hints they may be named later.

Far from inducing Widger or his friends to invest, Joe Woods was approached by Widger, says Ross, who was married to Grant Woods at the time and a partner in his law firm. At the urging of Mesa city leaders, Joe Woods spearheaded efforts to revive downtown Mesa with the construction of new office space and a luxury hotel. He intended to finance the development with reduced-interest loans backed by Industrial Development Authority bonds, an accepted way of attracting investment to decaying urban areas.

Widger sought to buy the managing interest in the partnership but lacked the cash to match his ambition. Consequently, he solicited other investors to come up with the half-million dollar purchase price.

In return, the partnership signed promissory notes agreeing to pay interest to these small investors. Despite this help, Widger was unable to raise more than half the money he'd promised. Compounding the problem, he made other investments which disqualified him as a below-market borrower under the IDA's strict regulations. The people who supposedly "squeezed out" Widger and his friends were new investors brought in to salvage the partnership's eligibility for the IDA funding, Ross explains.

Widger was removed from the partnership when he failed to complete his purchase. As in many urban- redevelopment stories, the project didn't attract the hoped-for traffic and ran into financial problems. Following Widger's press conference, Joe Woods paid the small investors their overdue interest from his own pocket, and asked where they had gotten their information blaming his son for the mess. "They told me they got their information from Marion Widger and did not research it before they wrote letters of complaint," Joe Woods says.

As tenuous as the Widger allegation seems, it requires an even bigger stretch to connect Woods with convicted savings-and-loan pirate Mario Renda, says James Hart, Woods' former law partner. "Grant never had any involvement with Mario Renda," Hart says.

As with the office project, Woods' father Joe was beseeched by city officials to build a hotel in downtown Mesa after the original developer fell out. The hotel did not draw visitors as intended, however, and ran into financial difficulty within a year of opening in 1984. In 1985 the mortgage holder, Western Savings & Loan, insisted that Joe Woods and co-owner Dave Schuff find a successful hotelier to buy a managing interest in the partnership and make the property profitable, Hart says.

Joe Woods found an interested group of English buyers, while Schuff introduced Western Savings to a San Diego hotel developer named Carroll Davis, who also was interested, Hart says.

"Davis' financial backing came from Mario Renda," Hart explains. "Western Savings performed background checks on both prospective buyers and decided to accept Davis' offer."

Again, what does this have to do with Grant Woods? "He had no involvement at all," says Hart, who acted as legal counsel to Joe Woods after Davis left town. "Grant came in as a partner much after Renda and Davis were gone, along with other investors Woods and Schuff rounded up to try and save the project," Hart says. "Joe and Dave pumped lots of their own money into it trying to keep it afloat."

Renda's name did not even surface until the deal was done, Joe Woods says. "We didn't investigate Davis because it was Western's loan and Western's idea to find another investor. I personally asked Western to do the `due diligence' [research]," he explains.

"The bank did run a credit check on Renda, and all that turned up was one lawsuit," according to a Western source who asked to remain anonymous. "I'm sure there was no extensive background check done on Renda. It would have been highly unusual to have done a complete background check," the source noted.

Banking-industry trade journals had begun publishing investigative pieces about Renda's activities as early as 1983, yet Western Savings loan officers approved him as a buyer. Neither Gary Driggs, bank president at the time, nor the bank's legal counsel returned phone calls from New Times.

Renda himself didn't even come to Mesa to sign the purchase papers; he sent his attorney to sign for him, Hart notes. After Davis took over the hotel, he convinced Western he needed an additional $1.5 million to make improvements, bringing the total mortgage to $19 million.

"Within six months, he gutted the hotel [financially] and split town," Hart says. "Western had allowed both Davis and Renda to come in as corporations, so they had no individual liability. We later learned this was a familiar pattern for Renda: to buy a property, inflate the mortgage and make off with the difference, leaving the project to go into bankruptcy."

In March 1988, Western Savings foreclosed on the hotel mortgage and demanded payment from the investors. "Ironically, Joe Woods was the first person to recognize the connection between the hotel bankruptcy and organized crime in the S&L industry," Hart says. "In October 1988, two years after Davis left town, Joe read a newspaper article on the topic and recognized one of Renda's other partners. He went through the roof and sent the piece to Driggs, saying, `What is this?'"

