Woods, who won the primary and was subsequently elected attorney general, angrily denied Eisenstein's accusations and--citing a rule that prevents lawyers from making reckless statements about candidates for attorney general--threatened to seek his foe's disbarment.
"Taxpayers won't have to pay anything in this thing, ever," Woods vowed to the Arizona Daily Star a week before the three-way primary was settled in his favor.
Woods also said during the campaign that he and his father, Mesa contractor Joe E. Woods, were unaware that Mario Renda, a hotel partner of theirs for six months in 1986, was a notorious bank con artist. As federal regulators sorted out the savings-and-loan mess, Renda would later emerge as one of the most sophisticated and ingenious swindlers of the era. Both Joe Woods and Grant Woods said they knew nothing of Renda's escapades until they were disclosed by local newspapers in October 1988. Two months later, Joe Woods flew to Washington, D.C., and told FBI officials that he believed he had unwittingly become involved with "the mob."
And three years after Eisenstein sounded the alarm while standing on the steps of the 12-story hotel, which is now called the Sheraton Mesa hotel, federal records show that taxpayers will indeed suffer significant losses from the failed project--approximately $10 million.
In addition, a November 24, 1992, deposition given by Joe Woods indicates that before Renda became a partner, the Woods partnership--Centennial Enterprises--was given a financial-disclosure statement showing that Renda had been the target of extensive litigation alleging bank fraud and racketeering in another state. But according to the deposition, that information was either overlooked or ignored by Centennial, which was managed by Joe Woods.
Renda's financial-disclosure statement did not become a factor even though Joe Woods' deposition reveals that he had serious concerns about doing business with Renda and his partner, Carroll Davis, before the men joined Centennial in April 1986. Furthermore, Woods said he always tried to keep a distance from unsavory characters.
"I've always had questions in my mind as long as I've been in business about being affiliated with the mob. Always," Woods said in the deposition. "That's my pattern and my style, and I try with all diligence to be involved." Despite Joe Woods' claims of vigilance, he said in his deposition he doesn't remember reviewing the Renda/Davis financial statement. He said the statement was given to the partnership's attorney, Barbara Ross, who forwarded it to Western Savings, which financed the hotel. At the time, Ross was married to Grant Woods.
"My pattern in those days was to be nonfinancial," Joe Woods said in his deposition. "I would pass them [financial documents] on to people that I thought had the ability to read them and understand them."
But Ross tells New Times she never saw the financial statement until the final meeting of the partners and Western Savings that ushered Renda and Davis in.
"The only time I think I saw it was at the closing," Ross said.
Moreover, Joe Woods said in his deposition that even if Ross had seen the disclosure statement, it wasn't her job to blow the whistle on Renda.
"I relied on the financial institution [Western Savings] to do that," he said in the deposition.
The $10 million that taxpayers must pick up stems from a $19.5 million Western Savings loan to Centennial. The partnership defaulted on the loan--which grew to more than $20 million, including unpaid interest and late fees--in 1988. After Western Savings failed in 1989, the federal Resolution Trust Corporation sold the hotel in May 1990 for $7 million.
Joe Woods and his major partner in Centennial, David Schuff, had agreed to pay Western Savings $3 million each when the partnership defaulted on the hotel loan in October 1988. Schuff paid his share, but Joe Woods filed suit in Maricopa County Superior Court, challenging his payment. That suit was voluntarily dismissed last January when the RTC agreed to reduce Woods' payment to $1.35 million.
Grant Woods declined to be interviewed for this story. When asked about the Davis/Renda financial statement, Joe Woods said he couldn't remember details and referred New Times to his deposition. Efforts to reach Renda and Davis were unsuccessful.
The hotel project was a Woods family affair from the beginning.
In 1983, Joe Woods convinced the Mesa City Council that the hotel project would benefit downtown redevelopment plans. The city agreed and sold the five acres where the hotel would be built to Joe Woods and his wife, Nina, for $1. Joe Woods hoped the land would provide a nice income for his family. In the early years, Joe Woods said the hotel would lease the land for free, but once the hotel became profitable, he and his wife would collect lease payments.