Trial by Paper

For 10 weeks, federal prosecutors have presented evidence showing Governor J. Fife Symington III repeatedly overstated his assets and understated his liabilities when preparing personal financial statements between 1986 and 1990. The government alleges Symington prepared the false statements to influence lenders to grant loans to his real estate development partnerships. That's a crime, and if convicted, Symington could face a lengthy prison term and a substantial fine. He also would be forced to resign as governor.

Symington's attorneys claim the governor prepared his financial statements from memory, leading to unintentional "errors and omissions." They say the mistakes could have been easily detected by lenders who had access, or could have had access if requested, to detailed financial records of Symington's company.

Prosecutors have focused on Symington's December 31, 1989, financial statement. On May 4, 1990, Symington, then a gubernatorial candidate, signed the statement claiming a net worth of $11.9 million. Symington certified the statement was still accurate on June 29, 1990, when he obtained an $8.3 million loan for his Mercado Developers Limited Partnership from a consortium of union pension funds.

The government has presented evidence showing numerous discrepancies in the December 31, 1989, financial statement prepared on a Valley National Bank (VNB) form. The document below is a portion of the summary page of the financial statement. The document on the facing page, which has been split for design purposes, details Symington's real estate investments. The excerpts at the bottom of this page show how Symington presented vastly different assessments of his real estate projects to First Interstate Bank on June 21, 1990, and the union pension funds on June 29, 1990.

Are the repeated deviations from reality simply the result of Symington's lack of attention to detail and his reliance on mistake-prone subordinates? Or are the discrepancies part of a deliberate attempt by Symington to deceive lenders to obtain loans that were necessary to keep his company afloat?

When Symington recertified the accuracy of his financial statement to the union pension funds on June 29, 1990, his signature on the statement appeared directly beneath the following certification:

"In submitting the foregoing statement, both the printed and written portions of which I have carefully read, I guarantee its accuracy with the intent that it be relied upon by the bank in extending credit to me. I warrant that I have no known obligations, direct or contingent, which have not been set forth hereon and that I have not knowingly withheld any material information of an adverse nature (emphasis added). I agree to notify the bank immediately, in writing, of any unfavorable change in my financial condition."

Eight days earlier, on June 21, 1990, Symington signed a different financial statement dated as of December 31, 1989, and on June 26, 1990, provided it to First Interstate Bank. That statement also indicated a net worth of $11.9 million. But Symington changed the bank's standard certification statement to read as follows:

"In submitting the foregoing statement, both printed and written portions of which I have carefully read, I am providing you with a 'best efforts' evaluation of my financial condition. The current depression in the real estate market makes it difficult to determine real asset value, thus any evaluation is highly subjective (emphasis added). I agree to notify the said Bank immediately, in writing, of any unfavorable changes in my financial condition. I hereby authorize you to investigate my credit record and to check statements I've made."

Symington never notified the union pension funds that eight days earlier he had signed a financial statement to First Interstate Bank (now Wells Fargo) that concluded the values he placed on his real estate assets were "highly subjective.

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John Dougherty
Contact: John Dougherty