Joe Woods says he was so concerned about Renda that he contacted the Federal Bureau of Investigation in December 1988 for information, fearing that his family might be in danger. By that time, however, Renda was already under federal indictment for banking crimes in other states.

Ross says she dislikes being in the spotlight, but agreed to talk to New Times because she believes her ex-husband has been unfairly criticized in connection with both dealings. "Grant is a very honorable guy," Ross says.

TODAY GEORGIA STATON'S campaign is buoyed mostly by Woods' sullied image.
While Woods had attracted a broad base of support from conservatives and moderates alike, Staton remains one of the most unpopular figures in a race this year, as measured by her inability to attract money and endorsements. Staton, whose main claim is her background as a prosecutor, failed even to win the backing of major police organizations. And the mass defection of Democrats to Woods represented an "unprecedented" vote of no-confidence, says one influential Democrat.

Two weeks ago, Staton threw out fresh bait: Her campaign reportedly leaked documents linking Woods to wheeler-dealer Barry Wolfson, the subject of a civil suit brought by the attorney general over Wolfson's handling of $360 million in public bond money loaned for apartment developments in the early Eighties.

When contacted by reporters, Wolfson claimed that Woods used extortion to obtain a settlement on a 1986 claim Woods had filed on behalf of his father. Woods had sued Wolfson for refusing to pay $360,000 for construction of a Mesa apartment complex built by Joe E. Woods Incorporated. (Wolfson contended in his counterclaim that the work was slipshod.)

Wolfson says Woods accused him of criminal fraud in connection with the bond money Wolfson had obtained from development agencies in Chandler, El Mirage, and South Tucson. (Wolfson said he would use the $360 million to build affordable housing, but instead invested it, earning $3 million in interest before returning it to bond authorities.)

Wolfson alleges that Woods threatened to tip off the attorney general unless Wolfson paid off the debt to Woods' father. Shortly thereafter, Wolfson paid Joe Woods $175,000 to settle the claim. (Wolfson was already under investigation by the state, which later filed suit to recover his profits from the arbitrage scheme, says Attorney General Bob Corbin.)

Woods dismisses Wolfson's accusation, saying he had done nothing unethical. And Wolfson's own attorney in the suit, Phoenix lawyer David Van Engelhoven, issued a contradiction as sweet as anything Woods' mother could have dreamed up: "We didn't feel then, and we don't feel now, that Grant Woods did anything unethical," Van Engelhoven says. "Mr. Woods did nothing that affected his honesty, trustworthiness or his fitness to practice law."

Staton has denied knowledge of the Woods suit against Wolfson, and said Wolfson's extortion claim came as a surprise--a position she maintained even after news accounts identified her campaign as the source of the original story linking Wolfson and Woods.

But David Eisenstein last week revealed that the extortion story was up for grabs as early as the primary, when Wolfson offered it to him. The only problem with it, he says, was that any competent attorney could discern that Wolfson's claim was bogus in fewer than five minutes.

It took the state attorney general a lot longer than that to dispose of the allegation. Nearly a week into the election's final stretch elapsed before Corbin announced that he had found no basis to the charge. (Corbin, whose hand-picked successor Steve Twist was narrowly defeated by Woods in the primary, was denied a federal judgeship because of the influence of Senator John McCain, Woods' political mentor.)

Polls taken in the interim reflect the confusion sown among voters, and the percentage backing Woods dropped from 40 to 32. At the same time, the proportion of people still undecided has actually increased, rather than decreasing as is usual toward the end of a campaign.

Despite Corbin's exoneration of Woods and the lack of substance in other claims against the Republican candidate for attorney general, supporters predict his political enemies will make at least one more attempt to smear his name before next Tuesday. "We don't know what it will be, but we're all certain Georgia will make one more big effort to discredit Grant," Joe Woods says.

Chris: we may need an extra inch or two on last page of this story for an addition. If so, it will come Monday.

Thanks, cj

Each time Woods begins to build a substantial lead in the polls, another face from his past surfaces to hurl crippling allegations.

"Grant never had any involvement with Mario Renda," Hart says.

Staton remains one of the most unpopular figures in a race this year.

Wolfson alleges that Woods threatened to tip off the attorney general unless Wolfson paid off the debt to Woods' father.

Supporters predict Woods' political enemies will make at least one more attempt to smear his name before next Tuesday.

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Kathleen Stanton