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REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
July 24, 1997 9:30 a.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Trial - Volume 40)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
7814
1 I N D E X
2 Witness: Direct Cross Redirect Recross VD
3 Lawrence Field
By Mr. Lynam 7815
4 By Mr. Schindler 7843
5 John Fife Symington, III
By Mr. Dowd 7845
6
7
8 E X H I B I T S
9 No. Description Identified Admitted
10 7564 Videotape 7856 7856
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19
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7815
1 P R O C E E D I N G S
2
3 THE COURT: Good morning, ladies and gentlemen. The
4 record may reflect the presence of the jury with roll call
5 waived, presence of counsel, presence of the defendant.
6 And you may proceed.
7 MR. LYNAM: Thank you, Your Honor.
8
9 LAWRENCE FIELD,
10 called as a witness herein, having been previously duly sworn,
11 was examined and testified as follows:
12
13 REDIRECT EXAMINATION
14 BY MR. LYNAM:
15 Q. Good morning, Mr. Field.
16 A. Good morning, Mr. Lynam.
17 Q. Yesterday during cross-examination the government asked
18 you whether you had previously testified as an expert in
19 federal court. Do you remember being asked that?
20 A. Yes, sir, I do.
21 Q. Have you provided expert accounting testimony in state
22 Superior Court before?
23 A. Yes, I have.
24 Q. Are the accounting principles the same regardless of
25 whether you're in state court or federal court?
7816
1 A. Yes, sir, they are.
2 Q. And how many investigations have you conducted regarding
3 complaints against CPAs?
4 A. For the Arizona State Board of Accountancy?
5 Q. Yes, sir.
6 A. I'm sure what I said earlier, 15 to 20 at a minimum,
7 maybe a few more.
8 Q. Remember the government asked you whether you had taught
9 any accounting courses in college?
10 A. Yes, I do.
11 Q. Have you taught continuing education for accountants?
12 A. Yes, I've taught continuing education through the Arizona
13 Society of Certified Public Accountants for the last five or
14 six years.
15 Q. What subjects have you taught?
16 A. Those subjects have been primarily on auditing matters
17 and financial statement disclosure policies.
18 Q. Now, when our firm retained your accounting firm to
19 assist us in the case, what did we ask you to do?
20 A. You asked our firm to look at the documents that
21 surrounded the work that Coopers & Lybrand did for
22 Mr. Symington and his related entities.
23 Q. Did we ask you to assist us in understanding the
24 accounting issues?
25 A. Yes, sir, you did.
7817
1 Q. Were you told at the time that the government had been
2 investigating this case for years and that we needed some
3 help?
4 MR. SCHINDLER: Objection, Your Honor, relevance.
5 THE COURT: Sustained.
6 BY MR. LYNAM:
7 Q. Did you understand that the government had already looked
8 at a lot of these accounting issues for a long period of
9 time?
10 MR. SCHINDLER: Objection, Your Honor, calls for
11 speculation and relevance.
12 THE COURT: Let's move along. You may answer the
13 question. Let's move forward.
14 THE WITNESS: Yes, I did understand that.
15 BY MR. LYNAM:
16 Q. What were the specific records we asked you to look at?
17 A. You specifically asked us to look at Coopers & Lybrand
18 work paper files related to audits, tax work, the agreed upon
19 procedure files, work paper files related to reviews or
20 compilations that Coopers & Lybrand had performed for
21 Mr. Symington's entities, partnerships, corporations. You
22 asked us to look at correspondence files and billing files.
23 Q. Was it basically all of the Coopers & Lybrand files you
24 could locate?
25 A. Yes, sir. We looked at every one we can get our hands
7818
1 on.
2 Q. Did we ask you to look at every single issue in this case
3 or just the issues related to Coopers & Lybrand?
4 A. You only asked us to look at the issues related to
5 Coopers & Lybrand.
6 Q. Did we ask you to look at every single exhibit in this
7 case or just the documents related to Coopers & Lybrand?
8 A. Just the ones related to Coopers & Lybrand.
9 Q. For example, did we ask you to look at all the notes of
10 Jean Wong?
11 A. No, sir, you did not.
12 Q. Did we ask you to look at every letter that The Symington
13 Company has sent for the last five or six years?
14 A. No, sir, you did not.
15 Q. If we had asked you to look at the thousands of other
16 documents in this case, how many more hours would you have had
17 to have spent above the 550 hours your firm has already spent?
18 A. I really couldn't give you an exact number, but certainly
19 it would be a very significant number of hours.
20 Q. Did we ask you to interview witnesses?
21 A. No, sir, you did not.
22 Q. Did the government conduct interviews of Coopers &
23 Lybrand accountants?
24 MR. SCHINDLER: Objection, Your Honor, calls for
25 speculation and relevance.
7819
1 THE COURT: Yes, the objection sustained, unless the
2 witness has actual knowledge.
3 BY MR. LYNAM:
4 Q. Are you aware that the government conducted interviews of
5 Coopers & Lybrand accountants?
6 A. Yes, sir, I was aware of that.
7 Q. Did we ask you to base your opinion in court on hearsay
8 that people said in out-of-court interviews?
9 A. No, sir, you did not.
10 Q. Did we ask you to base your opinion on a review of the
11 actual records of Coopers & Lybrand?
12 A. Yes, sir, you did.
13 Q. And are those the records that we saw here in court?
14 A. Yes, sir, it was certainly some of those records.
15 Q. We saw some of them here in court?
16 A. Only some of them, yes, sir.
17 Q. Now, government asked you whether you were involved in
18 the work that Coopers & Lybrand did for Mr. Symington. Do you
19 remember being asked that?
20 A. Yes, I do remember that.
21 Q. And you said what?
22 A. I said, no, I was not involved.
23 Q. If you were involved in that work, could you testify as
24 an accounting expert on your own work?
25 A. No, sir, I could not.
7820
1 Q. The government asked you whether you were involved in
2 conversations that Coopers & Lybrand had with Mr. Symington.
3 Do you remember being asked that?
4 A. Yes, sir, I do.
5 Q. And you were not; is that your answer?
6 A. That was my answer, yes, sir.
7 Q. If you were involved in those conversations that
8 Coopers & Lybrand had with Mr. Symington, could you testify as
9 an accounting expert about things that you were personally
10 involved in?
11 A. No, I could not.
12 Q. Now, where were the Coopers & Lybrand files that you
13 looked at?
14 A. They were in one of two locations. They were at the FBI
15 document depository or they were at the offices of Brown &
16 Bain, which is a law firm here in Phoenix, Arizona.
17 Q. With regard to the documents of Brown & Bain, do I
18 understand what you're saying that those documents were not in
19 the government's possession?
20 A. That's correct.
21 Q. So some of the documents that we introduced as exhibits
22 here were documents which the government did not have in their
23 possession at the FBI?
24 A. That's correct, yes, sir.
25 Q. Does the fact that your firm was paid for the work you
7821
1 did in assisting us in this case change how you did your work?
2 A. No, sir, not at all.
3 Q. Is your firm usually paid for the work that you do?
4 A. Yes, sir, it is.
5 Q. Does the fact that you were paid for your work change
6 your duty as an accountant?
7 A. No, sir, it does not.
8 Q. Are accountants required to be independent?
9 A. Yes, they are.
10 Q. Did you reach independent conclusions here, Mr. Field?
11 A. Yes, sir, I did.
12 Q. Did you reach honest conclusions?
13 A. Yes, sir.
14 Q. Did you reach those conclusions based on your experience
15 as an accountant?
16 A. My experience as an accountant and the documents that I
17 reviewed, yes, sir.
18 Q. Regarding the subject of hours worked and getting paid,
19 do you know how much the FBI agents and the accountants which
20 the government has used for the past five years have been paid
21 for their work on the accounting issues?
22 MR. SCHINDLER: Objection, Your Honor, calls for
23 speculation and relevance.
24 THE COURT: Sustained.
25 BY MR. LYNAM:
7822
1 Q. To your knowledge, does the government supply accountants
2 at taxpayers' expense to assist the defense in cases like
3 this?
4 MR. SCHINDLER: Objection, Your Honor, relevance and
5 lack of foundation, calls for speculation.
6 THE COURT: The witness may answer only if he knows
7 but not otherwise.
8 THE WITNESS: I have no knowledge.
9 BY MR. LYNAM:
10 Q. Have you ever heard of the government supplying an
11 accountant to the defense in a case like this at taxpayers'
12 expense?
13 A. I have never heard of that.
14 MR. SCHINDLER: Same objection, Your Honor.
15 BY MR. LYNAM:
16 Q. Does the defendant have to go out and hire their own
17 accountants in cases like this?
18 A. That's always been my experience, yes, sir.
19 Q. Now, you testified about some work that your firm has
20 done for the state. Remember being asked about that?
21 A. Yes, sir, I do.
22 Q. Did your firm do work for the state before Fife Symington
23 was elected Governor?
24 A. Yes, sir. We've done work for various agencies in the
25 state since we opened in September of 1986.
7823
1 Q. Do other accounting firms in Phoenix do work for the
2 State of Arizona or other state agencies?
3 A. Yes, sir, they do.
4 Q. With regard to the work your firm has done for the State
5 Board of Accountancy, was that work awarded on the basis of a
6 competitive bid?
7 A. Yes, sir, it was.
8 Q. And Mr. Schindler didn't ask you about the competitive
9 bid process, did he?
10 A. No, sir, he did not.
11 Q. Is more than one firm selected as a result of the
12 competitive bid process for that work?
13 A. There are several firms that have contracts with the
14 State Board. They -- they all expire at different times.
15 They may only appoint one or two firms with any particular
16 bid, but there are certainly more than one firm -- there is
17 more than one firm that has a contract with the state board,
18 yes, sir.
19 Q. And who approves those contracts for the state board?
20 A. The State Board of Accountancy approves those.
21 Q. Does Governor Symington select the winner of the
22 competitive bidding process?
23 A. No, sir, he does not.
24 Q. With regard to the work your firm has done for the State
25 Gaming Commission, who awards those contracts?
7824
1 A. The State Gaming Commission awarded that contract.
2 Q. Do you personally work in that area?
3 A. No, sir, I do not.
4 Q. What is your understanding of why your firm was
5 selected?
6 MR. SCHINDLER: Objection, Your Honor, calls for
7 speculation, lack of foundation.
8 THE COURT: You may answer if you know. Not
9 otherwise.
10 THE WITNESS: We were selected for that contract due
11 to our prior experience with investigative work and assisting
12 state agencies on -- since we've opened.
13 BY MR. LYNAM:
14 Q. Do you have any reason to believe that Governor Symington
15 was involved in that award?
16 A. No, sir, I have no reason to believe that.
17 Q. Were the fees that were -- your firm was paid by these
18 state agencies earned?
19 A. Yes, sir.
20 Q. Does the fact that your firm has done some work for a
21 state agency affect the opinions that you've testified to in
22 court?
23 A. No, sir.
24 Q. Now, you testified that you were asked to look at the
25 Coopers & Lybrand work papers, correct?
7825
1 A. That's correct.
2 MR. LYNAM: Your Honor, may the computer monitors be
3 enabled, please?
4 THE COURT: Yes.
5 BY MR. LYNAM:
6 Q. I'm going to just bring up some documents on the screen
7 that are already in evidence from the documents we've seen
8 yesterday. Do you see this reference here from the 1987 AUP
9 file?
10 A. Yes, sir, I do.
11 Q. That refers to -- let me see if I can bring it up
12 better.
13 Is this the reference in the AUP file for 1987? Why
14 don't you read it. It's probably easier.
15 A. It says, "Note: These real estate schedules have been
16 reviewed by Coopers & Lybrand tax department personnel
17 (John Yeoman and Bill Buntin) who work closely with
18 most Symington real estate transactions. Other than
19 the changes noted above, no obvious errors were
20 noted."
21 Q. And, Mr. Field, did you create that note in the Coopers &
22 Lybrand file?
23 A. No, sir, I did not.
24 Q. Who created that?
25 A. That note was written by the individual that performed
7826
1 this work, who I'm fairly confident was Ms. Rolle.
2 Q. It was created by Coopers & Lybrand then?
3 A. That's correct, yes, sir.
4 MR. LYNAM: Your Honor, may the Elmo be enabled,
5 please?
6 THE COURT: It may be.
7 BY MR. LYNAM:
8 Q. Mr. Field, did you create the reference in the Coopers &
9 Lybrand file to the Ritz-Carlton having a $57 million
10 appraisal?
11 A. No, sir.
12 Q. Did Coopers & Lybrand create that reference?
13 A. Yes, sir, that's their work paper.
14 Q. Mr. Field, did you create the reference in the Coopers &
15 Lybrand file where they discuss the burn downs or the
16 decreases in the percentage of the CELP file -- of the CELP
17 partnership as a result of not making general partner loans?
18 A. No, sir, I did not.
19 Q. Who created that reference?
20 A. That was in Coopers & Lybrand's work paper files.
21 Q. Mr. Field, did you create the reference in the Coopers &
22 Lybrand file to the fact that the CELP 2 loan was $37 million
23 and not $35 million?
24 A. No, sir, I did not.
25 Q. Who created that?
7827
1 A. That was in Coopers & Lybrand work paper files.
2 Q. Did you create the reference -- the references in the
3 file that documented that -- that Coopers & Lybrand reduced
4 Mr. Symington's net worth each year they worked on the 1987,
5 '88, and '89, AUPs?
6 A. No, sir, I did not.
7 MR. SCHINDLER: Objection, Your Honor.
8 BY MR. LYNAM:
9 Q. Who created those references?
10 A. Those were created by Coopers & Lybrand.
11 Q. Did you create the general ledger that showed interest
12 being paid on notes payable that we looked at yesterday?
13 A. No, sir, I did not.
14 Q. That was in the Coopers & Lybrand file?
15 A. No, sir -- yes, sir, it was.
16 Q. And that was in the Coopers & Lybrand file when you
17 examined it?
18 A. Yes, sir, it was.
19 Q. Did you create the letter from Coopers & Lybrand to The
20 Symington Company analyzing the effects of a possible sale of
21 the Van Buren property during 1988?
22 A. No, sir, I did not.
23 Q. Who created that letter?
24 A. That letter was created by Coopers. It was written by an
25 employee of Coopers & Lybrand.
7828
1 Q. And, Mr. Field, did you create the reference in the
2 Coopers & Lybrand CELP 3 file to the -- the $4 million net
3 worth requirement having a technical violation -- being a
4 technical violation not expected to change the terms of the
5 loan agreement?
6 A. No, sir, I did not.
7 Q. Who created that reference in the file?
8 A. That was in Coopers & Lybrand's files.
9 Q. Does the fact that your firm did some work for state
10 agencies change the fact that Coopers & Lybrand had all of
11 this information in their file?
12 A. No, sir, it does not.
13 Q. Does the fact that your firm has done work for state
14 agencies change the fact that Coopers & Lybrand did not
15 utilize all the available information they had when they
16 worked on the agreed upon procedures?
17 A. No, sir, it does not.
18 Q. Does it change the fact that Coopers & Lybrand had a duty
19 to use that information in your opinion?
20 A. In my opinion, it does not change that at all.
21 Q. Now, the government suggested during cross-examination
22 that some of the files that were marked as exhibits were not
23 complete files. Do you remember being asked about that?
24 A. The ones that were marked as exhibits were not complete
25 copies of the files. Is that what you're asking me?
7829
1 Q. Yes.
2 A. Yes, sir, I remember.
3 Q. Remember Mr. Schindler brought a big stack of files to
4 show you?
5 A. Yes, sir, I do.
6 Q. Now, did the government object to our use of some of
7 these files?
8 MR. SCHINDLER: Objection, Your Honor. Improper
9 question, lack of foundation.
10 THE COURT: Sustained.
11 BY MR. LYNAM:
12 Q. Mr. Field, did we plan on using more documents in the
13 file?
14 MR. SCHINDLER: Objection Your Honor, relevance,
15 calls for hearsay.
16 THE COURT: Sustained.
17 BY MR. LYNAM:
18 Q. Mr. Field, were we limited in our ability to present all
19 of the documents in the file that we wanted to?
20 MR. SCHINDLER: Same objection, Your Honor.
21 THE COURT: Sustained.
22 BY MR. LYNAM:
23 Q. Now, the government asked you about the use of the word
24 "cumulative knowledge." Do you remember that yesterday?
25 A. Yes, sir, I do.
7830
1 Q. And they asked you if -- if that term was in the book of
2 standards published by the American Institute of CPAs;
3 remember that?
4 A. Regarding attestations services, yes, sir, I remember
5 that.
6 Q. And I believe you testified that was a term of art?
7 A. That's correct, yes, sir.
8 Q. What did you mean by that?
9 A. Well, term of art is -- is a saying that I've become
10 aware of that means it's a term used in a certain profession
11 or by a certain group of people that -- that knowledge is
12 something. And what -- what cumulative knowledge is supposed
13 to mean is all of the available knowledge that you have about
14 that client or that subject matter.
15 Q. Is that part of having the adequate knowledge to do the
16 work that you described in those standards?
17 A. Yes, sir, it is.
18 Q. And yesterday the government asked you about a client
19 walking into your accounting firm and asking you to compare
20 his financial statement with the prior financial statement.
21 Remember being asked about that?
22 A. Yes, sir, I do.
23 Q. Now, if you had never done any work for that client
24 before, and you had no other available information on that
25 client, what would you do if he asked you to work on his
7831
1 financial statement?
2 A. Well, my answer yesterday was that I -- I probably
3 wouldn't do it. The only other thing I would add to that is
4 that I guess if the person didn't mind how much money I
5 charged them, then we could ultimately do enough work to get
6 happy with that. But I think the bottom line is if someone
7 walked in under that scenario and we had never done any work
8 for them in the past, the reality of it would be that we would
9 decline to do the work and they will have to go somewhere
10 else.
11 Q. Why is that?
12 A. Well, for the very reason that we've been talking about.
13 We just would not have sufficient knowledge of that person's
14 circumstances, actions and details to be able to feel
15 comfortable that the document we would be associating
16 ourselves with would be free of significant errors.
17 Q. But if -- if you had done work for that client before,
18 and had all the other available information that you're
19 talking about, what would you do then?
20 A. I would suspect we would accept the engagement.
21 Q. And would you utilize that information that you have when
22 you're working on that financial statement?
23 A. Yes, sir, we certainly would.
24 Q. And did Coopers & Lybrand have other information
25 available to them when they were working on Mr. Symington's
7832
1 financial statement?
2 A. Yes, sir, they did.
3 Q. So Mr. Symington was not an unknown person to Coopers &
4 Lybrand when he asked them to work on his financial statement,
5 was he?
6 A. No, sir, he was not.
7 Q. Now, I believe it's been testified to by both you and
8 Ms. Wrigley that the AUP work was not an audit of the
9 financial statement; is that right?
10 A. That's correct. It was not.
11 Q. If an audit of the financial statement had been done for,
12 let's say 1987, how would the market value of the real estate
13 have been presented?
14 MR. SCHINDLER: Objection, Your Honor, calls for
15 speculation and relevance given the nature of the engagement.
16 THE COURT: Sustained.
17 BY MR. LYNAM:
18 Q. Are audits done in accordance with GAAP?
19 A. Yes, sir, they are.
20 Q. And if the financial statement had been audited and
21 presented in accordance with GAAP, would that have been a
22 change in the methodology from the prior financial statement?
23 MR. SCHINDLER: Same objection, Your Honor, calls
24 for speculation.
25 THE COURT: You may answer the question.
7833
1 THE WITNESS: Yes, it would be a change in
2 methodology. I believe I testified at some point yesterday
3 that those personal financial statements were not prepared in
4 accordance with GAAP. Therefore, it would be a change.
5 BY MR. LYNAM:
6 Q. Could using a different methodology cause the market
7 values of the properties -- result in a change of the market
8 value of those properties compared to the way they were
9 presented previously?
10 MR. SCHINDLER: Objection, Your Honor, calls for
11 speculation and relevance.
12 THE COURT: You may answer the question, but you
13 should not, in doing so, engage in any speculation.
14 THE WITNESS: It very certainly could change the
15 values, yes, sir.
16 BY MR. LYNAM:
17 Q. And if you changed the method of determining the values
18 of the properties after the $4 million net worth requirement
19 has started, is there a risk of being in default simply
20 because of the methodology?
21 MR. SCHINDLER: Objection, Your Honor, this is
22 beyond cross and totally irrelevant.
23 THE COURT: Sustained.
24 BY MR. LYNAM:
25 Q. If Mr. Symington did not want an audit done and a change
7834
1 in the methodology done on his financial statement, does that
2 affect Coopers & Lybrand's duty with regard to the work they
3 did under the agreed upon procedures?
4 A. No, sir, it does not.
5 Q. Does that change Coopers & Lybrand's duty to use the
6 available information they have on such matters as the notes
7 payable?
8 A. No, sir, it does not.
9 Q. Does that change Coopers & Lybrand's duty to use the
10 available information they had regarding what the loans were
11 on the projects?
12 A. No, sir.
13 Q. Does it change Coopers & Lybrand's duty to bring
14 appraisals that they have in their file to Mr. Symington's
15 attention if they don't match what's on his financial
16 statement as the appraised value?
17 A. No, sir. It would not change that.
18 Q. Does it change Coopers & Lybrand's duty to use any of
19 this information that we've talked about?
20 A. No, sir, it does not.
21 Q. Now, you were asked some questions about the bills that
22 Coopers & Lybrand issued for the agreed upon procedures work.
23 And did the file itself for the 1987 agreed upon procedures
24 work reflect work being done by the tax department?
