Mecham Firm Not Evaluated for Loan It Got

Gov. Evan Mecham’s former chief of staff said Wednesday that he filled Mecham’s request for an $80,000 loan to his car dealership from a promotional fund without checking the company’s financial condition.

James Colter conceded at Mecham’s impeachment trial that the July, 1987, loan would have been “a bummer deal” if the dealership was unable to repay it.

Prosecutors said they would show that Mecham Pontiac was in deep financial trouble and “desperately needed the loan” to survive.

The governor’s lawyers, who contend that Mecham was helping the state by paying high interest rates on the money, objected to testimony about the car dealership’s financial condition, but they were overruled.

Misuse of Money Alleged

The Senate is investigating an allegation that Mecham misused the funds, raised by his inaugural committee but transferred to the protocol fund because of a state law barring use of such contributions to pay campaign debts.

When Sen. Manuel Pena suggested to Colter, who left the Mecham administration last fall, that Mecham Pontiac was overencumbered when the loan was taken, Colter said: “If that’s so, it’s a bummer deal. But it was repaid, so I guess it wasn’t a bummer deal.”

Also Wednesday, Mecham’s former legislative aide testified that she quit because she was worried that “people could possibly go to jail” if the loan was discovered.

Donna Carlson, who was the subject of an alleged death threat investigated earlier in the trial, testified that she and other Mecham staffers believed the fund could be used only to “promote the interests of the state of Arizona.”

In addition to charges of obstructing the investigation of an alleged death threat against Carlson and of misusing state funds, Mecham is accused in the impeachment trial of concealing a $350,000 campaign loan.

Tells of Conversation

Carlson described a conversation with Colter late last summer that she said involved both loans.

“Mr. Colter was extremely upset,” Carlson said. “He said: ‘I don’t think the governor understands the magnitude of the debt . . . . I had to loan him $80,000 out of the protocol fund.’ ”