Was Told He Could Use Protocol Fund, Mecham Says

Gov. Evan Mecham testified for a second time in his historic impeachment trial Friday, answering charges that he illegally used $80,000 in public funds to bail out his family’s struggling Pontiac dealership.

The first-term Republican said he was assured the money could be used for “any damn thing you want” except personal living expenses or politics.

The money originally totaled about $100,000 in a protocol fund made up of proceeds from inaugural festivities.

Prosecutors say it was public money to be used to promote Arizona through ceremonies and gifts for visiting dignitaries.

The defense argues that the funds were private and that Mecham was within his rights to loan $80,000 to Mecham Pontiac Corp.

Friday’s testimony by Mecham and his son, Dennis, the dealership’s general manager, focused on the business’ debts and assets.

Financial Straits

The prosecution maintains that Mecham made the loan because the dealership was in financial straits.

Evidence introduced this week showed Mecham Pontiac at the time was in default on a $100,000 commercial loan and in the process of foreclosure on a piece of property in Tacoma, Wash.

The governor admitted that he had been “red-faced” over the way he managed his business.

Asked by his chief counsel, Jerris Leonard, about the $100,000 default, the governor said:

“Well, quite frankly, I wasn’t watching my details. I was a little red-faced when this caught up with me and I went and took care of it.”

He said he made a payment and renewed the loan.

“Is it embarrassing for you to have to have this kind of an exhibit shown to the entire state of Arizona?” Leonard asked, referring to the bank letter notifying Mecham of the default.

“I’m not enthused about it,” Mecham responded.

Mecham said he was told about the protocol fund while governor-elect in November, 1986.

He said he was given the parameters of the protocol fund by William Long, co-chairman of the Mecham Inaugural Committee, which was formed independently of Mecham.

‘Never Heard a Word’

“I never heard a word discussed of public funds,” Mecham asserted.

He quoted Long as telling him: “You can spend it for any damn thing you want . . . as long as it isn’t politics or personal living expenses.”

Mecham said he loaned it to his dealership merely to earn more interest for the fund--about 9% compared to 4.5% it drew in a bank.

Earlier Friday, Dennis Mecham testified in his father’s behalf.

The younger Mecham claimed the business was in “very strong” shape and did not seek any funds from the governor.

Dennis Mecham said his father called him last July and “asked if I could use $80,000 in the dealership operation, and I said yes.”

He said his father told him the money came from the inaugural fund and “was just sitting there” and he wanted to “roughly double the interest.” The loan was repaid in full in October when the governor’s chief of staff told Dennis Mecham there were “political questions.” That was the same month newspaper reports disclosed a $350,000 campaign loan Evan Mecham is accused of failing to report properly.

Concealing the campaign loan is one of three articles of impeachment against the 63-year-old governor as well as the focus of a criminal indictment against him.