25 A. Yes, sir, it did.
7835
1 Q. Is that one of the notes that we just looked at first
2 thing this morning?
3 A. That was certainly one of the references, yes, sir.
4 Q. Now, were you able to find the actual bill that was sent
5 by Coopers & Lybrand for that agreed upon procedures work for
6 1987?
7 A. No, sir, we never located that.
8 Q. So without the bill, can you conclude that Mr. Symington
9 was not told that the tax department was working on this
10 bill?
11 MR. SCHINDLER: Objection, Your Honor, vague and
12 ambiguous, calls for speculation and relevance.
13 THE COURT: You may answer the question, if you
14 can.
15 THE WITNESS: Can you repeat it, please?
16 BY MR. LYNAM:
17 Q. Remember yesterday you were asked whether you saw any
18 documents stating or advising Mr. Symington that the tax
19 department had worked on the AUP work?
20 A. I remember that, yes, sir.
21 Q. But without looking at the bill, can you tell that he was
22 advised one way or the other?
23 A. I could not find the bill, so, no, I couldn't tell
24 whether he was advised that by the bill.
25 Q. Whether or not the hours worked by the tax department
7836
1 were broken down on the bill, does that change Coopers &
2 Lybrand's duty to utilize the information that they have had,
3 whether it's in the tax department or anyplace else, when they
4 are working on this financial statement?
5 A. No, sir, it doesn't change their duty. And I believe my
6 testimony yesterday was that they realized they had a duty and
7 that's why they sent it to the tax department to do that.
8 MR. LYNAM: Your Honor, may the computer monitor be
9 enabled again?
10 THE COURT: Yes.
11 BY MR. LYNAM:
12 Q. I'm going to bring up on the screen the letter from the
13 1987 work file.
14 Remember this letter we looked at yesterday?
15 A. Yes, sir, I do.
16 Q. Is this the representation letter that Coopers & Lybrand
17 asked Mr. Symington to sign?
18 A. Yes, sir, related to the December 31, 1987 agreed upon
19 procedures work.
20 Q. And remember we asked about -- you were asked about this
21 paragraph number one. Can you read that again?
22 A. It says, "We are responsible for the fair presentation in
23 the statement of financial condition in conformity with
24 accounting principles generally applied to personal
25 statements of financial condition reported on Valley
7837
1 National Bank forms."
2 Q. Now, you were asked some questions about what those
3 accounting principles were, right?
4 A. Yes, sir, I was.
5 Q. And what was your answer?
6 A. My answer was that those principles do not exist.
7 Q. And I believe yesterday in cross-examination you said
8 something about this was irrelevant then. Can you explain
9 your answer?
10 A. When I said it was irrelevant, what I meant was they
11 don't exist, so, therefore, the representation doesn't mean
12 anything. You can't represent something that doesn't exist.
13 So, therefore, to me, it's irrelevant.
14 Q. And did you find any reference in the work files to
15 Coopers explaining what these accounting principles were?
16 A. No, sir, I did not.
17 Q. Based on your review of the files did Coopers & Lybrand
18 have a wide body of knowledge regarding Mr. Symington's
19 financial affairs?
20 A. Yes, sir, they did.
21 Q. And they prepared this letter for him; is that correct?
22 A. That's correct. That was my testimony yesterday.
23 Q. Now, yesterday the government asked you whether you saw
24 any documentation in the files where Mr. Symington said that
25 the numbers on his financial statement were not correct.
7838
1 Remember being asked that?
2 A. Yes, sir, I do.
3 Q. Now, did Coopers & Lybrand need to be told that in order
4 to go and check the numbers on the financial statement?
5 A. No, sir, they did not.
6 Q. Does Coopers & Lybrand still have a duty to use the
7 available information in their files to check basic accuracy
8 of his financial statement?
9 A. Yes, sir, they do.
10 MR. LYNAM: Can we enable the Elmo, Your Honor,
11 please?
12 THE COURT: Yes.
13 BY MR. LYNAM:
14 Q. Remember yesterday Mr. Schindler asked you some questions
15 about the summary of the bills which you prepared?
16 A. Yes, sir, I remember going through it.
17 Q. And he had you total up how many were for Mr. Symington
18 personally. Remember that?
19 A. Yes, sir, I remember that.
20 Q. And these were not -- these were just the bills you were
21 able to locate; is that right?
22 A. Yes, sir, this is a list of all the bills that we were
23 able to locate.
24 Q. But you testified that you know there are some bills you
25 couldn't locate; is that right?
7839
1 A. Yes, sir, that's correct. We know it's not a complete
2 list.
3 Q. Now, do you see the names of these partnerships here, the
4 partnership entities?
5 A. Yes, sir, I do.
6 Q. Did Mr. Symington have personal interest in all of these
7 partnerships?
8 A. Yes, sir, he did.
9 Q. And does the general partner of the partnership typically
10 control who does the accounting work for that partnership?
11 A. Yes, sir, they would.
12 Q. And do you see references to work being done for The
13 Symington Company?
14 A. Yes, sir.
15 Q. And what is your understanding as to who was the owner of
16 The Symington Company?
17 A. My understanding that was Mr. Symington.
18 Q. So with regard to all of these -- all this work for the
19 partnerships in the company, did Coopers & Lybrand treat these
20 entities as affiliates of Mr. Symington?
21 A. In review of -- excuse me -- in review of the Coopers &
22 Lybrand billing files, I testified that Coopers & Lybrand
23 was -- excuse me -- Mr. Symington and his affiliated
24 entities were consistently in the top ten clients of the
25 Phoenix office of Coopers & Lybrand. And the way they always
7840
1 listed that in that ranking was it was a one-line item. So in
2 my opinion, they considered them all to be one client, yes,
3 sir.
4 Q. And what was the total that that one client was billed
5 for all the work that Coopers & Lybrand did?
6 A. For what period, sir?
7 Q. Here on --
8 A. What was that?
9 Q. -- what was the total that that one client was billed for
10 the work that Coopers & Lybrand did?
11 A. For what period?
12 Q. The total period reflected in your summary.
13 A. I believe net credit of that amount was $1,070,000.
14 Q. Does the fact that Coopers & Lybrand had done all of this
15 work on these affiliates of Mr. Symington create the
16 cumulative knowledge that you are referring to that they had a
17 duty to utilize?
18 A. Yes, sir, it does.
19 MR. LYNAM: Your Honor, may the Elmo -- monitor be
20 enabled again?
21 THE COURT: Yes.
22 BY MR. LYNAM:
23 Q. Mr. Field, I'm going to show you a page from the May,
24 1991 compilation that's already in evidence. Remember
25 Mr. Schindler asked you some questions about how Coopers &
7841
1 Lybrand displayed or presented the notes payable when they did
2 the compilation in May, 1991?
3 A. I remember discussing it with him, yes, sir.
4 Q. And do you remember he -- he asked you whether the date
5 that the note was initially incurred was listed here in this
6 financial statement that Coopers prepared?
7 A. I remember that, yes, sir.
8 Q. Now, did Coopers & Lybrand have available to them in
9 these general ledgers you've described further information
10 about these promissory notes?
11 A. Yes, sir, they did.
12 Q. And did they have that information during 1987, 1988, and
13 1989?
14 A. Yes, sir, they did.
15 Q. Now, is there any indication in the files that you
16 examined that Mr. Symington told Coopers not to display the
17 date that these notes were incurred?
18 A. In the footnotes themselves?
19 Q. Or in any of the work files you looked at?
20 A. No, sir, there was no indication of that.
21 Q. And is the way Coopers & Lybrand presented them in the
22 financial statement they prepared typical of the way an
23 accounting firm would present a note payable?
24 A. Yes, sir, I think it's very typical.
25 Q. Mr. Field, how many national accounting firms have you
7842
1 worked for?
2 A. Two different ones.
3 Q. What were their names again?
4 A. Arthur Anderson and Price Waterhouse.
5 Q. And Coopers & Lybrand is also a national accounting firm?
6 A. Yes, sir. Actually I believe they are an international
7 accounting firm as well as were -- or are Arthur Anderson and
8 Price Waterhouse.
9 Q. Mr. Field, is there a wall in a large national accounting
10 firm between the tax department and the audit department?
11 A. No, sir, there's no wall.
12 Q. In your experience when a client hires an accounting
13 firm, is he hiring just one person in a department, or is he
14 hiring the entire firm?
15 MR. SCHINDLER: Objection, Your Honor, that calls
16 for speculation and it's well beyond the scope of cross.
17 THE COURT: Sustained.
18 BY MR. LYNAM:
19 Q. Did you see anything in the agreed upon procedures
20 file -- files that you looked at that indicated that
21 Mr. Symington restricted people who were working on his
22 financial statement from talking to people in the tax
23 department who had other information about his financial
24 condition?
25 A. No, sir, I saw no such reference at all.
7843
1 Q. And did the documents that we examined yesterday show
2 that the people in the audit department and the people in the
3 tax department in fact communicated on a variety of matters
4 relating to Mr. Symington?
5 A. Yes, sir, they did.
6 MR. LYNAM: Thank you. I have no further questions,
7 Your Honor.
8 MR. SCHINDLER: Your Honor, I have one question
9 on --
10 THE COURT: On what subject?
11 MR. SCHINDLER: On the independence that Mr. Lynam
12 raised.
13 THE COURT: On what?
14 MR. SCHINDLER: The independence issue which I did
15 not cross on yesterday.
16 THE COURT: You may ask it. You can ask it from
17 there if you wish.
18 MR. SCHINDLER: Sure.
19
20 RECROSS-EXAMINATION
21 BY MR. SCHINDLER:
22 Q. Mr. Lynam -- Mr. Field?
23 A. Yes, sir.
24 Q. Mr. Lynam just asked you about independence. Do you
25 recall that?
7844
1 A. In what regard, sir?
2 Q. That an accountant needs to -- that you are independent
3 of Coopers & Lybrand. Do you recall that?
4 A. Yes, sir.
5 Q. In fact, at the time you took on this engagement, you had
6 already been doing work for Mr. Symington, correct, your firm?
7 A. Yes, sir, I testified to that yesterday.
8 Q. So your firm was not independent as to Mr. Symington,
9 correct?
10 A. We had done other work for Mr. Symington, if that's your
11 question, yes, sir.
12 Q. Right. And at the time that you were engaged to do this,
13 you were not independent vis-a-vis Mr. Symington, you weren't
14 an independent third-party accounting firm, correct?
15 A. I was not an independent third-party accounting firm, but
16 that's not the certified accountant's definition of
17 independent.
18 MR. SCHINDLER: I have nothing further, Your Honor.
19 THE COURT: Anything further?
20 MR. LYNAM: May the witness finish explaining what
21 he means then by the independence of an accountant just to
22 complete the answer?
23 THE COURT: Yes.
24 THE WITNESS: Actually I was done. I was just going
25 to point out that there -- that the standards that certified
7845
1 public accountants have to do their work by defines
2 independence. And Mr. Schindler's question was not directed
3 in that fashion.
4 THE COURT: You may step down, sir. You may be
5 excused at this time.
6 You may call your next witness.
7 MR. DOWD: Your Honor, the defense calls
8 Mr. Symington.
9 THE COURT: Please come forward, sir, and permit the
10 clerk to administer the oath to you, sir.
11 (The witness, John Fife Symington, III, was duly
12 sworn.)
13 THE COURT: Please take the stand, sir.
14 You may proceed.
15 MR. DOWD: Thank you, Your Honor.
16
17 JOHN FIFE SYMINGTON, III,
18 called as a witness herein, having been duly sworn, was
19 examined and testified as follows:
20
21 DIRECT EXAMINATION
22 BY MR. DOWD:
23 Q. Good morning, Mr. Symington.
24 A. Good morning, Mr. Dowd.
25 Q. Mr. Symington, you're the defendant in this case?
7846
1 A. Yes, I am.
2 Q. Where were you born, sir?
3 A. I was born in New York City.
4 Q. And where were you raised?
5 A. In Baltimore.
6 Q. And where were you educated, sir?
7 A. I went to elementary school in Baltimore. I went to high
8 school in Baltimore. And then I went to Harvard.
9 Q. And when did you graduate from Harvard, sir?
10 A. In 1968.
11 Q. And after you graduated from Harvard, what did you do,
12 sir?
13 A. I went right on active duty in the United States
14 Air Force.
15 Q. And were you an officer in the Air Force?
16 A. Yes, I was.
17 Q. And how long did you serve in the United States
18 Air Force?
19 A. I served in the Air Force for a little over three years.
20 Q. And did you serve overseas when you were in the United
21 States Air Force?
22 A. Yes, I did.
23 Q. And where did you serve, sir?
24 A. I served in Southeast Asia during the Vietnam War.
25 Q. And what was your billet, sir?
7847
1 A. I was stationed at Udorn Air Force base in Northeastern
2 Thailand on the Laotian border.
3 Q. And were you decorated for your service?
4 A. Yes, I was.
5 Q. What decoration, sir?
6 A. The Bronze Star for meritorious service.
7 Q. When did you first come to Arizona, sir?
8 A. I came here in 1968.
9 Q. Were you still in the Air Force?
10 A. Yes, I was stationed at Luke Air Force Base.
11 Q. And you left the Air Force in 1971?
12 A. Approximately.
13 Q. And what occupation did you undertake, sir?
14 A. I went into the real estate business.
15 Q. And here in Phoenix?
16 A. Yes. I joined a firm called Ed Post Realty in Scottsdale
17 and got my salesman's license.
18 Q. When did you become a developer?
19 A. Approximately in 1972, '73, in that period.
20 Q. And when did you start The Symington Company?
21 A. I started The Symington Company under its current name in
22 the very early '80s.
23 Q. Were you the 100 percent owner of The Symington Company?
24 A. Yes, I was.
25 Q. And how long were you a developer, sir?
7848
1 A. I've been a developer since probably 1972, '73.
2 Q. And what does a developer do, sir?
3 MR. DOWD: And, Your Honor, in this connection, I
4 would like to use a chart that we used in opening. The
5 government has no objection.
6 THE COURT: You may.
7 MR. SCHINDLER: No objection, Your Honor.
8 BY MR. DOWD:
9 Q. Can you see this chart, Mr. Symington?
10 A. Yes.
11 Q. Now, sir, would you tell us what a developer does? And
12 let's start with the first block.
13 A. Well, a developer finds a piece of property and envisions
14 a project for that property and then tries to take it through
15 the entire process to successful completion, whether it's an
16 office building or a warehouse, shopping center, whatever.
17 Q. Why is location important?
18 A. Well, it's the key to successful real estate. If you
19 don't have a good prime location, then you're not going to do
20 very well with your project. So location is very critical in
21 real estate.
22 Q. Then we have market surveys and economic consultants. Do
23 you employ them early in the process?
24 A. Yes, from the very beginning, you start to assemble your
25 team to build the project. And early on, you do market
7849
1 surveys to find out the depth of the market that you're going
2 to try to build into. And you hire various consultants who do
3 studies for you.
4 Q. And is it your experience that you run into zoning
5 problems?
6 A. Yes. More often than not in the development business you
7 run into zoning problems.
8 Q. And that takes -- does that take some time and expense
9 to solve the zoning problems?
10 A. Yes. Usually zoning problems, when they occur, are
11 fairly time consuming and expensive and a lot of work goes
12 into it with your team and with the city you're working with
13 and with the neighborhoods to make sure you come up with a
14 compatible design and that you, you know, you solve all of the
15 concerns in the neighborhood.
16 Q. Now, Mr. Symington, as a developer, does -- do all these
17 steps, the vision, location, the survey, and the zoning
18 problems, do they take money to deal with?
19 A. That's correct.
20 Q. And where do you -- where do you get the money to do
21 that?
22 A. Well, we -- basically I would use my lines of credit or
23 I would bring in a financial partner at the very beginning to
24 help me, depending on the size of the undertaking.
25 Q. Then the next block is when you have the investors or
7850
1 often they are known as the equity partners; is that correct?
2 A. That's correct.
3 Q. And they put up, what, some seed money?
4 A. Well, investors in a project, when you are creating it,
5 are the ones who -- the way we, or the way I would structure
6 my transactions, they are the ones who would basically come in
7 and invest the money in the project and put the capital in so
8 that we could build the project. I was the work partner. My
9 investors were the financial partner.
10 Q. Do you have to make a presentation to these investors?
11 Do you have to convince them of the prospects of this vision
12 and location and so forth?
13 A. Yes. Typically an investor in a real estate project will
14 want to see all the work that you've done, would want to
15 review the location, the market studies. They, you know, it's
16 a pretty detailed effort. And then they decide whether they
17 like it or they don't. And then they take the risk along with
18 you.
19 Q. Would you have any -- maybe this is out of order, but
20 would you have architects and engineers by this time and would
21 there be drawings for the investors to look at?
22 A. Typically you would have your professionals on board, you
23 would have your architects and your engineers and your -- your
24 contractor, because you're trying to move the whole process
25 forward to a construction start date. So you need all of the
7851
1 technical information, the working drawings, costs, it's just
2 a lot of stuff that you've got to pull together to build a
3 project.
4 Q. And this is another expense item; is that correct?
5 A. That's correct.
6 Q. Either you have to put up the money out of your line of
7 credit or your own pocket or from the equity partners; is that
8 correct?
9 A. That's correct. It's a very -- we call it in the
10 business, it's the front money that goes in on the front end
11 of the project to get it to a level where you can take it to
12 an institution or to an investor to get financing.
13 Q. All right. Then we have this business of leasing or
14 preleasing of the building before it's built; is that correct?
15 A. That's correct.
16 Q. What is that all about? What are you trying to achieve?
17 A. There what you're trying to do is several things. First,
18 a great way to test your vision or your concept for the
19 property is to take it to the marketplace to see, if it's an
20 office building, if you can appeal to a tenant, some -- some
21 firm that's out in the market looking for office space. And
22 if they like it, then you go through lease negotiations and
23 you try to sign them up. And you get them committed to lease
24 a certain square footage.
25 Q. Now, does that assist you in obtaining the construction
7852
1 financing, which is next?
2 A. That's correct. Because when you -- when you get some
3 preleasing, when you walk into the door, or you're conversing
4 with an institution that's interested in financing, say, an
5 office building, if you have some tenants that go in with you,
6 then that adds to the credibility of the project and it
7 reduces the financial risk of the project.
8 Q. And now, when you -- when you go to the -- the lender
9 here or the lender comes to you -- as I understand it, in
10 the '80s, they came to you?
11 A. Yeah, in the 1980s, it was a very -- it was a very
12 active market that way. And many financial institutions were
13 here in this market looking for product, coming by and sort of
14 saying, We hope you'll do business with us. So it was a very
15 active market that way.
16 Q. Now, if the construction lender agrees to finance the
17 construction, you as a developer are required to put up a
18 guarantee; is that correct?
19 A. That's --
20 MR. SCHINDLER: Your Honor, may I simply ask that
21 there not be so much leading? I would rather hear from
22 Mr. Symington, if the questions could be nonleading.
23 THE COURT: Let's move along.
24 MR. DOWD: Certainly.
25 THE COURT: And obviously --
7853
1 MR. DOWD: I will, Your Honor, I was just trying to
2 lay a foundation.
3 BY MR. DOWD:
4 Q. Mr. Symington, as the developer, what is required of you
5 by the construction lender?
6 A. A construction lender will -- well, first of all, they
7 require a very detailed package about the -- about the
8 project, its costs, and its liability and projections, because
9 they are lending on the real estate project. And that's
10 their -- that's what their main focus is.
11 In addition to that, it's typical in the industry
12 that they will require a personal guarantee from the
13 developer.
14 Q. And that's industry practice?
15 A. That's industry practice.
16 Q. And in connection with that guarantee, do they require a
17 financial statement from you?
18 A. Yes. In connection with the guarantee, they require
19 that.
20 Q. And the construction lender is given the green light to
21 put up the money and now you come to this phase here. Tell
22 the ladies and gentlemen of the jury what the -- what --
23 what you do in terms of putting it all together.
24 A. Well, once you have taken the -- the vision to the point
25 where it's ready to go into the ground, then you -- you break
7854
1 ground and you start a whole new phase of the project. And
2 it's equally intensive an effort because you're -- you're
3 under construction. There are a lot of details to supervise
4 and stay on top of in order to reach a completion date that
5 you had promised to the lender, and also to meet the
6 construction budget, which, of course, is a huge undertaking
7 if you're doing a large project.
8 Q. And are there a variety of problems that you could run
9 into here that could affect whether you build it on time and
10 on budget?
11 A. Yeah. There are -- there are lots of problems in
12 the -- in the development phase, the construction phase of a
13 project.
14 Q. Are they your responsibility?
15 A. Right. The developer is really charged with the
16 responsibility to bring in a project on time, on budget, and
17 lien free. And if you -- if you don't, then the -- the
18 lender will -- will be looking to you to complete the project
19 in that manner.
20 Q. Now, Mr. Symington, how are the proceeds of the
21 construction loan disbursed during the construction? Do you
22 get all the ten million up front or --
23 A. No, it's a process that the lender sets up so that it's
24 staged. Every month you have what are called construction
25 draws. And there's an inspection process on the part of the
7855
1 lender. Architect inspects the project. I would inspect the
2 project. And we would get a construction draw which would
3 consist of all the labor and materials that had gone into the
4 project up to that point. And then we would submit that
5 entire package, very detailed package to the lender for
6 funding.
7 Q. And would you get -- would you get paid during this
8 monthly draw process?
9 A. That's correct. We -- we would earn our development fee
10 on a monthly basis pro rata as we moved forward with the
11 completion of the project.
12 Q. And would those development fees, what did you do with
13 them?
