Indictment Accuses Arizona Governor of Lying, Fraud

Arizona Gov. Fife Symington, who won election promising to run Arizona like his own business, was indicted Thursday on federal charges of making false statements to financial institutions and using his office to pressure union pension funds to free him from a $10-million loan guarantee.

The 23-count indictment by a federal grand jury in Phoenix also accused the 50-year-old Republican, now in his second term, of wire and bankruptcy fraud. The grand jury said Symington had provided false personal financial statements to lenders from May 1986 through May 1991, for personal and business borrowings.

Symington was a commercial real estate developer before he was elected in February 1991.

Nora Manella, the U.S. attorney in Los Angeles who oversaw the case after Arizona authorities removed themselves, said at a news conference in Phoenix that most of Symington’s “real estate projects were unsuccessful. But through the false statements, he was able to create a picture of himself as a successful real estate developer.”

At a press conference after the indictment was made public, Symington declared that he was not guilty and criticized the federal government for taking seven years to investigate him.

“The federal government has accused me of criminal conduct I never committed and never contemplated,” he said. “I believe that one day a jury will find me innocent.”

Symington also repeated his vow that he would not step down if indicted. “I am going back to work,” he said.

Symington’s lawyer, John Dowd of Washington, D.C., said evidence will show that Symington made errors and omissions in his financial statements but that no banks lost money and the governor gained no advantage from his mistakes.

The indictment made Symington the second Arizona governor indicted in less than a decade. In 1988, Gov. Evan Mecham was charged with illegally hiding a campaign loan. He was eventually acquitted but not before he was impeached and removed from office on unrelated grounds. In those years, Symington was among the earliest to demand that Mecham resign.

In Thursday’s indictment, Symington was charged with 16 counts of making false statements to federally insured financial institutions, four counts of wire fraud, one count of bankruptcy fraud, one count of scheming to defraud a pension fund and one count of attempted extortion of pension funds.

In the attempted extortion count, Symington is accused of threatening between July and October of 1991 to end Arizona State University’s lease at a commercial center in downtown Phoenix unless six Arizona union pension funds released him from his $10-million personal guarantee of a loan used to finance the center, known as Phoenix Mercado.

If his demands were not met, Symington allegedly said, he would use his powers as governor to terminate the lease under which the university was the largest tenant of the Mercado, an act that could do great financial harm to the pension funds. The Mercado, a mixed-use retail and office center, once stood at the heart of Symington’s real estate ventures.

In the five-year span of alleged financial misrepresentation, Symington personally prepared at least eight sets of false personal financial statements for various lenders, the indictment said. They included First Interstate Bank of Arizona, Valley National Bank of Arizona, Dai-Ichi Kangyo Bank, Citicorp Real Estate Inc., and the investment advisors to the pension funds--MH Investment Counsel and McMorgan & Co.

The grand jury charged that Symington personally prepared different versions of personal financial statements for the same date, tailored to meet his varying needs as a borrower or as he attempted to win release from previous commitments.

According to the indictment, Symington provided a Dec. 31, 1989, financial statement to a pension fund investment advisor that showed him with a net worth of about $11.9 million. The statement was part of his guarantee of a $10-million loan that the pension funds made for the Mercado project.

The grand jury said Symington knew this financial statement vastly overstated his net worth.

In addition to providing false financial statements to Citicorp Real Estate, Symington misrepresented to the company that his assets included more than $600,000 in “readily marketable securities,” according to the indictment. These actually were held in four irrevocable trusts over which Symington had no control, the grand jury said.

Although much of the alleged misrepresentation took place before Symington’s election, the indictment charged that after becoming governor he continued to certify to a lender for one of his principal real estate projects that his net worth totaled at least $4 million.

At the same time, he was representing to an Arizona bank that his net worth was a negative $4.1 million, the indictment said.

Special correspondent Laura Laughlin in Phoenix contributed to this story.