From The Post

Jury Convicts Symington of Fraud

Gov. Fife Symington in 1994. (AP)

PHOENIX, Sept. 3 — A federal jury today convicted Arizona Gov. J. Fife Symington III of defrauding lenders by lying about his financial condition when he was struggling to save his collapsing real estate empire, forcing him from office.

The two-term Republican, who was elected governor on promises that he would run the state with the same business acumen with which he ran his real estate ventures, tearfully told reporters and staff members afterward that he will resign Friday.

"The future lies ahead of us, not behind us, and others will now be entrusted to lead us there," Symington said. "I have never been one to linger, and I don't intend to start now."

Arizona's constitution automatically forces a governor out of office upon conviction, meaning that Symington will be replaced by Secretary of State Jane Hull, also a Republican.

In the courtroom, Symington stared at a blank verdict form on the defense table at which he was seated, showing no emotion as the verdicts were read. A few muffled sobs were heard from supporters in the spectator seats, and one juror wiped tears from his eyes as the clerk repeatedly intoned "guilty."

U.S. Attorney Nora Manella from Los Angeles, whose office prosecuted the case, flew to Phoenix today and said after the verdicts, "This was not a political prosecution." She said that prosecutors and the FBI were after a developer who lied to his creditors, who had millions in losses -- losses that were passed along to their customers. Refering to Symington's wealthy upbringing, Manella said, "no amount of pedigree, or education, or business sophistication, excuses anyone."

Symington was the second Arizona governor indicted on criminal charges in a decade. Ironically, he was a major player in the impeachment and removal from office of his predecessor, Evan Mecham, before Mecham was acquitted of charges relating to a questionable campaign loan.

Eleven governors have been indicted while in office this century, and six have been convicted or pleaded guilty. Five of those resigned or were removed from office.

The jury found Symington guilty on seven felony counts of defrauding three banks by giving them false financial statements or overstating his net worth when they lent him millions of dollars for several of his real estate development projects.

The jury deadlocked on 11 charges in the 21-count indictment and acquitted Symington on three charges, including an allegation of attempted extortion. Prosecutors charged that Symington had threatened to use his political power as governor to cause Arizona State University to pull out of a group of pension funds to which he owed $10 million and from which he had sought loan concessions.

U.S. District Judge Roger Strand declared a mistrial on the deadlocked verdicts and set sentencing for Nov. 10.

Symington was convicted of one count of wire fraud that alleged he gave the pension funds three fraudulent personal financial statements between 1987 and 1990 overstating his net worth in order to get the $10 million loan for a downtown office-retail project.

The federal jury deadlocked on a charge that in 1995, while he was in office, the governor lied under oath during a bankruptcy proceeding about the accuracy of a 1989 financial statement to the pension funds. Symington declared bankruptcy that year after the pension funds refused to release him from his personal guarantee on the $10 million loan as he struggled to keep his collapsing real estate empire afloat.

Federal prosecutors said they were satisfied with the seven guilty verdicts, but would discuss whether to retry Symington on the deadlocked counts -- an unlikely event. Symington is facing a maximum prison sentence of 30 years and millions of dollars in fines, although prosecutors have not said what kind of sentence they will request.

After a week of deliberations, jurors had to start over again on Aug. 20 after one panelist, a 74-year-old woman, was dismissed and replaced by an alternate when other jurors complained that she was unable to focus on discussions and refused to talk about her opinions. The juror, a former Republican precinct committeewoman, later said she would have voted to acquit Symington and that other jurors tried to badger her into voting for conviction.

Symington's lawyers demanded a mistrial over the juror's dismissal. Judge Strand rejected the motion.

Symington, 52, is the Harvard-educated great-grandson of U.S. Steel founder Henry Clay Frick, the son of former ambassador Fife Symington II, who unsuccessfully ran for Congress three times in Maryland, and a cousin of the late Sen. Stuart Symington (D-Mo.).

During the 13-week-long trial, prosecutors contended that Symington used this background of privilege and wealth to deceive lenders into giving his real estate development partnerships millions of dollars on the basis of fraudulent representations about his financial condition after the Phoenix building boom of the 1980s went bust.

Simply put, the government's case -- and the jury's conclusion -- was that Symington made himself look rich when he wanted a loan and poor when he wanted to avoid paying back a loan. He repeatedly overstated his assets and net worth to creditors from 1986 to 1991 when seeking nearly $200 million in loans that would generate millions of dollars in development fees for his companies and himself, and understated his liabilities to creditors when seeking to renegotiate loans or stave off default, the jurors decided.

In some financial statements to lending institutions, Symington claimed to be a millionaire many times over and easily capable of guaranteeing loans. In others, he said he was as much as $26 million in debt, the government charged in the indictments on which the governor was convicted.

Testimony showed that only one of the 23 properties Symington developed -- mostly up-market shopping malls and office towers -- ever turned a profit. The rest were sold at a loss, foreclosed upon or returned to lenders before the governor declared bankruptcy in 1995, claiming that he was the victim of a real estate crash that sent the price of developments that cost him $150 a square foot to build plummeting to as low as $30.

During six days on the witness stand, Symington admitted making numerous mistakes in his financial statements but said they were unintentional and that he had relied on his accountants to spot and correct any errors.

Staff writer William Claiborne contributed to this report.