14 A. Well, those development fees were the -- amount to
15 basically the cash flow of the company. And I would use those
16 fees to pay down my lines of credit and then also to reinvest
17 in additional projects that we might be working on.
18 Q. And after the building is built, did -- did you and your
19 colleagues at The Symington Company engage in either managing
20 or leasing up of the buildings?
21 A. Yes, we did. We would transition. Once we had gotten a
22 certificate of occupancy from the municipality, then we would
23 go into the management phase and we would manage and lease the
24 project. And we would collect our normal industry management
25 fees for doing that.
7856
1 Q. So you got fees for leasing, correct?
2 A. Fees for leasing.
3 Q. And fees for managing?
4 A. And fees for managing.
5 Q. And the fees for development?
6 A. And fees for development.
7 Q. Between the period 1986 to 1990, do you know how many
8 projects you built?
9 A. I believe I built somewhere between eight and ten
10 projects.
11 Q. And were they built on time?
12 A. Yes, sir, they were built on time.
13 Q. Were they built either on or under budget?
14 A. They were built either on or under budget.
15 Q. Did you ever take any money from a project that you did
16 not earn?
17 A. I did not.
18 MR. DOWD: And, Your Honor, with the Court's
19 permission, we would like to look at some of the projects that
20 are on a videotape. And the government has no objection.
21 THE COURT: You may.
22 MR. SCHINDLER: Your Honor, just for the record, if
23 Mr. Dowd could identify this for identification purposes for
24 the record.
25 MR. DOWD: Excuse me, Your Honor, this is Exhibit
7857
1 2564 for identification.
2 MR. SCHINDLER: Your Honor, I believe it's 7564.
3 MR. DOWD: I'll accept that, thank you, Your Honor.
4 THE COURT: The record may so reflect.
5 MR. DOWD: I'm having number problems again.
6 BY MR. DOWD:
7 Q. Mr. Symington, as these pictures come up, if you would be
8 kind enough to describe these various projects.
9 A. Okay. This is a project on Missouri Avenue which I
10 built. And it's a garden office building, single story, in a
11 very nice neighborhood. It's -- the offices are accessed from
12 exterior courtyards. Surface parking, covered parking. Very
13 attractive and low-profile, professional offices.
14 Q. Were these the projects that Mr. Dane was involved in
15 with you?
16 A. Right. These are the Dane projects on Missouri, 1002.
17 And this shows you the -- the interior courtyard and the
18 landscaping. They are meant to be very low profile, because
19 they are meant to blend into the residential area so they have
20 that type of feel.
21 This is 1010 East Missouri, which is the building to
22 the east of that one. It's a two-story office building, no
23 elevator with a walkup. Again very lush landscaping.
24 Whenever we developed these projects, we would try to preserve
25 a lot of the trees, palm trees and pecan trees that were in
7858
1 this neighborhood. And, again, they are very compatible with
2 their surroundings.
3 This is the 1515 East Missouri building. And 1505
4 is just behind it. It's a smaller building.
5 Q. Is this known as Missouri Court?
6 A. This is Missouri Court, yes. And this was an
7 award-winning building. Cornoyer and Hedrick, the
8 architectural firm, designed it and became the major tenant in
9 the building. And it's a very graciously designed structure.
10 There are all the pecan trees in the courtyard that we
11 preserved and we built the buildings around them and made them
12 a main feature in the courtyard.
13 Again it's garden office, two stories with an
14 elevator. And it's -- it basically leased up very, very
15 quickly initially. And, again, surface parking, covered
16 parking.
17 And 1505 is a smaller companion building to the
18 southwest of the main structure.
19 This is the Alta Mesa Village shopping center that
20 we built. It's about 30 -- as I remember, it's around 31,
21 32,000 square feet. And it's a southwestern design, Santa Fe
22 mission design with a mission tile roof. Again, it's a --
23 well, in my opinion, a very beautiful project. A lot of
24 others thought so, too. Didn't lease so well because we were
25 in a very soft market. But it today it is full. And it's in
7859
1 the Brown and Higley area in Southeast Mesa.
2 Q. This was financed by First Interstate Bank?
3 A. Yes, it was First Interstate Bank.
4 And it has restaurants and shops, a range of smaller
5 retailers, and the China Palace. If you like Chinese food, I
6 recommend it.
7 This is an overhead of the Mercado. You're looking
8 to the south, because you can see Bank One Ballpark under
9 construction at the top of the screen. 7th Street is to your
10 left. And it's running north and south. And the Mercado
11 stretches between 5th and 7th.
12 It was meant to be modeled after a Mexican village.
13 When Pete Garcia and I were working on this with the
14 architect, we spent a lot of time in Mexico, particularly in
15 Guanajuato, to come up with the design and the color pallet
16 with the architect to create the atmosphere of a Mexican
17 hilltown village.
18 This is the office building part of it. Arizona
19 State University is the anchor tenant. And they -- they were
20 an early tenant in the project. And this gives you an example
21 of the -- the Mexican architecture with the domes and the
22 very open architecture, the tile. It's really a very sort of
23 informal and festive atmosphere, very nice courtyards. We had
24 a range of tenants there.
25 This is a -- an artist's rendering of the project
7860
1 when it was full of people.
2 This project is Scottsdale Centre, which is on
3 Scottsdale Road north of Indian Bend on the east side of the
4 street. It's a 160,000-square-foot garden office building.
5 It was one of the first major office projects in North
6 Scottsdale back in the early '70s. And has a southwestern
7 design with very long and graceful arches, a tile that we
8 actually picked out of Monterey, Mexico, specially for the
9 building.
10 It sits on top of an over -- of a garage, an
11 underground garage. And it's built on the old Stillman
12 Ranch. This used to be what was left of the Stillman Ranch.
13 And, again, we preserved a lot of the native vegetation and
14 built the project around it with lots of courtyards.
15 And the -- in fact, in the interior courtyard,
16 which you'll see here in a minute, all of the original palm
17 trees were air lifted in that we preserved from the Stillman
18 Ranch. We preserved them off-site and brought them back in.
19 And this is access to the underground garage.
20 Unlike most underground garages, this one has a very high
21 ceiling so you don't feel like you're in a cave. And it's
22 really a very, very fine building. We were very proud of it.
23 This is the Scottsdale Seville project, which is
24 just south of the one that was -- we were just talking
25 about. It's on Indian Bend and Scottsdale Road. And it's
7861
1 over a hundred thousand square feet and it's office and
2 retail. The -- the office project is the headquarters of
3 Continental Homes. Tenants like Paine Weber and others are
4 there. It leased extremely well. It opened in the -- late in
5 1990, the year 1990. That's a canal that we actually spent a
6 million dollars on to solve the original drainage problem.
7 This is the lobby to the office billing. We always
8 put a lot of effort and money into our lobbies, because they
9 are the first thing you encounter as the public, like entering
10 a building, so the public areas need to be very attractive.
11 This is the archway into the retail court into
12 Marilyn's Mexican Food restaurant. And there's a -- this
13 just gives you a flavor, Ruth's Chris Steakhouse is on the
14 second floor at the southern part of the retail center. And
15 then you have a series of shops in line. And it's been a very
16 successful project. It was built in a very difficult market,
17 but made it through and it's worked well.
18 That's the interior courtyard near Marilyn's Mexican
19 Food restaurant.
20 This is the 5090 building, which is part of the 40th
21 Street office park that I built just north of Camelback Road.
22 And you can see the canal there on your left. We are north of
23 the canal and right on the border of Paradise Valley. And you
24 can see 5050, 5060, 5070, and 5080 going up the canal. This
25 was all the Cudia City wash, which was a wasteland when we
7862
1 bought it because of the wash and then we changed the
2 landscape and turned this into an office park.
3 The 5090 building was a four-story 100 -- I think
4 it's about 160,000 square feet garden -- class A office
5 building. And it's one that we were building as a multitenant
6 structure. But U S WEST, from Denver, came in and wanted to
7 buy it. And their subsidiary, Beta West, bought it. And they
8 moved their headquarters into the project.
9 And, again, it's a top-quality structure, very
10 beautiful detailing and from our standpoint was very
11 successful. These are the views to the north, the Phoenix
12 Mountains.
13 This is the new 5050 building, which is just across
14 the street south of the one you just saw. And it's, I believe
15 my memory is right, a three-story structure, similar design,
16 same quality with underground parking. It's the one that I
17 financed with Citicorp. And the glass, what we refer to in
18 the business as the curtain wall, is very high quality.
19 This is 5060, which is just now -- you're going
20 down the canal heading west. And it's a garden office
21 building. And you can see the difference between this and the
22 5050 building in that it's more informal. It's -- your office
23 is accessible through a walkway on the outside. You don't
24 have a closed-in building. And you have surface parking.
25 It's about 23,000 square feet.
7863
1 This is the 5070 building, which is a companion one
2 as we go down the canal, same kind of architecture, very lush
3 landscaping, very easy access to and from your office. And
4 because it's north of Camelback, it doesn't have a lot of
5 traffic, so people like that.
6 And then 5080 was the last building heading west
7 down the canal. And it's built directly over the Cudia City
8 wash. It's actually, you can't tell it from here, but you can
9 see it's up on pylons. But when you're up on the deck, you
10 can tell you are up in the air about 15 feet, because the
11 river runs right underneath the building. Hopefully it won't
12 go any higher than 15 feet.
13 And there's a parking garage structure just to the
14 west of the building. And this also leased up very quickly in
15 its initial run. And this is a view underneath the building,
16 the reflective glass showing you the Phoenix Mountains to the
17 north.
18 The interior court, the lobby of the building. So
19 it's different from the 5060, 5070. That shows you where the
20 wash comes in and dumps into the canal. And that's the area
21 north of the buildings where the wash comes through.
22 This is a picture of the Esplanade at night. It's
23 24th and Camelback. That's the Ritz-Carlton Hotel, which is
24 the anchor of the project. And it sits right on the
25 intersection of 24th and Camelback like a great big aircraft
7864
1 carrier. It's on a diagonal. You do that to reflect the
2 western sun in the summer. So you want to build your
3 buildings on a diagonal.
4 This is the retail courtyard in the project. The
5 retail is actually in the base of the office building and then
6 adjacent.
7 The MCI Tower. MCI is one of the major tenants.
8 Very gracious public areas in the building lobbies.
9 This is a view from one of the higher floors in the
10 project. And it shows you why we -- why we wanted the 11
11 stories at Squaw Peak. You get absolutely incredible views
12 from the office space here.
13 The exterior of the building has a lot of faceting.
14 The angles are very unusual and meant to capture interest.
15 The underground garage here was probably the second largest in
16 the Western United States when it was built, next to Century
17 City in Los Angeles. And you can see Camelback, right to
18 Camelback Mountain and the use of the reflective glass, we use
19 a special glass there to capture the feel for the project.
20 Q. Mr. Symington, are you familiar with the charges in this
21 case?
22 A. Yes, I am.
23 Q. I would like to go through them with you generally and
24 then we will address them specifically.
25 First, did you lie to the bankruptcy courts?
7865
1 A. I did not.
2 Q. Did you threaten Mr. Eaton in 1991?
3 A. I did not.
4 Q. Did you know that Mr. Mallery was sending that letter of
5 July 18th to First Interstate Bank?
6 A. I did not.
7 Q. Did you authorize that letter?
8 A. No, I never authorized it.
9 Q. Did you obtain any money from the pension funds to scheme
10 and defraud?
11 A. No, I did not.
12 Q. Did you obtain any money from Citicorp through a scheme
13 to defraud?
14 A. No, sir, I did not.
15 Q. Did you provide your 1990 financial statement to
16 Citicorp?
17 A. Yes.
18 Q. Did you obtain money from DKB by submitting false draw
19 requests?
20 A. I did not.
21 Q. In 1992, did you tell DKB that your net worth was
22 $5,300,000 in 1990?
23 A. Yes, I did.
24 Q. Was that your best estimate of your net worth at that
25 time?
7866
1 A. Yes, that was my best estimate at that time.
2 Q. And had you reported that net worth on a VNB form in
3 1990?
4 A. Yes, I did.
5 Q. Did you provide Mercantile with a false material
6 financial statement with the intent of obtaining a letter of
7 credit?
8 A. I did not.
9 Q. How did you obtain a letter of credit?
10 A. My mother got the letter of credit for me.
11 Q. By pledging her assets?
12 A. Yes, she had an account at the Mercantile with stocks and
13 bonds in it. And she pledged those stocks and bonds in order
14 to get the letter of credit.
15 Q. Did you provide Valley National Bank with false material
16 statements with the intent to influence that bank to give you
17 a line of credit?
18 A. I did not.
19 Q. How did you get the line of credit at Valley?
20 A. The line of credit with Valley came about because
21 they -- they knew I was a developer and they knew I was
22 generating development fees. And that was basically the main
23 source of payment that I used on the line of credit.
24 Q. Did you provide First Interstate Bank with false material
25 statements with the intent to influence the bank to make
7867
1 construction loans?
2 A. I did not.
3 Q. Did you try to fool any of your lenders with your
4 financial statements?
5 A. I certainly did not.
6 Q. Did you try to take advantage of any lending institution
7 with your financial statement?
8 A. No.
9 Q. Did you gain any advantage by the errors and omissions in
10 your financial statement?
11 A. I did not.
12 Q. Did you injure or harm anyone with your financial
13 statements?
14 A. I did not.
15 Q. Did you take or receive any money or property you weren't
16 entitled to because of the errors and omissions on your
17 financial statement?
18 A. No, sir.
19 Q. Let's talk about your financial statements that were
20 prepared during the years 1986 to 1991. All right, sir?
21 A. Yes.
22 Q. You prepared these statements?
23 A. Yes, I did.
24 Q. How did you prepare them?
25 A. I would sit down at my desk and ask Joyce to bring me the
7868
1 most recent financial statement and I would -- I would update
2 it and not spend a great deal of time on it. But I would just
3 update it. And she would work on it a little bit, too.
4 Q. Did you do any research to prepare your statement?
5 A. No.
6 Q. Joyce Riebel was the person that testified here. Is that
7 who you are referring to?
8 A. Yes.
9 Q. She's the one who helped you?
10 A. Yes, she helped me.
11 Q. And which form did you use?
12 A. I used the Valley Bank form.
13 Q. And who supplied that form?
14 A. The Valley Bank.
15 Q. And were these audited statements?
16 A. They were not audited statements.
17 Q. Were you ever required to prepare audited statements?
18 A. No, I was not.
19 Q. In this -- in this trial, the evidence indicates that
20 there are multiple statements in each year with the same as of
21 date. Can you tell us how that occurred?
22 A. Yes. Those statements were updates of the prior
23 statement. And when I did the update, I didn't change the as
24 of date, which created that appearance.
25 Q. So there were different statements created at different
7869
1 times?
2 A. They were different statements prepared at different
3 times. They were updated statements.
4 Q. How did you arrive at the values on your real estate
5 schedule?
6 A. I would base them on -- on appraisals or my estimates of
7 the market.
8 Q. And did you ever offer a financial statement to a lender?
9 A. No.
10 Q. You only provided it when it was required?
11 A. That's correct, when they requested a financial
12 statement, I would send it.
13 Q. Mr. Symington, have you had an opportunity to go back and
14 try to reconstruct what you did and how you did it?
15 A. Yes.
16 Q. And are there errors and omissions on these financial
17 statements?
18 A. Yes, there are.
19 Q. And did Coopers catch some errors?
20 A. Yes, Coopers caught some errors.
21 Q. And when did you realize that there were more errors and
22 omissions?
23 A. In -- in the spring of '91, when I asked members of my
24 company to research my real estate schedule and my financial
25 statement and work with Coopers, they -- they discovered it
7870
1 or I think Randy Todd called me and told me at that time that
2 there were a lot of errors on the statement.
3 Q. Were there errors in the loan amounts on the statements,
4 sir?
5 A. Yes, there were.
6 Q. Did you ever overstate your share on the statement?
7 A. I -- I overstated my share and I understated my share.
8 Q. And did you include all of your payables on the
9 statement?
10 A. No, I didn't have all of my notes on the schedule.
11 Q. Now, you indicated that the staff of The Symington
12 Company was working at Coopers & Lybrand?
13 A. That's correct.
14 Q. Who hired Coopers & Lybrand to do the compilation?
15 A. I did.
16 Q. And what did you tell them to do?
17 A. I told them that they needed to get to the bottom of my
18 financial affairs, to draw a circle around it, and just get
19 all of the information and put it together for me.
20 Q. After you were told that there were errors and omissions
21 on the previous statements, what did you tell them to do with
22 respect to the compilation?
23 A. I told them to keep going and to make sure they got it
24 all straightened out.
25 Q. Who received that compilation?
7871
1 A. All of my -- all of the lenders that I was doing
2 business with.
3 MR. DOWD: Excuse me, Your Honor.
4 BY MR. DOWD:
5 Q. So you knew that the 1991 compilation that you provided
6 to the lenders revealed errors and omissions that you made on
7 your previous statements?
8 A. Yes, I did.
9 THE COURT REPORTER: I'm having trouble hearing
10 Mr. Dowd, Your Honor.
11 THE COURT: Yes, could you speak up just a little
12 bit?
13 MR. DOWD: Yes, certainly I'm sorry. Is that
14 better?
15 Merilyn, is that better? I'm sorry. I didn't mean
16 to do that.
17 BY MR. DOWD:
18 Q. Did the Valley National Bank --
19 THE COURT: Excuse me, I'm not sure, there's some --
20 I don't know whether it's construction going on or what,
21 but -- do you know what that is?
22 THE CLERK: I don't know. I'm going to ask Cari to
23 check it out.
24 THE COURT: All right.
25 All right. Let's proceed.
7872
1 MR. DOWD: All right.
2 BY MR. DOWD:
3 Q. Mr. Symington, did the Valley National Bank receive your
4 1991 compilation?
5 A. Yes, they did.
6 Q. Did the First Interstate Bank receive your compilation?
7 A. Yes.
8 Q. Did the union pension funds receive your compilation?
9 A. Yes.
10 Q. Did Citicorp receive your compilation?
11 A. Yes, they did.
12 Q. Did any of those institutions ever complain to you after
13 they received the compilations about the previous errors and
14 omissions that you made?
15 A. No, they did not.
16 Q. Were your errors and omissions intentional, sir?
17 A. No, they were not.
18 Q. Now, with respect to your -- the various statements which
19 we will go through, more particularity, did you -- did you
20 reflect how much cash that you had on hand?
21 A. Yes.
22 Q. And did you reflect your financial exposure?
23 A. Yes, I did.
24 Q. How did you do that?
25 A. Well, I showed my financial exposure on the real estate
7873
1 schedule where I showed the loans on the projects. And I
2 showed it with -- by putting "C" on the -- next to the loan,
3 which reflected that I was a guarantor on the construction
4 loans which I said on the front page.
5 Q. Now, in the -- during the period '86 to '91, did you --
6 did you provide other information from you and the companies
7 to these lenders?
8 A. Yes.
9 Q. And on the real estate projects, did you give them
10 pro forma information?
11 A. Yes.
12 Q. And was that correct to your knowledge?
13 A. Yes. I believed it to be correct.
14 Q. Has anybody told you otherwise?
15 A. No.
16 Q. Now, I would like to review with you, if I could, if the
17 clerk would be kind enough, let's talk about Citicorp and
18 information provided to Citicorp.
19 MR. DOWD: If you could provide the witness with
20 Exhibit 718, 752 through '59, and 764.
21 And, Your Honor, all of these exhibits are in
22 evidence, and if I could have the monitor on, please.
23 THE COURT: Yes, may they be presented.
24 BY MR. DOWD:
25 Q. Mr. Symington, do you recall dealing with Citicorp in
7874
1 1989 when they were trying to decide whether to make the 5050
2 loan?
3 A. Yes.
4 Q. And did they ask you and your company to provide
5 information to them?
6 A. Yeah, they asked us for lots of information.
7 Q. Would you be kind enough to look at Exhibit 718.
8 And I would like to direct your attention to page
9 71, if we could.
10 A. Page 71?
11 Q. Please.
12 Do you have that in front of you, sir?
13 A. Yes, I do.
14 Q. Do you remember when this was -- came into evidence,
15 Mr. Thompson and Mr. Feingold?
16 A. Yes.
17 Q. Or Mr. Thompson, rather. And what is this information in
18 here, sir?
19 A. On this particular page, it's -- it talks about
20 sponsorship.
21 Q. And were you the sponsor of this project, the 5050?
22 A. Yes, I was.
23 Q. And does this consist of information -- I would like to
24 direct your attention to page 72, if I could. Does this
25 consist of information that you provided to Citicorp in 1989?
7875
1 A. Yes, it is.
2 Q. All right. And in particular, I would like to direct
3 your attention to two paragraphs in the sponsorship, the first
4 one beginning with Symington. Would you be kind enough to
5 read that to the ladies and gentlemen of the jury?
6 A. Yes. "Symington doesn't have the personal net worth to
7 do major deals himself, so he must put them together
8 (his forte), such that he can build assets. His most
9 common partner in the last eight years is Harold
10 Groussman (a reported liquid net worth of $70 million)
11 from Minneapolis."
12 Q. Sir, is that an accurate statement?
13 A. Yes, that's accurate.
14 Q. Was that information supplied by you and your colleagues?
15 A. Yes, it was.
16 Q. You didn't have the net worth to do major deals?
17 A. No, I did not.
18 Q. And let's look at the second paragraph if we could, sir.
19 Would you read that?
20 A. "Typically, in a deal Groussman takes 70 percent and
21 Symington 10 percent to 30 percent which he receives at
22 the back end. An emergency clause in their agreement
23 allows for additional equity, if needed, from Grossman
24 or other parties, with the resultant dilution of
25 Symington's position."
7876
1 Q. Is that accurate, sir?
2 A. That is accurate.
3 Q. You had the back end?
4 A. Yes, I had a small interest on the front end, and the
5 idea was that I would help create the value of the project
6 over the long term, and then at the end of the project, the
7 back end, my interest would be substantially increased.
