S&L; Suit Against Arizona Governor Likely, Sources Say
The federal government has decided to file a multimillion-dollar lawsuit, perhaps as early as Monday, against Arizona Gov. Fife Symington over his role as both a director of a failed Phoenix savings and loan and its largest borrower, sources said.
Federal Deposit Insurance Corp. Chairman William Taylor has authorized a civil suit against Symington that alleges breach of care in his duties as a director of Southwest Savings & Loan Assn., which failed in 1989 at an estimated cost to taxpayers of $941 million.
Sources said the complaint, which was sent to Symington’s lawyers Thursday, is slated to be filed Monday in federal court in Phoenix.
Government sources said the Justice Department is also conducting a criminal probe of Symington’s activities at Southwest based on a referral two months ago from investigators at the Resolution Trust Corp. The RTC, the federal agency created to dispose of failed thrifts, assembled the civil case against Symington and other members of Southwest’s board of directors.
Symington, a Republican who won office in a special election in February, was the developer of Phoenix’s huge Camelback Esplanade hotel-office-retail complex, a joint venture financed by Southwest. Symington was a director of Southwest in 1983 when approval was given for the project, which ended up costing Southwest $52 million.
Symington’s attorney could not be reached for comment Saturday, and his spokesman, Doug Cole, said he was unaware of the suit.
RTC attorneys, in a June 12 internal memo that recommended filing suit against Symington, said he had invested only $432 of his own money in buying property for the Camelback Esplanade project but reaped more than $8 million in development fees by getting the Southwest board to commit to spending $39 million on the project.
That memo, written by a senior attorney and signed by four high-ranking RTC officials, said Symington had engaged in “blatant self-dealing” and “spent Southwest’s funds with reckless abandon.”
Symington has called the allegations “absurd,” saying he did nothing improper while on Southwest’s board. He also has said he expects the Camelback Esplanade project to be a “long-term success,” not a loss to the institution.
How strong a case to bring against Symington, or whether to bring one at all, has been the subject of months of internal debate at the upper reaches of the RTC and the FDIC. RTC General Counsel Gerald Jacobs, a former Phoenix lawyer who did work for Southwest and has described himself as an old friend of Symington, has recused himself from the Southwest investigation.
The statute of limitations on government claims against Southwest directors expires Feb. 17.