8 MR. DOWD: Do you want to take a recess?
9 THE COURT: We will take our morning recess and
10 reconvene in 15 minutes?
11 (A recess was taken.)
12 THE COURT: The record may reflect the presence of
13 the jury with roll call waived, presence of counsel, presence
14 of the defendant.
15 And you may proceed.
16 MR. DOWD: Your Honor, I understand that I could not
17 be heard before, and I apologize. I always sound very loud
18 right next to me. But I will try to speak up and I apologize
19 to anybody who could not hear me.
20 THE COURT: All right.
21 BY MR. DOWD:
22 Q. Mr. Symington, at the break we were looking at page 72 of
23 Exhibit 718. What I want you to tell me is what is the date
24 of that information in that document?
25 A. It's May -- May 20th, 1989.
7877
1 Q. So the information in the document was provided by you
2 and your colleagues prior to that time?
3 A. That's correct.
4 Q. Now, if you look at exhibit -- put that one away and
5 look at Exhibit 747, which is in evidence.
6 Mr. Symington, do you recall an event known as the
7 annual review in connection with the Citicorp loan?
8 A. Yes, I do.
9 Q. And do you recall a gentleman by the name of
10 Mr. Steinhilber?
11 A. Yes, I remember Mr. Steinhilber.
12 Q. And did he have occasion to call on you in early May of
13 1990?
14 A. Yes.
15 Q. And what I have placed before you, sir, is a memorandum
16 that is in evidence written by Mr. Steinhilber. And I would
17 ask you to look at the paragraph number one under "Findings"
18 and ask you if that refreshes your recollection about the
19 events of that visit he made with you.
20 A. Okay.
21 Q. Do you recall that visit, sir?
22 A. Yes, I recall the visit.
23 Q. Do you see where I've highlighted paragraph one?
24 A. Yes.
25 Q. And would you read that for the ladies and gentlemen of
7878
1 the jury, please.
2 A. Yes. "Number one, requested year-end operating
3 statements, rent rolls, and pertinent debt information,
4 (i.e., lender commitment, term, rate, interest
5 reserves, guarantees, et cetera) related to Fife
6 Symington's personal real estate holdings."
7 Q. Now, in the second paragraph is it correct that you
8 expressed some concerns about delivering that information
9 right away?
10 A. Yes.
11 Q. But do you know whether it was delivered right away?
12 A. It was delivered, I believe.
13 Q. Let's go to Exhibit 752, which I believe is in front of
14 you. And this is also in evidence, sir.
15 And who is this letter from?
16 A. This letter is from James A. Cockerham.
17 Q. Addressed to?
18 A. This is addressed to Tim Steinhilber, Citicorp Real
19 Estate, Inc.
20 Q. And what is Mr. Cockerham providing to Mr. Steinhilber,
21 sir?
22 A. Would you like me to read the --
23 Q. If you could just summarize it for us.
24 A. Well, he basically is giving him the financial statements
25 for eight of our projects, or eight of my projects.
7879
1 Q. I see.
2 A. Including the Esplanade, the Mercado, the 5060, 5070,
3 5080 buildings and Scottsdale Centre Limited.
4 Q. And the date of this letter, sir?
5 A. It's May 17th, 1990.
6 Q. Let's go to Exhibit 753, sir. And if you could, look at
7 753, '54, '55, '56, '57, and '58, or up to '57 and tell the
8 jury what those documents are.
9 A. 753 is the Camelback Esplanade Limited Partnership No. 1
10 financial statement for the years ended December 31, 1989 and
11 1988.
12 Q. And then look at 754.
13 A. 754 is Camelback Esplanade Limited Partnership No. 2
14 financial statement for the years ended December 31, '89 and
15 1988.
16 Q. Let's look at 755.
17 A. And 755 is a Camelback Esplanade Limited Partnership
18 No. 3, financial statement for the year ended December 31,
19 '89, and for the period of August 16th, 1988, which they say
20 is inception, through December 31, 1988.
21 Q. How about Exhibit 756, sir?
22 A. Exhibit 756 is the Mercado Developers Limited Partnership
23 financial statement, income tax basis, for the 12-month period
24 ended December 31, 1989.
25 Q. And 757, sir?
7880
1 A. And 757 is the 5060 Associates Limited, the 5060 building
2 financial statements, income tax basis, for the 12-month
3 period ended December 31st, 1989.
4 Q. And 758, sir?
5 A. And 758 is Scottsdale Centre Limited, 7373 building
6 statement of cash flow for the 12 months ended 12, 1989.
7 Q. And, sir, what kind of cash flow does that reflect on
8 that statement?
9 A. Well, on the -- on page 4 --
10 Q. Yes.
11 A. -- it shows year-to-date actual $42,595.93 negative.
12 Q. So it shows a negative cash flow for the year?
13 A. Yes, it does.
14 Q. Exhibit 759 is what, sir?
15 A. Exhibit 759 is a letter from James A. Cockerham to Tim
16 Steinhilber, Citicorp Real Estate, and it's a schedule of
17 selected loan information for properties requested by Citicorp
18 Real Estate that they had requested on May 17th, 1990. This
19 letter is dated May 18th, 1990.
20 Q. And are there attachments to that document?
21 A. Yes, there are.
22 Q. And what do they show?
23 A. They show loan information on properties that were
24 requested by Citicorp. They show the lender, the commitment
25 amount, the interest reserve, recourse, and date for CELP No.
7881
1 1, which is the Camelback Esplanade No. 1, and No. 2, and No.
2 3, as well as the Scottsdale Seville Associates.
3 Q. Do they have the permanent loan amounts for those
4 projects?
5 A. Yes, they do.
6 Q. Now, sir, is that the same kind of information that would
7 appear on your real estate schedule on your financial
8 statement?
9 A. Yes.
10 Q. Now, what I would like to do is now turn to Exhibit 764,
11 which is in evidence.
12 Whoops, oh, I see, I know what it is. I remember.
13 Is this the annual review that was done in 1990,
14 sir, by Citicorp?
15 A. Yes. It's the 1990 Symington annual review and real
16 estate portfolio exhibits.
17 Q. Okay. And this is prepared by Citicorp?
18 A. That's correct.
19 Q. Based on information that you furnished them?
20 A. That's correct.
21 Q. Let's turn to page 18, if you would, sir.
22 Do you see at the top?
23 A. Yes.
24 Q. And it indicates the quality of information received from
25 the sponsor?
7882
1 A. That's what it says.
2 Q. And what's the rating you get for financial information,
3 sir?
4 A. They ranked us a four.
5 Q. And what's the highest?
6 A. Five.
7 Q. Let's turn to page 19.
8 Do you see that paragraph on sponsor, sir?
9 A. Yes, I do.
10 Q. And let's look at the second bullet, if we could. And
11 would you be kind enough to read that to the ladies and
12 gentlemen of the jury.
13 A. Yes. "Mr. Symington's personal financial condition is
14 heavily reliant upon the performance of his partnership
15 interests in various real estate holdings. Symington's
16 real estate portfolio is heavily oriented toward office
17 properties, hence, is exposed to substantial declines
18 of equity and cash flow as a result of the depressed
19 state of the Phoenix office market."
20 Q. Is that an accurate statement, sir?
21 A. Yes, it's an accurate statement.
22 Q. Is that based on information furnished by you and your
23 company?
24 A. Yes, it is.
25 Q. Kindly turn to page 27 of the exhibit, please.
7883
1 Do you see the middle paragraph, Mr. Symington?
2 A. Yes.
3 Q. Sir, what was the date of this document again?
4 A. This is the 1990 Symington annual review.
5 Q. That's September, 1990?
6 A. I believe so. Yes, September, September 10th, 1990.
7 Q. And would you read this paragraph for the ladies and
8 gentlemen of the jury.
9 A. "Symington appears to have his hands full developing the
10 Esplanade (1.5 million square feet)" -- do you want me to read
11 the handwriting as well?
12 Q. No, just read what's printed there.
13 A. "The 5050 building (70,000 square feet), Scottsdale
14 Seville (178,000 square feet), and the downtown Mercado
15 (127,000" feet -- "square feet) all of which are in
16 various stages of construction and lease-up. In the
17 near term, CRE will continue to closely monitor our
18 account, as well as Symington's other development
19 projects performance."
20 Q. That's fine, you can stop right there.
21 Would you be kind enough to turn to page 28 of the
22 exhibit, the next page.
23 By the way, is that an accurate statement of how
24 full your hands were?
25 A. Yes, that's an accurate statement.
7884
1 Q. Now, at the top is a paragraph called "Comments: Fife
2 Symington's personal financial condition." Would you read
3 that, please, for us?
4 A. Yes. "Fife Symington's personal financial condition
5 alone does not merit extension of this credit.
6 Symington's partner in the transaction, American
7 Insurance Investment Company, Inc., has contributed $2
8 million of upfront cash equity into CRE's security and
9 presumably would seek to protect their interest in the
10 event difficulties are encountered. While AIMC is not
11 a direct obligor under CRE's debt, the combination of
12 their equity support and the underlying collateral
13 value mitigate the lack of top tier financial support
14 to this transaction."
15 Q. Now, sir, that's Citicorp. You also had dealings on two
16 construction loans with First Interstate Bank?
17 A. Yes, I did.
18 Q. And in addition to the financial statements and
19 pro formas you gave them, did you give them other information?
20 A. Yes. We gave them a lot of information.
21 MR. DOWD: All right. If the clerk would be kind
22 enough to give you Exhibits 183 and 224, which are both in
23 evidence, Your Honor.
24 BY MR. DOWD:
25 Q. Sir, 183 in evidence is a credit authorization memorandum
7885
1 of the First Interstate Bank of August 31, 1989. Do you
2 remember dealing with a fellow named Windle at First
3 Interstate Bank?
4 A. Yes, I do.
5 Q. And what were your dealings with Windle about?
6 A. They -- I recollect that they were about our
7 construction loans with First Interstate Bank.
8 Q. And had Mr. Cockerham been supplying him with
9 information?
10 A. Yes, he had.
11 Q. What kind of information?
12 A. Whatever information First Interstate Bank asked us for,
13 we gave them.
14 Q. All right. But did you provide them financial
15 information about your projects and about The Symington
16 Company operations?
17 A. Yes, he did. He provided them with the financial
18 information about all of our projects that they were asking
19 about.
20 Q. I would like to direct your attention, if I may, to page
21 12 of the exhibit -- and actually if you could look at page
22 12 and then on to page 13. This is a cash flow analysis; is
23 that correct?
24 A. This is page 13?
25 Q. Well, let's take -- let's take 12, first, of the
7886
1 exhibit. Page 10 in your exhibit, I think.
2 A. Is that the number at the center of the page or the
3 right-hand corner of the page?
4 Q. Well, there's one in the middle of the page that's page
5 10. And down --
6 A. Right.
7 Q. Down at the bottom is page 12 of 16, which is the exhibit
8 number.
9 A. Okay, I have -- I have page 10, cash flow analysis at the
10 bottom.
11 Q. And does it indicate whether Mr. Cockerham furnished
12 information, sir?
13 A. Yes, it does.
14 Q. And on the next page, page 13, would you tell the ladies
15 and gentlemen of the jury what that information is and where
16 it came from?
17 A. Does this have a different --
18 Q. That would be -- it's page 11 at the bottom, sir.
19 That's the page.
20 A. All right.
21 Q. See page 11 at the bottom?
22 A. Yes, I have page 11.
23 Q. All right, sir.
24 A. This is a -- a spreadsheet that they've put together on
25 my various projects showing leasing percent revenue and
7887
1 expenses, net income or loss, the Symington share percentage,
2 and that type of information.
3 Q. And this information came from Mr. Cockerham, correct?
4 A. Yes, it did.
5 Q. And how many projects are listed there, sir?
6 A. Let me count. It looks to me like there are
7 approximately 13 projects plus the CELPs at the bottom. So
8 that would be 13, 14, 15 projects.
9 Q. And over on the right-hand side there are some numbers
10 with brackets. Do you see those?
11 A. Yes.
12 Q. Let me highlight it. What does that indicate, sir?
13 A. The brackets indicate negative -- negative cash,
14 negative cash flow.
15 Q. So out of ten projects, how many are flowing negatively?
16 A. Well, the 5050, 5060, 5070, Scottsdale Centre.
17 Q. That's six?
18 A. Yes. The Ten MO, seven, Van Buren's eight.
19 Q. And this is information in possession of the bank in
20 August, 1989, correct?
21 A. That's correct.
22 Q. And these projects are all listed on your financial
23 statement, correct?
24 A. Yes, they are.
25 Q. Then you'll see the Symington share?
7888
1 A. Yes.
2 Q. And then below there's a report with respect to projects
3 that have been sold?
4 A. That's correct.
5 Q. And then the last category is what, sir?
6 A. The last category is the Camelback Esplanade related
7 partnerships and corporations.
8 Q. Now, in 1990, you were dealing with a gentleman by the
9 name of Hawes; is that correct?
10 A. That's correct.
11 Q. And did you also provide him with additional information
12 about all of your projects and your company?
13 A. Yes, I did.
14 Q. Is that all accurate information?
15 A. I believed it to be.
16 Q. Are those the same kind of information that appears in
17 your financial statement, correct?
18 A. That's correct.
19 Q. Now, with Valley National Bank, do you recall who you
20 dealt with there in the early years?
21 A. I seem to remember in the early '80s it was Charlie
22 Bartlett.
23 MR. DOWD: If we could give the witness Exhibit
24 414.
25 BY MR. DOWD:
7889
1 Q. Do you remember a fellow named Makula?
2 A. Yes, I remember Mr. Makula.
3 Q. Who was he?
4 A. He was -- I believe he took over from Charlie Bartlett.
5 Q. And did you ever talk to Mr. Makula about your real
6 estate interests?
7 A. Yes, I believe I did.
8 Q. Did you ever talk to him about the trust?
9 A. Yes.
10 Q. Let's turn to page 8 of that exhibit, it's page 3 of the
11 text.
12 A. Which page of the actual text?
13 Q. It says page 3, credit review at the top.
14 A. Right. I have page 3.
15 Q. See the paragraph at the top, sir? Do you have that in
16 front of you?
17 A. Yes, I have it.
18 Q. And did anyone at -- or Mr. Makula ever indicate to you
19 that he thought your equity values were inflated?
20 A. I don't remember him ever telling me that directly.
21 Q. Did he ever say they were of questionable value?
22 A. No, I don't remember him ever saying that to me.
23 Q. Well, let's go to page 9, which is page 4 of the text.
24 And I will direct -- which is the next page. Down in the
25 comments section do you see the paragraph that begins "In the
7890
1 development of properties"?
2 A. Yes, I do.
3 Q. Would you kindly read that to us?
4 A. All right. "In the development of properties, Fife
5 usually purchases the land, oversees the design of the
6 complex, initiates construction contracts, and arranges
7 financing. After syndicating the project, he gets back
8 most, if not all, of his front money, (land down
9 payment, architect's fees, points, et cetera) plus a 20
10 to 50 percent interest (his sweat equity). This is
11 generally subordinated to the interests of any limited
12 partners who have invested in the project."
13 Q. Is that an accurate statement, sir?
14 A. That is an accurate statement.
15 Q. Is that information provided to you by -- to Valley
16 National Bank?
17 A. Yes, I provided that to Valley Bank.
18 MR. DOWD: Excuse me one second.
19 BY MR. DOWD:
20 Q. Let's go to page 10 of 10, sir, which is the next page in
21 our exhibit.
22 A. Mr. Dowd, the last page I have in this exhibit is page 5.
23 Q. Well, that would be page 5, yes, sir. It's five of your
24 text. I'm sorry, I keep using the total document numbers and
25 we've got different numbers on these. That's page 5.
7891
1 Do you see the paragraph on the recommendation?
2 A. Yes.
3 Q. Would you read that for the ladies and gentlemen of the
4 jury?
5 A. "Based on Mr. Symington's excellent reputation, his
6 significant and somewhat liquid net worth, our
7 excellent deposit relationship and the strong cash flow
8 from developers fees, these credits are recommended as
9 presented. We recognize the difficulties in assessing
10 some of Mr. Symington's assets and the risks inherent
11 in lending to a developer on an unsecured basis.
12 However, Mr. Symington's ability as a promoter is now
13 established at not only a local but at a national (and
14 possibly international) level. Projects he is to be
15 involved with will be highly scrutinized and more than
16 likely, successful."
17 Q. Now, is that a fair statement, sir?
18 A. Yes, I think that's a fair statement.
19 Q. Let's just go above that paragraph and tell the ladies
20 and gentlemen of the jury whether you had other accounts and
21 what kinds of accounts you had at the Valley National Bank.
22 A. Well, I had all my -- I had all my personal -- most of
23 my personal banking accounts at the Valley Bank, had all of my
24 project accounts at the bank, had our money market accounts at
25 the bank. I think I had anywhere between 40 to 60 accounts at
7892
1 the Valley Bank over the years.
2 Q. Now, read that paragraph beginning with "our credit
3 relationship."
4 A. Which paragraph is that, Mr. Dowd?
5 Q. If you go above where we were.
6 A. Oh, I see.
7 Q. On page 5.
8 A. Do you want me to read the whole paragraph?
9 Q. Just read beginning with "our credit relationship" to the
10 end of that paragraph.
11 A. Okay. "Our credit relationship with Fife is very
12 profitable with average fee collected balances for the
13 last 12 months ended 11-87 totaling $926,189.83. In
14 addition to the above average of 36 checking accounts,
15 21 money market/savings accounts with a cumulative
16 total of 771,041.63 are held at VNB."
17 Q. Sir, was your relationship with the Valley National Bank
18 a profitable one?
19 A. Yes, I -- it was a profitable relationship for both of
20 us for many years.
21 Q. Mr. Symington, did you deny any financial information to
22 any lender you dealt with?
23 A. I did not.
24 Q. Now, during this trial there were a number of times it's
25 been suggested that you were secretive about your financial
7893
1 statement. Did you -- did you have your financial statement
2 delivered in sealed envelopes?
3 A. Yes, I did.
4 Q. And locked -- and your information locked in a file
5 cabinet?
6 A. Yes.
7 Q. And why were you doing that?
8 A. Because it was personal and private information.
9 Q. Did you ever code your statements by lenders?
10 A. No, I did not.
11 Q. Later on did Coopers code your statements?
12 A. Yes, they did.
13 Q. And why did they do that?
14 A. I was in the middle of a political campaign. And there
15 was a concern about the statements getting leaked to the
16 press. And so Coopers did a very subtle coding, I think, on
17 some of the financial statements.
18 Q. And was there a leak during the campaign?
19 A. Yes, there was.
20 Q. Let's talk about Coopers & Lybrand for a moment. You
21 heard Mr. Schindler refer to Mr. Yeoman as a member of the
22 defense team?
23 A. Yes, I did.
24 Q. Mr. Yeoman was a tax partner at Coopers & Lybrand?
25 A. Yes, he was.
7894
1 Q. And then we lost him?
2 A. Yes, he died tragically.
3 Q. Up to that point of Mr. Yeoman's death, was there any
4 reason to look at the Coopers files?
5 A. No.
6 Q. Following the Indictment in this case, were you publicly
7 accused of misleading Coopers & Lybrand?
8 A. Yes, I was.
9 Q. And had anyone from Coopers prior to that time ever
10 accused you of misleading them?
11 A. No.
12 MR. SCHINDLER: Objection, Your Honor. Defense has
13 asked to exclude this. I would object. This is entirely
14 inappropriate.
15 May we approach side bar, Your Honor?
16 THE COURT: The objection sustained.
17 BY MR. DOWD:
18 Q. Had you ever misled Coopers, sir?
19 A. No, never.
20 Q. Had you provided Coopers all of your financial
21 information?
22 A. Yes, Mr. Dowd, they had all -- all of my financial
23 information.
24 Q. How did you do that?
25 A. Well, whatever they -- they asked, they received.
7895
1 We -- they would call Joyce and ask Joyce for whatever
2 information she had. They received all the information from
3 our bookkeeper accountant, Pat Durocher, that would have been
4 all of our general ledgers since, I don't know, back to
5 probably '86.
6 They received all of our project information and
7 company information through the company, through me, through
8 Jim Cockerham. And they had all the information on me and my
9 operation.
10 Q. Mr. Symington, why did we hire Mr. Field?
11 A. Well, when John died, you know, we needed -- we needed
12 someone to -- well, let me just back up and say that we
13 needed somebody to review the Coopers records after the
14 accusation was made.
15 Q. And what did Coopers do for you and your various
16 affiliates and partnerships and companies?
17 A. They did Ann's and my joint tax return. They did the
18 financials for The Symington Company. They did the audits for
19 all the Camelback Esplanade entities. They did reviews of a
20 lot of our -- our partnerships. They did the tax returns on
21 just about all of our partnerships, maybe save but one.
22 Q. Did they do agreed upon procedures on your financial
23 statement?
24 A. Yes, they did the AUPs on my financial statement.
25 Q. And did Coopers have all the loan balances?
7896
1 A. Yes, they did.
2 Q. Did they have all of your income and expenses?
3 A. Yes, they did.
4 Q. Did they have all of your payables?
5 A. Yes, they had all of my payables.
6 Q. Did they have your ownership share?
7 A. Yes, they did.
8 Q. In connection with the agreed upon procedures, what did
9 you understand you wanted Coopers to do?
10 A. Basically I wanted them to reduce -- review my -- my
11 methodology and my consistency from year to year.
12 MR. DOWD: I would like to have the witness look at
13 Exhibit 61, which is not before him. And turn to page --
14 Bate stamp page 019.
15 BY MR. DOWD:
16 Q. Do you find page 019?
17 A. Wait a minute.
18 Q. Is there a Bate stamp number?
19 A. I have a CL number.
20 Q. CL number would be fine. CL number 019?
21 A. 019?
22 Q. Yes, sir.
23 A. It's not 00?
24 Q. I'm sorry?
25 A. Is it 0019?
7897
1 Q. No, it's 019.
2 A. Okay.
3 MR. SCHINDLER: Your Honor, I believe it is 0019.
4 MR. DOWD: I stand corrected, 0019, forgive me.
5 THE WITNESS: Okay. Found it.
6 BY MR. DOWD:
7 Q. And what is that document, sir?
8 A. It is a letter to Coopers & Lybrand signed by me and
9 Joyce Riebel.
10 Q. And who drafted this letter?
11 A. Coopers & Lybrand.
12 Q. Now, at this point how long had you retained Coopers as
13 a -- as an accountant, how many years?
14 A. Coopers had been working on my account since sometime in
15 the 1970s. I don't remember the exact date.
16 Q. I would like to draw your attention to paragraph one.
17 And in particular, line dealing with -- do you see paragraph
18 one in front of you?
19 A. Yes, I have it.
20 Q. And this letter purports to be a representation by you;
21 is that correct?
22 A. That's correct.
23 Q. And would you read that first paragraph?
24 A. Yes. It says, "We are responsible for the fair
25 presentation in the statement of financial condition in
7898
1 conformity with accounting principles generally applied
2 to personal statements of financial condition reported
3 on Valley National Bank forms."
4 Q. Now, Mr. Symington, did you know at the time or any time
5 what the accounting principles generally applied to personal
6 statements of the financial condition reported in the Valley
7 National Bank forms were?
8 A. No, I did not.
9 Q. Did you ever ask Ms. Wrigley?
10 A. No.
11 Q. Why?
12 A. Well, I -- I just assumed that Coopers knew what they
13 were doing and they asked me to sign the letter, so I signed
14 it.
15 Q. Let's go to paragraph 4. Would you read that, please?
16 A. Paragraph 4?
17 Q. Yes.
18 A. "No matters or occurrences have come to our attention up
19 to the date of this letter that would materially affect
20 the statement of financial condition of J. Fife
21 Symington, III."
22 Q. And what did that paragraph mean to you, sir?
23 A. It meant to me that my -- my financial statements were
24 basically okay. And --
25 Q. Had you provided Coopers all the information in your
7899
1 possession about your financial condition?
2 A. Yes, I had.
3 Q. And so there was nothing else that you could give them?
4 A. No, they had everything that I could give them. And I
5 just assumed that, you know, that they would do basic checking
6 and that my financial statement would be okay.
7 Q. Now, do you remember meeting with Katie Wrigley about
8 this AUP procedure on your '87 financial statement?
9 A. Yes, I do.
10 Q. And I wanted to ask you another question.
11 When you provided your information to Mr. Yeoman and
12 his colleagues, were you aware of any restriction on that
13 information as to other personnel at Coopers & Lybrand?
14 A. No, Mr. Dowd. I saw Coopers & Lybrand as my -- my
15 accounting company, the company that I worked with. And
16 they -- we interacted with various people at Coopers &
17 Lybrand. And so I -- I saw them as one, you know, one
18 entity. And I depended on them for a lot -- really all of my
19 accounting and -- tax and accounting information.
20 Q. Were you ever told that the audit didn't communicate with
21 the tax department or the tax didn't communicate with the
22 audit department?
23 A. No, I was never told that.
24 Q. What I would now like to turn to is -- do you recall how
25 long that meeting was with Ms. Wrigley?
7900
1 A. That was a long time ago. My recollection is it wasn't
2 very long, maybe 30, 40 minutes.
3 Q. Let's -- look at page 0011, if you would. Do you have
4 that in front of you?
5 A. Yes, I do.
6 Q. And what is that document?
7 A. Well, it's a letter from Coopers & Lybrand to me and it
8 is -- it talks about applying procedures enumerated below
9 accompanying the financial statement of J. Fife Symington,
10 III, December 31, 1987.
11 Q. Was this a letter presented by Ms. Wrigley at your -- at
12 the meeting you had with her?
13 A. I -- I believe so.
14 Q. And, sir, were there some corrections to your 1987
15 statement that appeared in this letter?
16 A. Yes, there were.
17 Q. And were these corrections discussed with you by
18 Ms. Wrigley?
19 A. Yes.
20 Q. And let's look at the first one.
21 And what is that all about, sir?
22 A. It's readily marketable securities. They said the
23 value -- it was a correction as to the values of readily
24 marketable securities.
25 Q. And then the second paragraph indicates what, sir?
7901
1 A. The -- it says that there were two instances where
2 percentage interests held through the partnerships were in
3 error. And they've been corrected in the December 31, '87
4 statement and result in the value of real estate investments
5 at December 31, '87 -- a reduction of $939,000.
6 Q. Did you have any disagreement or objection to these
7 changes?
8 A. No.
9 Q. Were you pleased that they had found them?
10 A. Yes. That's what they are -- you know, what they were
11 there for. I'm not an accountant, and it was very helpful.
12 Q. Let's turn to the next page, which is 0012. And is there
13 something else at the top?
14 A. Yes, there's real estate property held for development
15 had been omitted from the schedule at the November 1, '80 --
16 in November 1 of '87. And they included the investment on the
17 schedule of real estate investments at December 31, '87, which
18 resulted in an increase in total value of real estate
19 investments of $315,000 at December 31, 1987.
20 Q. And did you have any problem with that correction?
21 A. No, that was fine.
22 Q. Your net worth was lowered as a result of their work on
23 the 1987 statement?
24 A. I believe so.
25 Q. You had no objection to that?
7902
1 A. No objections.
2 Q. Mr. Symington, I would like to turn to a new or other
3 subject for a moment.
4 Do you remember Jean Wong testified in this trial?
5 A. Yes, I do.
6 Q. And you had hired Jean Wong back in 1981; is that
7 correct?
8 A. Yes.
9 Q. While she was working for you, was she ever concerned
10 about your ability to be well organized and detail oriented?
11 A. Yes.
12 Q. What was her concern?
13 A. Well, that I -- in her view, I wasn't well organized and
14 as detail oriented as she would have liked me to have been.
15 Q. And in connection with those conversations, did she ever
16 mention a gentleman by the name of Tom Ysasi, Y-s-a-s-i?
17 A. Yes.
18 Q. And what did she say?
19 A. Well --
20 MR. SCHINDLER: Objection, Your Honor, this calls
21 for hearsay.
22 THE COURT: Sustained.
23 BY MR. DOWD:
24 Q. And did -- did she hold Ysasi up as an example to you?
25 A. Yes, she did.
7903
1 MR. SCHINDLER: Objection, Your Honor, calls for
2 hearsay and relevance.
3 THE COURT: The answer may stand, let's move along.
4 BY MR. DOWD:
5 Q. Did Mr. Ysasi work on one of your jobs, sir?
6 A. Yes, he was general contractor for 5070, the garden
7 office building next to the one we were officing in, the 5070
8 building.
9 Q. And was there a problem with something Mr. Ysasi did?
10 A. Yes. When we were, as I remember it, we were probably
11 half to three-quarters of the way through construction in the
12 project and Jean burst into my office one day and was very
13 upset and it turned out that Tom Ysasi had basically taken a
14 $200,000 -- approximately a $200,000 construction draw and he
15 had taken it, which put us in the position as the developer,
16 and me on the loan, of not being able to pay our
17 subcontractors unless --
18 Q. Because there was a guarantee on the loan?
19 A. That's right. That's the developer's responsibility to
20 make sure that things are done right. So I immediately told
21 Jean that I would take care of the problem and called the
22 lender and we worked it out and got a -- an increase in the
23 loan on the building by the amount that was missing, and
24 turned around and paid the subcontractors, because that was
25 the only way they were going to get their money.
7904
1 Q. Now, did you have -- did you have a fellow named Randy
2 Todd work for you?
3 A. Yes.
4 Q. In 1985?
5 A. Yes, sir.
6 Q. And did you have occasion to promote him?
7 A. Yes, I did.
8 Q. And when -- what did you promote him to?
9 A. I promoted him to vice president.
10 Q. And what was Ms. Wong's reaction to that promotion?
11 MR. SCHINDLER: Objection, Your Honor, calls for
12 hearsay.
13 THE COURT: You may answer the question. Obviously
14 do not give statements made by Ms. Wong. But you may
15 otherwise answer.
16 THE WITNESS: Jean was very upset by Mr. Todd's
17 promotion.
18 BY MR. DOWD:
19 Q. As a result did you promote her?
20 A. Yes. I promoted her to executive vice president of the
21 company.
22 Q. And that was in 1985?
23 A. Yes, I believe that was in 1985.
24 Q. And did she leave shortly thereafter?
25 A. She left at the end of 1985.
7905
1 Q. Mr. Symington, was she a 50 percent partner in The
2 Symington Company?
3 A. No, she was not.
4 Q. Did she want to be?
5 A. Yes.
6 Q. Did you ever promise her an interest in The Symington
7 Company?
8 A. No, I did not.
9 Q. Now, I would like you to look at Exhibit 3335, which is a
10 letter to Ms. Wong in 1984. It's in evidence.
11 MR. DOWD: Your Honor, I will need the Elmo for this
12 exhibit.
13 THE COURT: It may be enabled.
14 BY MR. DOWD:
15 Q. Mr. Symington, do you recognize that letter, sir?
16 A. Yes, I do.
17 Q. And did you write the letter?
18 A. Yes, I did.
19 Q. And why did you write the letter?
20 A. Because Jean had done an absolutely wonderful job working
21 through the 24th and Camelback Road transaction. She also put
22 in unbelievable hours at the company. I felt she was working
23 herself to death and was trying -- I was trying to get her to
24 delegate responsibility so that she wouldn't work such long
25 hours. And I think she was having really a tough -- a tough
7906
1 time because of the hours she was working. And I wanted to
2 thank her for her fine work and encourage her to try to cheer
3 her up. And I meant everything I said in the letter.
4 Q. Now, was she a partner in this project with you?
5 A. Yes. I made her a partner in the Esplanade as well as in
6 other projects.
7 Q. When you used the word "partner" there, that's what
8 you're referring to?
9 A. Right, yes. She was my partner in real estate projects.
10 Q. Did you have some concern about her, sir?
11 A. Well, yes. I mean I -- I was concerned about -- about
12 her emotional well-being, because she -- I've never really
13 seen anybody work as hard as Jean and who paid attention to
14 details as much as she did. And the concern that I had was
15 for her and also for the company, because nothing would happen
16 in the company unless it went through her. And we were
17 growing. And we had people like Randy and Jim who were moving
18 into different areas of responsibility.
19 So I was working very hard to get Jean to basically
20 spread around some of the responsibility and ease up. And --
21 but I frankly have never met anybody who had her analytical
22 and detailed skills. I mean she's really tremendous that way.
23 Q. Did she work on your financial statements?
24 A. Yes, she did.
25 Q. And was she helpful?
7907
1 A. Yes.
2 Q. Were you happy that she worked on the statements?
3 A. Yes, I was.
4 Q. Were you -- did you ever object to her analysis or
5 contributions to your statement?
6 A. No.
7 Q. And there was an entry on one of the statements
8 indicating yes on contingent liabilities and a schedule of
9 contingent liabilities? Did you object to that, sir?
10 A. No. She made the suggestion and I did that.
11 Q. Did you ask her to stop working on your financial
12 statements?
13 A. No.
14 Q. Do you know why she stopped working on your financial
15 statements?
16 A. She didn't want to work on the financial statements.
17 Q. Remember the testimony about her being a subtier partner?
18 A. Yes, I --
19 Q. In the various partnerships, Ten MO, 1, 2, and 3 and
20 others?
21 A. Yes, I remember.
22 Q. Remember that testimony?
23 A. I remember that.
24 Q. As a partner in the subtier partnership, did she have any
25 responsibility for the management of that property?
7908
1 A. No.
2 Q. Was that written right in the agreement?
3 A. Yes, it was written into the agreement.
4 Q. And did she have any risk as to how that property was
5 handled or disposed?
6 A. No. She had no risk. Those were participations in the
7 real estate projects that I gave to people that worked with me
8 as a bonus. And it was only an upside bonus for them. It had
9 none of the downside risk. And if any money had to be put in,
10 I would be putting it in and I am the one who would be liable.
11 Q. Now, you were a partner in the main tier partnership,
12 correct?
13 A. That's correct.
14 Q. Did you have any obligation to consult with her about the
15 management of the property or your dealing with lenders on
16 that property?
17 A. No, I did not.
18 Q. Now, you recall that she -- a number of her notes of
19 meetings with partners on various projects and properties were
20 entered into evidence during her testimony?
21 A. Yes, I remember that.
22 Q. Did she ever provide you copies of those notes?
23 A. No, she didn't.
24 Q. You recall her testimony about Cornoyer-Hedrick and the
25 Missouri Court building?
7909
1 A. Yes.
2 Q. Did there come a time when you learned that
3 Cornoyer-Hedrick was going to leave Missouri Court?
4 A. Yes.
5 Q. And what did you and your colleagues do about that?
6 A. Well, the first thing we did was go to our -- I believe
7 it was Bob Hedrick and try to convince him not to leave the
8 building, and, in fact, try to convince him to buy the
9 building.
10 And then that effort failed, because Cornoyer and
11 Hedrick, who was a partner in the building, they were part of
12 our partnership, had made up their mind definitively that they
13 were going to leave the project.
14 Q. Now, sir, I would like to turn to a different subject.
15 Let's go to your particular financial statements and start
16 with the April 1, 1986 statement, which is Exhibit 16 in
17 evidence.
18 MR. DOWD: And I think I need the computer for this
19 one.
20 BY MR. DOWD:
21 Q. Mr. Symington, do you recognize this document?
22 A. Yes.
23 Q. What is it, sir?
24 A. It's a file folder with my personal financial statements
25 in it.
7910
1 Q. Do you recognize any of the handwriting on the document?
2 A. On the exterior flap I recognize Joyce Riebel's
3 handwriting.
4 Q. Now, these are the financial statements for April 1,
5 1986?
6 A. Yes.
7 Q. And are there more than one financial statement --
8 A. Yes.
9 Q. -- contained in this file?
10 And, sir, did you prepare these statements?
11 A. Yes, I did.
12 Q. If you look on the second page, it indicates Mellon Bank,
13 correct?
14 A. That's correct.
15 Q. Up at the top?
16 And that was one prepared for the Mellon Bank?
17 A. That's correct.
18 Q. And on page 3, would that be the -- the one that was
19 sent to the Mellon Bank?
20 A. Yes, I believe so.
21 Q. And on that first page, is there any entry for readily
22 marketable securities?
23 A. No, there is not.
24 Q. And why not, sir?
25 A. Because this was being sent to the Mellon Bank Trust
7911
1 Department that I was working with. And they were already
2 fully aware of my trust. They managed my trust.
3 Q. And prior to this time, had you ever provided them with
4 financial statements that included your trusts on them?
5 A. Yes, I had done that twice before.
6 Q. Let's look at Exhibits 1125 and 7663 that are in
7 evidence.
8 Is it time to take a break, Your Honor?
9 THE COURT: Oh, we've got lots of time.
10 MR. DOWD: Oh, I just saw you looking at me.
11 BY MR. DOWD:
12 Q. See Exhibit 1125, sir?
13 A. Yes.
14 Q. And what's the date of this exhibit?
15 A. It says October 10th, 1983.
16 Q. All right. If you'll turn to the next page. And tell me
17 whether it is -- that's your personal financial statement.
18 A. It is.
19 Q. And, sir, is there an entry for readily marketable
20 securities?
21 A. Yes, there is.
22 Q. And what's the date of this statement?
23 A. December 14th, 1981.
24 Q. And if we could turn to page 2. It would be page 3 of
25 the exhibit, the next page.
7912
1 A. Yes.
2 Q. Is there an entry for your trust?
3 A. Yes, there is.
4 Q. And if you look at Exhibit 7663.
5 THE COURT: Now it's time. We will take our noon
6 recess and reconvene at 1:30.
7 MR. DOWD: Thank you, Your Honor.
8 (The noon recess was taken.)
http://www.azcentral.com/news/symington/scripts/0724trans1.shtml
[an error occurred while processing this directive] (Click here for
afternoon session transcripts)
REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
May 28, 1997 8:56 a.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Trial - Volume 9)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
1509
1 I N D E X
2 Witness: Direct Cross Redirect Recross VD
3 Joyce Riebel
By Mr. Schindler 1518
4 By Mr. Lynam 1566
By Mr. Schindler 1574
5 Noel Thompson
6 By Mr. Schindler 1577
7
8
9 E X H I B I T S
10 No. Description Identified Admitted
11 210 Letter dated 6-19-80 1518
701 Letter dated 10-14-88 1593 1594
12 703 Letter dated 11-16-88 1598 1599
13
14
15 M I S C E L L A N E O U S
16 Motion in Limine by Mr. Schindler 1510
17
18
19
20
21
22
23
24
25
1510
1 P R O C E E D I N G S
2
3 THE COURT: Good morning, ladies and gentlemen. The
4 record may reflect the presence of counsel, the absence of the
5 defendant, the absence of the jury.
6 The Court is advised that there are matters to take
7 up prior to the commencement of the trial. And, you may
8 proceed.
9 MR. SCHINDLER: Thank you, Your Honor. Good
10 morning. I've handed to your clerk and hopefully you now have
11 a list of exhibits, defense exhibits that there is some
12 dispute between the parties over. In particular -- does the
13 Court have before it the --
14 THE CLERK: Rose is copying it.
15 THE COURT: No, but I guess I will shortly.
16 THE CLERK: It's coming.
17 THE COURT: Thank you. This is -- what is this?
18 MR. SCHINDLER: This is a list of defense exhibits
19 that the defense seeks to use to cross-examine Noel Thompson,
20 which will be one of the witnesses that will testify today,
21 Your Honor. The ones that are in the box are the exhibits
22 that remain in dispute. As you see, I've made a box there.
23 The government objects to use of these exhibits
24 essentially on three grounds. All of those exhibits postdate
25 the loan closing. The loan closed in this case in August of
1511
1 1989. There were disbursements that continued between August
2 of '89 into 1991.
3 Our objection, Your Honor, is primarily that these
4 documents go to either lack of reliance or bank negligence.
5 And it's on that basis and the Court's prior ruling that the
6 government seeks -- moves in limine to preclude use of the
7 documents that the -- are marked in that box. And the
8 parties had agreed that we would raise it with the Court now,
9 allow each side to argue, and then the Court could review the
10 documents at its leisure.
11 These will not become ripe before lunch. I think we
12 both agree that the cross-examination of Mr. Thompson will not
13 begin before lunch, but we wanted to give you as much advance
14 notice as possible.
15 THE COURT: All right. Thank you.
16 MR. DOWD: Good morning, Your Honor.
17 THE COURT: Good morning.
18 MR. DOWD: Your Honor, this matter was raised --
19 came up in a peculiar way. Yesterday, the government sent me
20 a list of my own exhibits and indicated that they objected to
21 the use of them on cross-examination. And I confess I hadn't
22 even decided whether I was going to use them. But with
23 respect to the documents which we have submitted copies to the
24 Court, I think it's plain -- what the documents reflect, Your
25 Honor, are two things: One, sort of the internal operations
1512
1 of the bank, Citicorp, where they request two categories.
2 One, they request documents, sort of follow-up requests to The
3 Symington Company for reports on the various projects they are
4 doing.
5 Your Honor, you're going to see a great deal of
6 Exhibit 718, which is the original credit memo that Citicorp
7 put together over a year's time, in which they analyzed the
8 project and the sponsor, The Symington Company, and the
9 borrower, et cetera. A number of the documents that are on
10 the so-called disputed list here are merely follow-up requests
11 where Jim Cockerham of The Symington Company is providing
12 Citicorp with sort of an update of their original credit
13 memo. In other words, what's the status of Scottsdale
14 Centre? What's the status of the CELPs? Because these were
15 all subjects that they analyzed in their credit memo.
16 I don't see anything having to do with reliance or
17 negligence here. I mean, I frankly think the whole negligence
18 thing is silly. I would never argue negligence on behalf of
19 anything that shows diligence by the bank. And if I were to
20 use these documents with -- with -- with Mr. Thompson --
21 oh, the other category, Your Honor, has to do with sort of
22 their internal analysis of where this loan stands as the
23 building's being built. There's a classification memorandum
24 and there's some strategy memoranda. And it's -- it's a very
25 informative document that in one page tells you everything you
1513
1 want to know about the loan. And I guess the important point
2 in those documents has to do with this whole idea that the
3 market is declining, vacancies are increasing, et cetera. And
4 to me, that is very helpful contextual information for the
5 jury.
6 I guess if I had to -- there's really no reference
7 to the financial statements in any of these documents. And I
8 don't -- you know, I really don't understand. I think the
9 documents are clearly relevant to the -- to the full picture
10 of what was going on here. After all, the Citicorp covers
11 Counts 17 through 20. And they are all wire fraud counts,
12 Your Honor. And they cover the period from 1989 to 1992.
13 These particular documents we are talking about, I
14 believe, are all in 1989, as the building -- let me back up,
15 Your Honor. They closed the loan in August of '88.
16 MR. SCHINDLER: '89.
17 MR. DOWD: Or of '89, excuse me. And they commenced
18 construction. So it's '89 through '90. It's all during the
19 period of the alleged scheme to defraud.
20 I would say that the category of the documents where
21 The Symington Company is providing information requested by
22 Citicorp goes to that, you know, the intent issue on the count
23 where, you know, the November 22nd letter where the 1990 --
24 they said the 1990 statement wasn't prepared. I think it
25 generally shows that The Symington Company was most
1514
1 cooperative and gave any kind of information they wanted. So
2 I think it's pertinent on that point.
3 But I think it's important information because it
4 shows the conduct of Symington and his company and the
5 borrower during the period of the scheme to defraud.
6 So, you know, for those reasons, I think they are
7 appropriate. I have to be candid with the Court. I haven't
8 decided whether I'm going to confront Mr. Thompson with
9 these -- with this information. But I do think it's quite
10 helpful to the case. But I don't think it has anything to do
11 with either reliance or negligence.
12 THE COURT: Thank you.
13 MR. SCHINDLER: Very briefly?
14 THE COURT: Yes.
15 MR. SCHINDLER: The issue, Your Honor, really
16 relates to whether Mr. Symington may use information obtained
17 by the bank, as part of his own process, from The Symington
18 Company. Some of the information provided by Mr. Cockerham
19 and the company conflicts with information represented by
20 Mr. Symington in his financial statements and are arguably
21 conflicts. And what Mr. Dowd would like the Court to do is
22 meld together Mr. Symington and the representations he made
23 and the fact that he is on trial with actions taken by The
24 Symington Company or by the bank itself to try and do
25 additional due diligence in order to determine or verify in
1515
1 1990 whether any representations made by Mr. Symington were
2 true. And it is certainly the case, Your Honor, that in 1990,
3 after the loan had closed, and moneys were being disbursed,
4 that later in 1990, the bank itself performs additional
5 analysis and makes its own conclusions as to some of the
6 information represented by Mr. Symington.
7 But that, Your Honor, is patent lack of reliance
8 evidence, evidence this Court has already found is not
9 admissible. And I would ask the Court simply to differentiate
10 between representations made by Mr. Symington versus
11 representations made by The Symington Company or information
12 provided by the company in response to bank inquiries post
13 loan closing. And if the Court would keep that in mind as it
14 reviews the documents.
15 MR. DOWD: Your Honor, Mr. Schindler raised a point
16 that had not been raised in our previous discussions. May I
17 just comment on it?
18 THE COURT: Yes.
19 MR. DOWD: Your Honor, you ought to know that as a
20 result of discussions yesterday, it appears that Mr. Thompson
21 left the Citicorp on July 1 of 1990. So we sort of informally
22 agreed amongst ourselves that we wouldn't pursue matters after
23 that time. And the reference to what happened later on and
24 what they relied on and what they analyzed really isn't coming
25 up in these documents. These documents are during the period
1516
1 of construction. But in all events, they are during the
2 period of the scheme to defraud. So they have nothing to
3 do -- we are not seeking, you know, their judgments later
4 on. It is simply the status of this building being
5 constructed during a difficult period of time and the
6 information that the bank looks at. But, you know, it
7 just -- I think he's talking about later exhibits and a later
8 time frame. It's not the time frame that I'm acquainted with
9 with these documents, nor testimony of Mr. Thompson.
10 THE COURT: All right. The Court will review the
11 exhibits in light of your presentation. It may be able to
12 assist both the Court and the parties in dealing with them
13 when that time arises.
14 Let me just suggest one thing for your
15 consideration. In a lengthy trial, such as this may be, you
16 may or may not think it would be valuable to you to be able to
17 argue to the jury at various points in the trial. And
18 what -- what I'm just suggesting, and the two of you can talk
19 about it and then we can get back together again about it if
20 you would like to, is something like this: For example, at
21 the close of a witness' testimony, the parties might feel that
22 it would be valuable to them to present a very brief argument
23 to the jury about that witness' testimony and its importance.
24 In some lengthy trials, for example, each side has
25 been accorded maybe -- maybe an hour, maybe two hours of
1517
1 argument that they can use whenever they want to throughout
2 the trial. The jury would be instructed as to the process
3 that was being accorded to counsel and then Grace, with the
4 precision of a master chess referee, would keep track of the
5 time. And at the close of a witness' testimony, one side or
6 the other, or both sides may decide, well, you know, I would
7 like to take three minutes of my two hours to argue to the
8 jury about what we believe this witness has said.
9 Now, whether or not you think that's something that
10 would be useful and valuable to you or whether you think
11 that's a little novel, perhaps, inappropriate, I leave for you
12 to discuss amongst yourselves. And then just let me know if
13 you think anything like that might be useful and valuable to
14 you.
15 We will take our recess now and reconvene at 9:30.
16 (A recess was taken.)
17 (The jury entered the courtroom.)
18 THE COURT: Good morning, ladies and gentlemen.
19 Please be seated. The record may reflect the presence of the
20 jury with roll call waived, presence of counsel, presence of
21 the defendant.
22 And, you may proceed.
23 MR. SCHINDLER: Thank you, Your Honor.
24
25
1518
1 JOYCE RIEBEL,
2 called as a witness herein, having been previously duly sworn,
3 was examined and testified as follows:
4
5 REDIRECT EXAMINATION (Continued)
6 BY MR. SCHINDLER:
7 Q. Good morning, Ms. Riebel.
8 A. Good morning, Mr. Schindler.
9 Q. Ms. Riebel, do you have before you Exhibit 210?
10 A. Yes, I do.
11 Q. And you recall testifying about Exhibit 210 last week
12 with Mr. Lynam?
13 A. Yes.
14 Q. Will you remind the jury what Exhibit 210 is?
15 A. It's a letter from First Interstate Bank to Mr. Symington
16 regarding the First Interstate Bank $10 million financing to
17 Mercado Developers.
18 Q. And in particular let me draw your attention to paragraph
19 1, to the reference to a meeting. Do you see that?
20 A. Yes, sir.
21 Q. Now, in that letter First Interstate Bank writes to
22 Mr. Symington about a meeting on June 8th; is that correct?
23 A. Yes.
24 Q. And makes reference to a discussion about Mr. Symington's
25 personal financial condition as it relates to his
1519
1 unconditional guarantee of payment of Mercado's indebtedness
2 to First Interstate Bank; do you see that?
3 A. Yes, sir.
4 Q. Now, do you recall telling Mr. Lynam that it was in
5 response to that letter that Mr. Symington provided the
6 financial statement with the changed certification relating to
7 Mr. Symington's best efforts?
8 A. That's right.
9 Q. And Mr. Lynam wrote in "asked for details" there. Do you
10 see that?
11 A. Yes, sir.
12 Q. Do you know why First Interstate Bank was, in Mr. Lynam's
13 words, asking for details?
14 A. Well, they outlined in this letter what they wanted him
15 to provide.
16 Q. And --
17 A. Some documents relating to Mellon Bank and his current
18 statement.
19 Q. Going back to the first paragraph of Exhibit 210, do you
20 know whether Mr. Symington was telling First Interstate Bank
21 that he could not or did not want to honor his unconditional
22 guarantee of payment of the Mercado loan?
23 A. No, I don't know that.
24 Q. Do you know -- let me direct your attention down to the
25 second paragraph where First Interstate Bank writes to
1520
1 Mr. Symington a request that Mr. Symington provide copies of
2 all documents relative to his Mellon Bank trust and their
3 current personal financial at the same time on the FIB form.
4 Do you see that?
5 A. Yes, sir.
6 Q. Do you know whether First Interstate Bank asked
7 Mr. Symington to --
8 A JUROR: Could you activate our monitors, please?
9 MR. SCHINDLER: Your Honor, I'm sorry, could the
10 jury monitors be enabled?
11 THE COURT: They may be.
12 MR. SCHINDLER: I'm sorry, Your Honor, I thought
13 those were on.
14 BY MR. SCHINDLER:
15 Q. For the benefit of the jury, Ms. Riebel, let's just go
16 back. The first paragraph we talked about was the one
17 highlighted at the meeting on June 8th?
18 A. Correct.
19 Q. The second paragraph is the one relating to the asking
20 Mr. Symington to provide copies of his Mellon Bank trust. Do
21 you see that?
22 A. Yes, sir.
23 Q. Do you know whether First Interstate Bank had asked
24 Mr. Symington to sell some of the marketable securities on his
25 financial statement to honor his unconditional guarantee of
1521
1 the Mercado loan?
2 A. I would not know that. I did not participate in any of
3 those discussions.
4 Q. This letter, Ms. Riebel, is dated June 19th, 1990; is that
5 correct?
6 A. Yes, sir.
7 Q. And so as of June 19th, 1990, First Interstate Bank
8 apparently does not have copies of Mr. Symington's trust.
9 Would you agree with me?
10 A. Assuming since they asked that he provide the copies.
11 But they do say "provide copies of all documents relative to
12 your trust."
13 Q. Yes, ma'am. Do you see the third paragraph? Can you
14 read to the members of the jury what that says?
15 A. Yes, sir. "To date, I have not received either the trust
16 documents or your financial statement on our form."
17 Q. And that suggests as of June, 1990, First Interstate Bank
18 did not have copies of Mr. Symington's trust documents; is
19 that correct?
20 A. Yes, sir.
21 Q. And do you recall telling Mr. Lynam that the June 21st,
22 1990 letter from Mr. Washburne, the attorney, outlining the
23 details of trust, was supposed to give First Interstate Bank
24 details about the four irrevocable spendthrift trusts?
25 A. Correct.
1522
1 Q. That's because First Interstate Bank didn't know about
2 that before; is that correct?
3 A. Correct.
4 Q. Ms. Riebel, do you have in front of you Exhibit 2952?
5 MR. SCHINDLER: And, Your Honor, this is already in
6 evidence, and I would ask that the jury monitors be enabled.
7 THE COURT: They may be.
8 THE WITNESS: Okay.
9 BY MR. SCHINDLER:
10 Q. Do you have 2952 before you?
11 A. I do.
12 Q. Is this a copy of the financial statement that was
13 provided to Security Pacific? And if it will help you, check
14 the back page, the signature page, and the --
15 A. Yes, sir.
16 Q. Okay. This is a financial statement that shows the
17 $11,952,529 on the front; is that correct?
18 A. Correct.
19 Q. And you can go to page 2. This is the financial
20 statement that has the additional writing at the bottom about
21 seeing the attachment dated August 23rd, 1990, which is an
22 integral part of the financial statement?
23 A. Yes, sir.
24 Q. And then on the back is in fact that August 23rd
25 attachment, correct?
1523
1 A. Correct.
2 Q. Now, Ms. Riebel, is this the attachment where
3 Mr. Symington writes that the value of his assets and net
4 worth are now materially and dramatically overstated?
5 A. Yes, sir.
6 Q. Do you -- do you recall testifying and telling Mr. Lynam
7 that Mr. Symington was not seeking a loan from Security
8 Pacific?
9 A. Yes, sir.
10 Q. In fact, Mr. Lynam wrote "no loan" there; do you see
11 that?
12 A. I do.
13 Q. In fact, Mr. Symington was telling Security Pacific Bank
14 that he did not want to be on the hook to Security Pacific?
15 MR. LYNAM: Objection, Your Honor, to the
16 characterization.
17 THE COURT: Well, you may answer the question.
18 THE WITNESS: I'm looking here to see. That's part
19 of what he is saying, that he does not expect to make the next
20 payment on the note and so forth, yes.
21 BY MR. SCHINDLER:
22 Q. In fact, he's urging them not to make the loan to
23 Mr. Hirsch because Mr. Symington can't pay on the Hirsch
24 note?
25 MR. LYNAM: Objection, leading.
1524
1 THE COURT: Sustained.
2 BY MR. SCHINDLER:
3 Q. Does Mr. Symington tell first Security Pacific Bank that
4 he cannot make payments on the Hirsch loan?
5 A. He says he does not expect to make the next payment,
6 yes.
7 Q. And, in fact, Ms. Riebel, can you read to members of the
8 jury what Mr. Symington has written in the section that I've
9 just highlighted?
10 A. Starting with "please be advised"?
11 Q. Yes, ma'am.
12 A. "Please be advised that I am not urging you to accept
13 such note as security or advising you that payments
14 thereon will be made. To the contrary, and again
15 because of the current status of the Arizona real
16 estate market, and resulting deterioration of my
17 financial condition, I do not expect to make the next
18 payment on the note and I've advised representatives of
19 the payee that a restructuring of the note will be
20 necessary, including some waiver of payments and
21 discounting of the note."
22 Q. So Mr. Symington told First Interstate Bank, who was
23 asking for him to honor his guarantee on the Mercado, to give
24 them details according to the chart, correct?
25 A. I'm sorry, you said First Interstate Bank?
1525
1 Q. Starting with First Interstate Bank you testified a few
2 moments ago First Interstate was asking Mr. Symington to honor
3 his unconditional guarantee to the Mercado and in response to
4 that request the best efforts financial statement went to
5 First Interstate?
6 A. Yes, sir.
7 Q. And when Security Pacific was asking to get collateral
8 for the Hirsch loan, Mr. Symington tells Security Pacific that
9 his financial condition is materially and dramatically
10 overstated, correct?
11 A. Several months later, yes, sir.
12 Q. That's in August, right, August 23rd?
13 A. Right.
14 Q. Ms. Riebel, to your knowledge did Mr. Symington ever tell
15 Citicorp Real Estate that his financial condition was
16 materially and dramatically overstated in August of 1990?
17 A. I have no information of any of his conversations with
18 lenders.
19 Q. To your knowledge, did Mr. Symington tell Valley National
20 Bank that his financial condition was materially and
21 dramatically overstated in August of 1990?
22 A. I have no knowledge of his conversations with his
23 lenders.
24 Q. So is it a fair statement, Ms. Riebel, that you don't
25 know what Mr. Symington told any of his lenders?
1526
1 A. That's correct.
2 Q. Now, Ms. Riebel, you've been asked a lot of questions
3 about Coopers & Lybrand and the process used to prepare the
4 reports; is that a fair statement?
5 A. Yes, sir.
6 Q. Now, on the board, Ms. Riebel, I'm going to write
7 "Coopers Process." And if you could, I would like you to
8 outline the steps that took place from the beginning to the
9 end when Coopers & Lybrand would issue its report, the agreed
10 upon procedures report. Okay?
11 A. First of all, the bank would make a request for a
12 financial statement.
13 Q. Okay. Well, I want to talk specifically about Coopers &
14 Lybrand.
15 A. Okay. But --
16 Q. Do you recall testifying that that was done for Dai-Ichi
17 Kangyo Bank?
18 A. I do.
19 Q. Do you recall testifying that the first thing that
20 happened was a draft -- well, strike that.
21 That with respect to the 1987 financial statement,
22 previously Mr. Symington had provided copies of his November
23 1st, 1987 financial statement to Coopers & Lybrand for them to
24 begin their review?
25 A. Yes.
1527
1 Q. So first Coopers has draft of earlier. And then with
2 respect to the December 31st, 1987 financial statement, do you
3 recall testifying that you sent over a draft of the December
4 31st, '87 financial statement for Coopers to review?
5 A. Correct.
6 Q. And do you recall testifying that part of the -- that
7 the purpose of the report was to compare the methodology of
8 the 12-31-87 to the earlier November 1st, '87 financial
9 statement prepared by Mr. Symington?
10 A. Yes, sir.
11 Q. Now, Ms. Riebel, do you recall that after the draft
12 December 31st, '87 financial statement was sent over to
13 Coopers, Mr. Symington met with someone at Coopers & Lybrand
14 to review his real estate schedule?
15 A. That he met with, yes, sir.
16 Q. So if I say "JFS," do you know that's Mr. Symington?
17 A. Yes, I do.
18 Q. Mr. Symington meets with C&L, okay?
19 A. Meets or talks, conversations with them, yes.
20 Q. Ms. Riebel, do you know what Mr. Symington said to
21 anybody at Coopers & Lybrand?
22 A. I do not.
23 Q. You were not present for that conversation?
24 A. No, sir.
25 Q. And it would be fair to say that you don't know what
1528
1 Coopers & Lybrand said to Mr. Symington during those meetings?
2 A. That's correct. With possibly the exception of when they
3 would call me to change and say they had spoken with
4 Mr. Symington.
5 Q. Okay. Which brings us right to step number four. After
6 the meeting with -- between Mr. Symington and Coopers &
7 Lybrand, there were some changes to the December 31st, '87
8 financial statement. Do you recall?
9 MR. LYNAM: Objection to -- I'm sorry, I didn't
10 mean to interrupt you -- the leading questions, Your Honor.
11 BY MR. SCHINDLER:
12 Q. Do you recall testifying to that?
13 MR. LYNAM: Objection, leading, Your Honor.
14 THE COURT: Well, Court sustains the objection,
15 let's move along.
16 BY MR. SCHINDLER:
17 Q. Ms. Riebel, do you recall testifying that after the
18 meeting there were changes made to the December 31, 1987
19 financial statement?
20 MR. LYNAM: Objection, Your Honor. Leading,
21 Your Honor.
22 THE COURT: You may answer the question.
23 THE WITNESS: Yes.
24 BY MR. SCHINDLER:
25 Q. Ms. Riebel, it would be fair to state -- to say that
1529
1 after the changes were made to the draft a final December 31,
2 '87 financial statement was prepared?
3 A. Yes, sir.
4 Q. After the final -- well, incidentally, was that final
5 one done at your offices by you? In other words, did you type
6 up a final?
7 A. In 1987?
8 Q. Yes, ma'am.
9 A. Yes, sir.
10 Q. In fact, the work was done in 1988, is that a fair
11 statement, for the '87?
12 A. Correct.
13 Q. After you typed up a final December 31st, '87, did you
14 then send it to Coopers & Lybrand for them to use to attach
15 their letter to it?
16 A. I don't recall which process it was for the letter to be
17 attached. I cannot remember if I sent it or if they sent the
18 letter for me.
19 Q. Okay. Would it be a fair statement that either way, the
20 final version got attached to the Coopers & Lybrand letter?
21 A. Yes, sir.
22 Q. Either you attached the letter to the final or you sent
23 the final to Coopers and they attached a letter?
24 A. That's right.
25 Q. Now, Ms. Riebel, is this the same procedure, the same
1530
1 process that was employed in connection with the 1988 agreed
2 upon procedures letter?
3 A. Yes, sir.
4 Q. Would it be fair to say the only thing that changes are
5 the dates, in other words, you sent Coopers a draft December
6 31st, '88 for them to compare to the December 31st, '87. And
7 then the same process takes place?
8 A. I believe that's correct.
9 Q. And, again, Ms. Riebel, with respect to the 1988 agreed
10 upon procedures report, do you know what Mr. Symington told
11 Coopers & Lybrand during his meeting with them?
12 A. No, sir.
13 Q. Or do you know what Coopers & Lybrand told Mr. Symington
14 during the meeting with him?
15 A. No, sir.
16 Q. Was the same procedure employed for the 1989 agreed upon
17 procedures report?
18 A. Yes, sir.
19 Q. And, again, do you know what Mr. Symington told Coopers &
20 Lybrand during the meetings he had with them in connection
21 with the 1989 agreed upon procedures report?
22 A. No, sir.
23 Q. How about vice versa, do you know if Coopers told
24 Mr. Symington?
25 A. No, sir.
1531
1 Q. And in each instance, a final version would be prepared
2 and attached to the Coopers & Lybrand letter?
3 A. Correct.
4 Q. Now, Ms. Riebel, aside from the financial statements that
5 were prepared and sent to Coopers & Lybrand for the agreed
6 upon procedure reports, aside from these, did you check with
7 Coopers & Lybrand before sending out any of the other personal
8 financial statements to banks that you've been testifying
9 about over the last couple days?
10 A. After this time you mean? '87, '88, '89?
11 Q. Right. Apart from the ones that were sent to Coopers &
12 Lybrand or discussions with Coopers relating to the agreed
13 upon procedures report, did you check with Coopers & Lybrand
14 before sending out financial statements to any of the other
15 lenders?
16 A. I always talked with them about changes that were being
17 made. You're asking if I checked with them before I sent it
18 out?
19 Q. The question is, Ms. Riebel, did you check with Coopers &
20 Lybrand when preparing the other financial statements that
21 were sent out apart from the agreed upon procedures report?
22 A. I believe that I had conversations with them, especially
23 concerning the real estate schedule.
24 MR. SCHINDLER: Okay. Your Honor, may I approach?
25 There's one for the Court.
1532
1 Actually, may I have that back for one second, Your
2 Honor? I gave you all of the copies.
3 BY MR. SCHINDLER:
4 Q. Ms. Riebel, I've handed you an excerpt of your grand jury
5 testimony of February 10th, 1994. Do you have that in front
6 of you?
7 A. Yes, sir.
8 Q. I would ask you, please, to turn to page 100 of that
9 testimony, ma'am.
10 Do you have page 100 before you?
11 A. Yes, I do.
12 Q. Let me ask if you could, please, to read to yourself line
13 16 through line 22.
14 A. Okay.
15 Q. Do you recall being asked if when you were typing up
16 financial statements for Mr. Symington, whether you would stop
17 to call Coopers to double-check the numbers that you were
18 typing with Mr. Symington?
19 A. I see that here.
20 Q. And what did you answer, ma'am?
21 A. I answered, "I don't believe so," but I have to tell you,
22 Mr. Schindler, I had no review of documents before I saw --
23 went to the grand jury. Since then I have reviewed documents
24 and to the best of my recollection now, I believe that I
25 have.
1533
1 Q. Okay. Did you review documents with Mr. Symington's
2 counsel?
3 A. And when are you referring to?
4 Q. At any time, ma'am.
5 A. I reviewed documents with both your office and Mr. Dowd's
6 prior to this.
7 Q. In fact, you went to Mr. -- when was the last time you
8 met with Mr. Lynam or anybody representing Mr. Symington?
9 A. On the same Saturday before this trial started while I
10 was also at your office on that Saturday.
11 Q. Can you tell members of the grand jury -- I'm sorry,
12 members of the jury what documents you reviewed that causes
13 you to change your testimony that you checked with Coopers &
14 Lybrand before you sent out other financial statements.
15 MR. LYNAM: Objection, Your Honor, to the
16 characterization.
17 THE COURT: Overruled.
18 THE WITNESS: I reviewed financial statements and I
19 reviewed -- I'm not sure this is on, is it?
20 BY MR. SCHINDLER:
21 Q. I can hear you fine.
22 A. Okay. And I reviewed worksheets. And to the best of my
23 recollection now, I often referred to Coopers & Lybrand for
24 any help or any questions that I might have had or anything
25 that was changed on the real estate schedule.
1534
1 Q. My question to you, Ms. Riebel, is what documents did you
2 review that have caused you to change your opinion as to
3 whether you checked with Coopers & Lybrand?
4 MR. LYNAM: Your Honor, it's been asked and
5 answered.
6 THE COURT: Well, if there's any further answer, you
7 may give it.
8 THE WITNESS: Nothing further.
9 BY MR. SCHINDLER:
10 Q. Can you point to a single document?
11 A. No. I reviewed worksheets. And the financial statements
12 and, again, I have seen times where I have made changes --
13 excuse me -- or had questions with Coopers & Lybrand since
14 that time.
15 Q. Was that regarding the real estate schedule, Ms. Riebel?
16 A. Yes, it was.
17 Q. Have you -- have you seen a single document or testified
18 about a single document in this trial relating to your
19 provision of a financial statement to any lender, other than
20 in connection with the agreed upon procedures report, where
21 you checked with Coopers?
22 A. I don't recall for sure.
23 Q. Incidentally, Ms. Riebel, you were under oath when you
24 testified before the grand jury?
25 A. Yes, I was.
1535
1 Q. This was in 1994?
2 A. That's right.
3 Q. Ms. Riebel --
4 A. And again, at that time I had not had a chance to review
5 any documents, nor did I have a chance to correct anything
6 that I said.
7 Q. Ms. Riebel, was Coopers & Lybrand informed that
8 Mr. Symington was sending out financial statements with
9 different net worths for the same year?
10 A. That I don't know.
11 Q. Is it your testimony that they were informed or were not
12 informed?
13 A. My testimony is that I don't know.
14 Q. Let me ask you to turn to page 101 of that same grand
15 jury testimony on February 10th, 1994, and ask you to read
16 what appears on lines 2 through line 6.
17 A. Okay.
18 Q. Do you recall being asked whether Coopers & Lybrand was
19 informed that Mr. Symington was sending out financial
20 statements with different net worth values for the same year?
21 A. It says here I don't know that they weren't. But I don't
22 think so.
23 Q. When you say "it says here," that's your answer, correct?
24 A. That's correct.
25 Q. And you were under oath at that time?
1536
1 A. I was.
2 Q. Do you have any memory now that conflicts with what you
3 testified before the grand jury?
4 A. My memory is, after all of this review, is that I did
5 still depend on Coopers & Lybrand in a few instances. And I
6 cannot tell you which ones after this time.
7 Q. That's a different question.
8 A. Okay.
9 Q. The question is whether Coopers was told that
10 Mr. Symington was sending out different financial statements
11 for the same year showing different net worths.
12 A. I don't know.
13 Q. Do you think that they were?
14 A. I don't know.
15 Q. But you testified previous you don't think so; is that
16 correct?
17 A. I said in here, "I don't know that they weren't, that I
18 don't think so."
19 Q. Ms. Riebel, do you have Exhibit 17 before you?
20 A. Okay.
21 Q. Do you have that before you?
22 A. I do.
23 Q. That's your file for the October 30th, 1986 financial
24 statements?
25 A. Yes, it is.
1537
1 Q. Would you like some water?
2 A. I have some, but just a moment, please.
3 Okay.
4 Q. All right. If you turn to page 2, that's your first
5 flap, correct?
6 A. Correct.
7 Q. And can you just hold that up for a second for the jury.
8 And there's a number in pencil down in the
9 right-hand corner; is that correct?
10 A. Yes.
11 Q. And it's hard to see here, but I've tried to mark at
12 least where it occurs in the document. Is that where that
13 pencil mark occurs?
14 A. Yes, sir.
15 Q. Ms. Riebel, do you recall testifying last week that you
16 and Mr. Yeoman put the numbers in pencil on the bottom of the
17 flaps in the personal financial statement files?
18 A. Correct.
19 Q. And you recall testifying that you did that after the
20 investigation began?
21 A. That's right.
22 Q. Ms. Riebel, where were the files located when you and
23 Mr. Yeoman went through this process of putting the pencil
24 marks on there?
25 A. In Mr. Yeoman's office at Coopers & Lybrand.
1538
1 Q. Was this procedure done before or after you stamped each
2 of the files "confidential, attorney-client privilege"?
3 A. This procedure was done after.
4 Q. The numbering in pencil was done after?
5 A. Right. I believe it was. Because I think I did it at
6 the office.
7 Q. So you think you did it -- you and Mr. Yeoman did this
8 at the offices of Coopers & Lybrand?
9 A. No, the stamping I believe I did at the office prior.
10 Q. So the files were stamped "attorney-client information,
11 confidential" first and your testimony is that they somehow
12 got to Coopers & Lybrand and you and Mr. Yeoman reviewed them
13 there and put these numbers on?
14 A. Yes, sir.
15 Q. Now, was Mr. Yeoman assisting Mr. Symington and Mr. Dowd
16 in his defense at that time?
17 A. Yes, he was.
18 Q. So Mr. Yeoman had been hired by Mr. Dowd and Akin Gump to
19 assist in the investigation at that point; is that correct?
20 A. That, I don't know.
21 Q. But Mr. Yeoman was assisting?
22 A. He was assisting, yes.
23 Q. Now, as far as you know, Ms. Riebel, at that point in
24 time, no subpoenas had been issued for any of these files?
25 A. Not to my recollection.
1539
1 Q. And Mr. Yeoman is the same Mr. Yeoman that was the
2 treasurer of Mr. Symington's campaign for Governor?
3 A. Correct.
4 Q. Was anyone else present when you and Mr. Yeoman put these
5 pencil numbers on the bottoms of the flaps?
6 A. No one was present in the room, no, sir.
7 Q. Ms. Riebel, do you recall testifying before the grand
8 jury on January 25th, 1994?
9 A. Yes, I recall.
10 Q. Ms. Riebel, I've handed you an excerpt of your testimony
11 of January 25th, 1994. And let me ask if you could please
12 turn to page 78 and 79 of that grand jury testimony.
13 A. Okay.
14 Q. Have you had an opportunity to review pages 78 through
15 79?
16 A. Yes, sir.
17 Q. Let me ask you also to look at page 81 at lines 19
18 through 25 of that same grand jury testimony.
19 A. I only have page 80. I do not have page 81.
20 Q. You do not have 81 there?
21 A. No.
22 Q. Okay. I apologize. Let me bring that to you.
23 Ms. Riebel, do you recall being shown that same flap
24 and that same number one and asked if you knew who put that
25 number there?
1540
1 A. Yes, I do.
2 Q. And do you recall testifying that you were not sure who
3 put that number there?
4 A. Yes. And that's because I thought it might be
5 attorney-client privileged.
6 Q. So your testimony is that you misled the grand jury and
7 told them that you did not put that there because you thought
8 it would be attorney-client privilege?
9 MR. LYNAM: Objection, Your Honor, argumentative.
10 THE COURT: Sustained.
11 BY MR. SCHINDLER:
12 Q. Ms. Riebel, you testified before the grand jury that you
13 did not put those numbers there; is that correct?
14 A. That's correct.
15 Q. And you testified that you did not know who put those
16 numbers there?
17 A. Did I say that exactly? Let's see. That I wasn't sure
18 who put the numbers there.
19 Q. And it's your testimony that you told the grand jury you
20 did (sic) know who put those there because you thought it
21 would be attorney-client privilege?
22 A. No, I did not say that to them. I'm saying it to you.
23 Q. And I am asking you is your testimony you told the grand
24 jury you did not know who put those numbers there because you
25 thought that information was attorney-client privileged?
1541
1 A. I told the grand jury that I thought it was
2 attorney-client privilege, no, I didn't tell them that.
http://www.azcentral.com/news/symington/scripts/0528trans1.shtml
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REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
July 8, 1997 9:30 a.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Trial - Volume 30)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
5810
1 I N D E X
2 Witness: Direct Cross Redirect Recross VD
3 Douglas Hawes
By Mr. Schindler 5811
4 By Mr. Dowd 5864
5
6
7
8 E X H I B I T S
9 No. Description Identified Admitted
10 183 Credit authorization request 5876 5876
207 Senior loan committee addendum 5816 5816
11 211 Memorandum dated 6-25-90 5892 5892
213 Financial statement 5819 5820
12 215 Charge-off request 5900 5900
219 Special credit report 5824 5824
13 220 Letter dated 9-7-90 5827 5828
221 Transmittal dated 9-20-90 5827 5828
14 222 Certification 5827 5828
223 Financial statement 5836 5837
15 224 Memorandum dated 10-2-90 5843 5843
233 Memorandum dated 5-1-91 5853 5853
16 7228 Letter dated 4-20-89 5874 5874
7231 Letter dated 7-30-89 5874 5874
17 7264 Letter dated 1-27-89 5874 5874
18
19
20
21
22
23
24
25
5811
1 P R O C E E D I N G S
2
3 THE COURT: Good morning, ladies and gentlemen. The
4 record may reflect the presence of the jury with roll call
5 waived, presence of counsel, presence of the defendant,
6 presence of the witness.
7 And, Mr. Schindler, you may proceed.
8 MR. SCHINDLER: Thank you, Your Honor
9
10 DOUGLAS HAWES,
11 called as a witness herein, having been previously duly sworn,
12 was examined and testified as follows:
13
14 DIRECT EXAMINATION
15 BY MR. SCHINDLER:
16 Q. Good morning, Mr. Hawes.
17 A. Good morning.
18 MR. SCHINDLER: Your Honor, may the jury monitors be
19 enabled?
20 THE COURT: Yes.
21 BY MR. SCHINDLER:
22 Q. Mr. Hawes, when we concluded on Friday afternoon, you
23 recall that we had been discussing two loans that First
24 Interstate Bank had made. The first was the Alta Mesa loan
25 and the other was the Mercado loan.
5812
1 A. Yes.
2 Q. Do you recall on Friday afternoon we were discussing
3 Exhibit 201?
4 A. Yes.
5 Q. And do you have that before you?
6 A. Yes.
7 Q. And just to, since it's been a couple of days, on page 1,
8 what's the date of this memo?
9 A. June 7th, 1990.
10 Q. Okay. And to put things back in perspective, as of June
11 7th, 1990, had the total amount of the Mercado shortfall been
12 determined yet?
13 A. No.
14 Q. And as of that point in time, do you recall you testified
15 that you had or First Interstate Bank had decided to wait
16 until July 1st on the Alta Mesa Village loan to allow the Alta
17 Mesa loan to be finalized?
18 A. We had done a forbearance on Alta Mesa, yes.
19 Q. Until July 1st?
20 A. On July 1.
21 Q. Part of that was to allow things on the Mercado to close?
22 A. The shortfall, yes.
23 Q. If we could go back to page 4, which is where we had left
24 off, is this the memo that you testified about Friday relating
25 to the Mercado shortfall?
5813
1 A. This is the memo, yes.
2 Q. And when we concluded on Friday, we were talking about
3 the paragraph I've highlighted on the screen. Do you have
4 that before you?
5 A. Yes.
6 Q. And in particular, I think just as we broke, I asked you
7 about the sentence where Mr. Symington indicated market values
8 do not accurately reflect the current market. Do you recall
9 that?
10 A. I can see the sentence, yes.
11 Q. And had Mr. Symington told you that the financial -- the
12 market values on his financial statement did not accurately
13 reflect the market?
14 A. No.
15 Q. This is something he told Mr. Hawes -- I mean Mr. White?
16 A. I don't know what he told Mr. White.
17 Q. Now, moving down to the next sentence that I've
18 highlighted, can you read what I've highlighted there?
19 A. Yes.
20 Q. And can you read that to the jury?
21 A. Oh, "Contingent debt also appears not to have been fully
22 accounted for on his recent statement."
23 Q. And again, did Mr. Symington tell you the contingent debt
24 had not been accounted for on his statement?
25 A. I'm not sure what the question --
5814
1 Q. Sure. Had Mr. Symington told you in the context of your
2 discussions on the Alta Mesa Village loan that the -- that
3 contingent debt was not -- appears not to have been fully
4 accounted for on his December 31st, '89 financial statement?
5 A. No.
6 Q. And moving down there's some entries I've highlighted now
7 relating to the marketable securities. Do you see that?
8 A. Yes.
9 Q. And can you read those to the jury, please?
10 A. "Marketable securities shown on the statement are held in
11 irrevocable family trust of which Symington is the
12 beneficiary. Trustor is unknown, trustee is Mellon
13 Bank, and Symington claims that the asset cannot be
14 liquidated or pledged."
15 Q. Now, as of June of 1990, was First Interstate Bank still
16 looking to Mr. Symington to honor his Alta Mesa Village
17 guarantee?
18 A. Yes.
19 Q. And was First Interstate Bank still looking to
20 Mr. Symington to honor any shortfall in the Mercado
21 construction loan?
22 A. Yes.
23 Q. Now, do you know if Mr. Symington had told any other
24 lenders that the assets could not be liquidated or pledged?
25 A. I do not know what he told other lenders.
5815
1 Q. And I assume that means you don't know what he told the
2 permanent lender on the Mercado as well; is that correct?
3 A. Correct.
4 Q. Now, turning to the next page, page 5 or page 4 of the
5 memo, but page 5 of the document, what is Mr. White
6 recommending that First Interstate Bank do?
7 A. Should I read these?
8 Q. Yes, please.
9 A. "Based on the foregoing, I recommend the following
10 actions:
11 "One, accept up to a 1.2 million shortfall upon
12 funding of the permanent loan.
13 "Two, negotiate directly with permanent lender in an
14 effort to close gap.
15 "Three, require obligor/guarantors to fund at least
16 100,000 of their estimated closing costs/lease-up
17 expenses from sources other than our repayment source.
18 "Four, charge off final shortfall and convert
19 deficiency to a one-year note, principal and interest
20 at maturity, if necessary. We request authority to
21 negotiate the collateral."
22 Q. Now, did First Interstate Bank in fact agree to accept a
23 $1.2 million shortfall?
24 A. I'm not sure of the exact number, but it was
25 approximately that.
5816
1 Q. And do you recall whether there was in fact a -- whether
2 the shortfall was in fact converted to a one-year note?
3 A. I don't know specifically.
4 Q. Do you recall generally?
5 A. If it was one year, I was not involved with any of those
6 negotiations, so I'm only going by this.
7 MR. SCHINDLER: And, Your Honor, could the clerk
8 place before the witness what has been marked as Exhibit 207?
9 THE COURT: Yes.
10 MR. DOWD: No objection, Your Honor.
11 THE COURT: The exhibit may be received in
12 evidence.
13 BY MR. SCHINDLER:
14 Q. Do you have Exhibit 207 before you, Mr. Hawes?
15 A. Yes.
16 Q. And first of all, what's the date?
17 A. June 7th, 1990.
18 Q. Okay. And what's the approval date? I've highlighted it
19 on the screen for you.
20 A. Oh, June 8th, I'm sorry.
21 Q. What is a senior loan committee -- what is this
22 document?
23 A. This is a senior loan committee amendment -- addendum to
24 approval. These are what appear to be additional conditions
25 or requirements to an already approved transaction.
5817
1 Q. And going down to the bottom, do you know who Ward Wilson
2 is?
3 A. Yes.
4 Q. Who is Ward Wilson?
5 A. He's a senior vice president at then First Interstate.
6 Q. And you said a moment ago that this was an addendum that
7 had additional conditions and I've highlighted that. Can you
8 read to members of the jury first what's the first condition?
9 A. "Number one, we must receive and review a copy of the
10 Mellon Bank Trust mentioned on page 3 of the narrative
11 in the presentation. Based on that review, we may seek
12 either or both collateral and an assignment of the
13 trust income to" support -- to "add support to
14 Mr. Symington's guarantee."
15 Q. Now, do you know if Mr. Symington ever assigned the trust
16 income that he was to receive under the four irrevocable
17 trusts to First Interstate Bank?
18 A. I don't think so. I don't have any specific knowledge of
19 that.
20 Q. Did you ever receive an assignment?
21 A. No.
22 Q. Going down to the second -- what's the second condition?
23 A. "The loan officer is specifically not authorized to
24 compromise, reduce or release any obligations of either
25 the borrower or the guarantors, except to the extent
5818
1 that such obligations are paid in full."
2 Q. And as of June 8th, 1990, then was First Interstate still
3 expecting Mr. Symington to honor his guarantee?
4 A. Yes.
5 Q. What was the third condition?
6 A. "Number three, Mr. Symington must provide a current
7 personal financial statement on our bank's form.
8 Please ask him to indicate both cost and current market
9 values of his assets and to fully disclose all
10 contingent as well as direct liabilities."
11 Q. Going down to number four?
12 A. "Number four, counsel for FIAZ should be present during
13 all substantial negotiations and/or conversations
14 between ourselves and our borrower and/or guarantors."
15 Q. Now is F-I-A-Z an abbreviation for First Interstate of
16 Arizona?
17 A. Yes.
18 Q. Was it your practice to have counsel present during all
19 substantial negotiations between a borrower and guarantor?
20 A. Depending on the situation, it could be. Some you don't
21 have any counsel present. All depends on the specific
22 circumstances.
23 Q. And what -- what types of circumstances would require
24 counsel to be present?
25 A. Among the circumstances, I mean if there's ongoing
5819
1 litigation, threatened litigation, overly complex situations.
2 Q. Were you supposed to have counsel present during your
3 discussions relating to the Alta Mesa Village loan?
4 A. I had not received that instruction, no.
5 Q. And going down to number five?
6 A. "Given Mr. Symington's position as a public figure, it is
7 even more important than usual for us to carefully
8 document all negotiations and substantive conversations
9 we have with him on" our -- on "this subject. To a"
10 slighter -- to a "slightly lesser extent, the same is
11 true for officials of Chicanos Por La Causa."
12 Q. And finally, "The loan should be placed on nonaccrual."
13 What does that mean?
14 A. That is an internal accounting methodology. Loans that
15 are nonaccrual do not accrue income for accounting purposes.
16 Q. Now, one of the conditions was for Mr. Symington to
17 provide a current financial statement, number three. Do you
18 see that?
19 A. Yes.
20 Q. And do you know if, in fact, Mr. Symington provided a
21 current financial statement?
22 A. To Mr. White? I mean I was not involved with those
23 negotiations. I'm not sure what Mr. White got.
24 MR. SCHINDLER: Your Honor, could the clerk place
25 before the witness Exhibit 213?
5820
1 THE COURT: Yes.
2 MR. DOWD: No objection.
3 THE COURT: The exhibit may be received in
4 evidence.
5 BY MR. SCHINDLER:
6 Q. Do you recognize 213?
7 A. It's a First Interstate Bank personal financial statement
8 form.
9 Q. And prior to coming to court have you had a chance to
10 look at it?
11 A. I beg your pardon?
12 Q. Prior to coming to court have you had a chance to look at
13 it?
14 A. I think I've seen this one before.
15 Q. And starting at the top, who is it a financial statement
16 for?
17 A. Mr. Symington.
18 Q. And what is it -- as of what date does it represent to be
19 his statement of financial condition?
20 A. December 31, 1989.
21 Q. And going down to the first page, what's the net worth
22 that Mr. Symington reports on this?
23 A. $11,952,529.
24 Q. And do you recall, is that the same number that
25 Mr. Symington reported on the 12-31-89 that you received on
5821
1 the Valley National Bank form?
2 A. That I received?
3 Q. Yes.
4 A. Yes.
5 Q. Now, let me direct your attention to page 2 to the
6 signature line. Does it appear to have been signed?
7 A. Yes.
8 Q. And on what date?
9 A. June 21, 1990.
10 Q. Now, I want to direct your attention to the certification
11 box. And if you could, read to members of the jury the
12 certification line above Mr. Symington's signature.
13 A. "In submitting the foregoing statement, both the printed
14 and written portions of which I have carefully read, I
15 am providing you with a 'best efforts' evaluation of my
16 financial condition. The current depression in the
17 real estate market makes it difficult to determine real
18 asset value, thus any evaluation is highly subjective."
19 Asterisk. "I agree to notify the said Bank
20 immediately, in writing, of any unfavorable change in
21 my financial condition. I hereby authorize you to
22 investigate my credit record and check statements I
23 have made."
24 The asterisk is: "I warrant that I have no" -- it's
25 punched out. Probably "known obligations, direct or
5822
1 contingent, which have not been set forth hereon and
2 that I have not knowingly withheld any material
3 information of an adverse nature."
4 Q. Okay. First of all, is that a standard language on the
5 FIB certification?
6 A. I don't think so.
7 Q. And was the bank aware that Mr. Symington was going to
8 alter the certification above the signature line?
9 A. Again, this was Mr. White's document. I don't -- I
10 would be -- it would be unusual.
11 Q. Had Mr. Symington told you that he was going to alter the
12 certification on the FIB form?
13 A. No.
14 Q. Now, attached to the back of this financial statement,
15 page 7, is a letter. Do you see that letter?
16 A. Which page is that?
17 Q. Page 7 of the document.
18 A. Okay.
19 Q. And it's a letter to Mr. Symington dated June 21st,
20 1990. Is that the same date that the financial statement was
21 signed?
22 A. Yes.
23 Q. And had you seen this letter before?
24 A. Before when? Today?
25 Q. Correct.
5823
1 A. In reviewing with the FBI I had seen this letter.
2 Q. Going back, do you know, Mr. Hawes, whether Mr. Symington
3 informed any other lender that his financial statement was
4 just a best efforts evaluation of his financial condition?
5 A. I have no idea what he told other lenders.
6 Q. And I assume that would include --
7 A. Well, they were -- beg your pardon?
8 Q. Go ahead.
9 A. Other than Mr. White, by lenders you mean other
10 institutions?
11 Q. Correct.
12 A. I have no information.
13 Q. Now, do you recall when the Mercado permanent loan
14 finally closed?
15 A. The end of June sometime. The day I do not know.
16 Q. And there was in fact a shortfall?
17 A. Yes.
18 Q. And was that shortfall in fact converted to a one-year
19 note?
20 A. I don't know that for a fact. I only represent the
21 efforts -- I wasn't involved with that so it was not
22 something I was responsible for.
23 Q. You testified earlier that the forbearance on the Alta
24 Mesa loan had gone until July 1st, 1990. Do you recall that?
25 A. That was when it was to mature, yes.
5824
1 Q. And did the Alta Mesa loan get repaid on July 1st, 1990?
2 A. No.
3 Q. Did workout negotiations continue until August of 1990?
4 A. Yes.
5 MR. SCHINDLER: Your Honor, if the clerk could place
6 before the witness what's marked as Exhibit 219.
7 MR. DOWD: No objection, Your Honor.
8 THE COURT: The exhibit may be received in
9 evidence.
10 BY MR. SCHINDLER:
11 Q. Do you recognize Exhibit 219?
12 A. Yes.
13 Q. And what is it?
14 A. This is a special credit report for the account for J&F
15 Investments.
16 Q. And what is a special credit report?
17 A. Loans that are handled by the loan workout area special
18 credits department over a certain dollar amount have a report
19 done on them every month for management tracking purposes.
20 Q. And which loan does this relate to?
21 A. J&F Investments.
22 Q. And was that the Alta Mesa loan?
23 A. That's the property with it, yes.
24 Q. And there's a line entitled "Related Entities." What
25 does that relate to?
5825
1 A. What are related entities? Is that your --
2 Q. Correct.
3 A. If there is other -- a person that has other borrowings
4 with the bank or an entity that has borrowings with the bank
5 that has common ownership or common guarantees would be
6 related.
7 Q. Going down there's a line for guarantors. Who are the
8 guarantors of the line?
9 A. J. Fife Symington and Jerry Strauss.
10 Q. Now, the next box down that says financials -- I'm
11 sorry, "financial," do you see that?
12 A. Yes.
13 Q. What is that a reference to?
14 A. Those are the -- the Roman numeral at the left should
15 correlate with the financial information. So number one would
16 be J&F Investments. Number two would be Mercado Developers.
17 Number three would be Symington. And number four would be
18 Strauss.
19 Q. All right. Going to line number three for Mr. Symington,
20 I've highlighted the line that appears to correspond to
21 Mr. Symington. Do you see that?
22 A. Yes.
23 Q. And again, what's the net worth?
24 A. Eleven million, nine hundred fifty-two with zero, zero,
25 zero omitted.
5826
1 Q. So 11,952,000?
2 A. Yes.
3 Q. Now, there's a comment there for certified financials.
4 Do you see that?
5 A. Yes.
6 Q. What does that refer to?
7 A. At this point I believe we had requested he sign a
8 specific certification to his financial condition.
9 Q. And is that something you had requested personally?
10 A. Yes.
11 Q. I'll come back to that in a minute.
12 Going down to the section entitled "Collateral,"
13 what's represented -- or what does that section relate to?
14 A. The value and the source and date. The source and date
15 is fair value, which is a term from the appraisal. And MAI is
16 the designation of the appraiser. So that number refers to a
17 November, 1989 appraisal and the fair value would be
18 $1,360,000.
19 Q. Is that a fair value appraisal of the Alta Mesa Village
20 project?
21 A. Yes.
22 Q. And going down to the bottom to "Proposed Plan," what is
23 the proposed plan of action?
24 A. That "borrower and guarantor provide updated certified
25 financial information including all income sources, negotiate
5827
1 motivated sellers program or deed in lieu with deficiency note
2 arrangement with borrower that establishes some minimum
3 monthly payment provision. Prepare recommendation to
4 management by 9-30, 1990."
5 Q. Mr. Hawes, the original 12-31-89 financial statement that
6 you received from Mr. Symington was certified. There was a
7 certification on it. Do you recall that?
8 A. Yes.
9 Q. Why were you seeking new certified financials from
10 Mr. Symington?
11 A. The certification was a little more in depth. It was
12 formal looking and the regular statement is a snapshot in time
13 as to what your assets are that date. The certification would
14 ask him to recertify the numbers and asked about being a
15 beneficiary of trusts and other things that may not appear in
16 the statement.
17 Q. And were you still looking for assets to pay back the
18 Alta Mesa Village loan?
19 A. Absolutely.
20 Q. Did Mr. Symington send in certified financials as you
21 requested?
22 A. Did he sign the certification? Yes.
23 MR. SCHINDLER: Well, Your Honor, could the clerk
24 place before the witness what's been marked as Exhibits 221,
25 220, and 222?
5828
1 MR. DOWD: No objection, Your Honor.
2 THE COURT: Each exhibit may be received in
3 evidence.
4 BY MR. SCHINDLER:
5 Q. And, Mr. Hawes, let me ask you to start first with
6 Exhibit 222. Is 222 before you? Do you have that before you?
7 A. Yes.
8 Q. First of all, it's entitled "Certification Regarding
9 Financial Statements." Do you see that?
10 A. Yes.
11 Q. Is this a standard First Interstate Bank form as
12 initially drafted? Let me rephrase that.
13 Is there something called a certification form that
14 First Interstate Bank prepares?
15 A. We had a certification form prepared for this case, yes.
16 Q. Now, in -- on this particular form, there's some
17 language that has lineouts through it. Do you see that?
18 A. Yes.
19 Q. Now, are you able to read the typewritten information
20 under the lineouts?
21 A. I probably can, yeah.
22 Q. And can you read to members of the jury what is
23 typewritten under the lineouts?
24 A. Beginning with "however"?
25 Q. Correct.
5829
1 A. "However, the Financial Statements are, in the opinion of
2 the undersigned, not an accurate statement of the
3 financial condition of the undersigned as of September
4 5, 1990. Because of the current status of the Arizona
5 real estate economy and anticipated events concerning
6 such economy and the assets shown on the Financial
7 Statements, the value of the assets and the net worth
8 shown on the Financial Statements are now materially
9 overstated. The amount of such overstatement cannot be
10 quantified at this time. Therefore, the furnishing of
11 the Financial Statements must not be taken as a
12 representation of the current accuracy and the
13 Financial Statements are being furnished only because
14 of your specific request" thereof -- "therefor."
15 Q. Now, was that language, the typewritten language on the
16 form that you prepared and sent to Mr. Symington?
17 A. No, it was not.
18 Q. Now, going down to paragraph 3, I've highlighted some
19 sentences that begin in paragraph 4, "to the best knowledge of
20 the undersigned." Do you see that?
21 A. Yes.
22 Q. Was that language on the original certification that you
23 provided to Mr. Symington?
24 A. I don't think so.
25 Q. Going to page 2, there's a paragraph number 7. Do you
5830
1 see that?
2 A. Yes.
3 Q. Had you asked Mr. Symington to provide more information
4 relating to the trusts?
5 A. We -- I mean we asked for all information regarding
6 trusts, yes.
7 Q. Now, going down to paragraph 9, what's the purpose of
8 paragraph 9?
9 A. Should I read this?
10 Q. Yes.
11 A. "To the best knowledge and belief of the undersigned,
12 there are no other" -- no other "assets or income
13 which will reasonably accrue to the use or benefit of
14 the undersigned in the next twenty-four (24) months
15 from the date hereof, and the information set forth
16 above is accurate and complete as of the date hereof."
17 Q. Now, going down to the very last paragraph, can you read
18 to members of the jury what's written just above the signature
19 line?
20 A. "The undersigned acknowledges that First Interstate is
21 relying on this Certificate and the information
22 contained in the attached Schedules to extend, modify
23 of continue financial accommodations. The undersigned
24 acknowledges that this Certificate and the information
25 contained in the Schedules are a material inducement to
5831
1 proceed with such financial accommodations. The
2 undersigned is aware of the penalties under 18 USC
3 Section 1014 for making false statements or willfully
4 overvaluing property for the purpose of influencing the
5 actions of a bank insured by the Federal Deposit
6 Insurance Corporation."
7 Q. And what date this was certification originally signed?
8 A. September 5th, 1990.
9 Q. Now, Mr. Hawes, were you aware on that very same date,
10 September 5th, 1990, Mr. Symington had recertified and
11 warranted the accuracy of his December 31st, 1989 financial
12 statement without any sort of altered certification like this?
13 A. I'm not sure of the question.
14 Q. Sure. Were you aware that on the very same date,
15 September 5th, 1990, Mr. Symington had provided another copy
16 of his December 31st, '89 financial statement to another bank
17 in which he certified that the financial statement was
18 accurate and did not provide any sort of altered certification
19 like this?
20 A. I was not aware of that, no.
21 Q. Now, did you receive back this altered certification from
22 Mr. Symington?
23 A. Yes.
24 Q. Were you willing to accept it?
25 A. No.
5832
1 Q. Why not?
2 A. The certification as we sent out is the certification and
3 information that we needed, we -- no additions were
4 discussed. We didn't feel they were necessary.
5 Q. And did you tell Mr. Symington that it was unacceptable?
6 A. Yes, we did.
7 Q. Would you look at, please, what has been marked as
8 Exhibit 220.
9 And incidentally, when you got 222, did it have the
10 lineouts on it originally?
11 A. No.
12 Q. When you first got it, it was typed as typed-written
13 without the lineouts through it?
14 A. Correct.
15 Q. Now, do you recognize 220?
16 A. Yes, this is a letter dated September, 1990 -- September
17 7th, 1990, from me to J&F Investments care of The Symington
18 Company and Mr. Symington.
19 Q. And would you just read the first paragraph to the jury?
20 A. "I received your Certification Regarding Financial
21 Statements September 6, 1990. The package did not
22 contain any of the schedules described in the
23 certification document. Furthermore the changes you
24 made to the wording in paragraph 2 makes the document
25 unacceptable to the bank."
5833
1 Q. And can you go down, please, and read paragraph 2?
2 A. "First Interstate Bank of Arizona, N.A. is still
3 interested in resolving this loan in a cooperative
4 manner. To be able to work in that mode, the bank
5 requires that the certification be completed with the
6 schedules attached and not unilaterally altered.
7 Should you have any concerns regarding completing the
8 certification, I would be willing to discuss those
9 concerns."
10 Q. What did you mean by "cooperative manner"?
11 A. By doing a workout which the parties proceed under
12 agreements that are mutually discussed and agreed to, not
13 through litigation or foreclosure.
14 Q. And why didn't the bank just declare a default and sue
15 Mr. Symington?
16 A. We believed it was in our best interests to have the
17 borrower's cooperation at this point.
18 Q. What were the options? What were the bank's options as
19 of September of 1990?
20 A. We could declare the loan in default and accelerate,
21 begin foreclosure, begin lawsuits.
22 Q. Did you have any good options as of that point in time?
23 A. By good, you mean --
24 Q. Were you having to choose between the lesser of two
25 evils?
5834
1 A. I'm -- we were aware of what the value of the property
2 was. So I mean we knew that we could not sell the property
3 ourselves for more than the debt, so we knew there was a loss
4 there. Is that the question?
5 Q. I'm just asking you what the options were of the bank as
6 of that point in time.
7 A. As to -- we have the option of working with the borrower
8 or proceeding with litigation is our options.
9 Q. Now, at the third paragraph, you make a reference to this
10 certification. Do you see that?
11 A. Yes.
12 Q. And as part of your letter, did you enclose an undoctored
13 certification?
14 A. This was a copy of the certification that we originally
15 sent.
16 Q. And attached to your letter, is this how the
17 certification originally read?
18 A. This is -- should be identical to the one we sent
19 originally, yes.
20 Q. Did Mr. Symington sign this certification that you sent
21 to him?
22 A. I never received a signed copy back.
23 Q. Do you know what he did instead?
24 A. What I received was the original -- the one that had
25 been altered, had the paragraph lined out, the parts lined out
5835
1 were initialed and that was sent to us.
2 Q. Going back to your letter for a moment, on the first
3 paragraph of your letter, you make a reference to the fact
4 that the package did not contain any of the schedules
5 described in the certification document.
6 A. Yes.
7 Q. What is that a reference to?
8 A. In the certification they are asking for I think three
9 schedules: One detailing income, another for trusts, and the
10 third also is by income. I'm reading this quickly.
11 Q. Can you look at what's been marked as Exhibit 221.
12 Is this a transmittal to you?
13 A. Yes, it is.
14 Q. And what's the date of the transmittal?
15 A. September 20th, 1990.
16 Q. And that's after the date of the letter you sent?
17 A. I believe so.
18 Q. And what's being enclosed with this transmittal?
19 A. Revised certification regarding financial statement and
20 personal financial statement including revised real estate
21 investment schedule.
22 Q. And going back to Exhibit 222, the certification, are the
23 revisions that are referred to the lining out of the language
24 that you read earlier?
25 A. Yes, that is a revision, yes.
5836
1 Q. And then there are initials over on the side there. Do
2 you see that?
3 A. Yes.
4 Q. Do you know whose initials those are?
5 A. Mr. Symington's.
6 Q. Down at the bottom there's some additional initials again
7 next to a date. Do you see that?
8 A. Yes.
9 Q. Do you know whose initials those are?
10 A. I believe Mr. Symington's.
11 Q. And what date has he initialed the revisions?
12 A. September 19th, 1990.
13 Q. And again at the bottom of page 2, are there initials and
14 a date?
15 A. Yes.
16 Q. Was the certification as revised as lined out by
17 Mr. Symington and then initialed acceptable to First
18 Interstate?
19 A. Yes.
20 Q. Now, in the transmittal Ms. Riebel refers to a revised
21 financial statement. And do you have Exhibit 223 before you?
22 A. No.
23 MR. SCHINDLER: And if not, could the clerk place
24 that before you.
25 THE CLERK: Here you go.
5837
1 THE WITNESS: Thank you.
2 MR. SCHINDLER: Any objection?
3 MR. DOWD: No objection, Your Honor.
4 THE COURT: The exhibit may be received.
5 BY MR. SCHINDLER:
6 Q. Is this the revised financial statement that you received
7 from Mr. Symington?
8 A. Yes.
9 Q. And, again, starting at the first page, does it still
10 reflect on the front financial condition as of December 31st,
11 1989?
12 A. Yes.
13 Q. And on the front, does it still report the net worth of
14 11,952,529?
15 A. Yes.
16 Q. And going down to page 2, is this still going to the
17 certification -- do you see the certification language on
18 page 2?
19 A. Yes.
20 Q. Now, this is still that best efforts altered
21 certification; is that correct?
22 A. Yes. That was on the other statement.
23 Q. I'm sorry?
24 A. Yes.
25 Q. And, again, that wasn't the original language that
5838
1 appeared in the certification?
2 A. It is not part of our standard document, no.
3 Q. Now, it appears to have been signed first on June 21st,
4 1990, and then again resigned on September 19th. Do you see
5 that?
6 A. Yes.
7 Q. And let me ask you to turn, please, to page 4.
8 Do you have page 4?
9 A. Yes.
10 Q. What is page 4?
11 A. It's entitled "Real Estate Investments-Revised."
12 Q. And I've highlighted a column on the far right-hand
13 side. Do you see that?
14 A. Yes.
15 Q. What is that column entitled?
16 A. "Revised Symington Value 9-19-90."
17 Q. And going down to the bottom, does high- -- I've
18 highlighted a section entitled the "Original Net Worth." Do
19 you see that?
20 A. Yes.
21 Q. As well as "Estimated Revised Net Worth"?
22 A. Yes.
23 Q. What was the new net worth that Mr. Symington was
24 reporting as of September 19th, 1990?
25 A. Estimated revised net worth is $4,486,616.
5839
1 Q. And does that reduction in net worth appear to stem from
2 a reduction in Mr. Symington's equity in various projects?
3 A. Yes.
4 Q. Now, Mr. Hawes, do you know if any of the entries in the
5 revised Symington value 1990 column are accurate?
6 A. By accurate -- are they his representations or did I
7 believe that that was what the properties were worth?
8 Q. Correct.
9 A. I believe that the properties were worth less than that.
10 Q. And what about the representations about Mr. Symington's
11 equity in the projects, do you know if those were accurate?
12 A. Well, I believe that those values were less than that.
13 Q. So you believed that Mr. Symington's net worth was less
14 than the four million that he was reporting?
15 A. Well, yes. I believe these values were less, and,
16 therefore, the equity would have to be less.
17 Q. At this point in time, did you know if the loan amounts
18 that were reported were accurate or not?
19 A. I believed that they were.
20 Q. Now, I just want to be clear. When you go to the column
21 on the right, the revised Symington value --
22 A. Um-hmmm.
23 Q. -- you testified a moment ago that you thought that the
24 market values that were reported here were not accurate?
25 A. Under market value, I believe that those could not be
5840
1 achieved at that time.
2 Q. Okay. And do you know if the schedule indicates whether
3 the reduction in Mr. Symington's value is attributable to a
4 reduction in the market value of the project or whether it's
5 attributable to the reduction in Mr. Symington's interest in
6 the project?
7 A. I have no information either way.
8 Q. So the schedule itself doesn't indicate?
9 A. No.
10 Q. Let me draw your attention down in particular to some
11 entries for the Camelback Esplanade No. 1, No. 2, No. 3. Do
12 you see that?
13 A. Yes.
14 Q. On the original financial statement, the original
15 12-31-89, what had Mr. Symington reported as his share of
16 Camelback Esplanade No. 1?
17 A. $2,652,000.
18 Q. And then revised as of September 19th, 1990?
19 A. The same number.
20 Q. What about Camelback Esplanade No. 2?
21 A. Two million, two thirty-two.
22 Q. And what with revised?
23 A. The same number.
24 Q. And then for number three?
25 A. 2,163,200. And the revised is 500,000.
5841
1 Q. Now, Mr. Hawes, were you aware that in August of 1990
2 Mr. Symington's counsel had represented that Mr. Symington's
3 value in the Esplanade was now zero?
4 A. I was not aware of that, no.
5 Q. Did you still believe Mr. Symington had some equity in
6 the Esplanade projects?
7 A. I don't recall what I valued those at. But from the
8 statement, it would appear that he still had an ownership
9 interest.
10 Q. Well, did you believe that he had some value, some equity
11 out of the Esplanade project?
12 A. I would have to check my notes. I don't think I put any
13 value on that specific one. I think they were worth less than
14 the debt.
15 Q. And getting down to -- going back to page 2 to the
16 Schedule 4. There's an entry for "Notes, Contracts, and
17 Mortgages." Do you see that?
18 A. Yes.
19 Q. And then if you turn to page 3, is there in fact a
20 schedule for "Notes Payable"?
21 A. Yes.
22 Q. Is there any reference in the scheduled notes payable to
23 a $300,000 note that Mr. Symington -- or $300,000 loan that
24 Mr. Symington obtained from his mother in April of 1989?
25 A. Not listed here, no.
5842
1 Q. And were you aware of the fact that Mr. Symington
2 obtained a $300,000 loan from his mother in April of '89?
3 A. No.
4 Q. Were you aware that Mr. Symington obtained a $600,000
5 loan from his mother in January of 1990?
6 A. No.
7 Q. Were you aware that Mr. Symington also had two notes
8 outstanding payable to a man named Toll, one for $10,000 and
9 one for $70,000?
10 A. No.
11 Q. Were you aware that Mr. Symington still had $50,000
12 outstanding payable to a man named Horton?
13 A. No.
14 Q. Were you aware that Mr. Symington had $100,000 payable to
15 an entity called 40th Street Associates?
16 A. No.
17 Q. Are those facts you would have wanted to know as part of
18 doing your workout?
19 A. Yes.
20 Q. Why?
21 A. Well, we want a complete picture of the financial
22 condition so we can act appropriately.
23 Q. Why is a complete picture important to you?
24 A. We are attempting to be paid the most amount of -- in
25 the most reasonable time frame. And assets are important, so
5843
1 they may be a source of repayment. Liabilities may give us an
2 indication of other creditors that may be attaching those
3 assets.
4 Q. Now, after receiving Mr. Symington's revised personal
5 financial statement and certification, did you recommend a
6 modification of the Alta Mesa Village loan?
7 A. After receiving this?
8 Q. Yes.
9 A. I recommended a -- a workout proposal, yes.
10 MR. SCHINDLER: Your Honor, could the clerk place
11 before the witness Exhibit 224.
12 MR. DOWD: No objection.
13 THE COURT: The exhibit may be received.
14 BY MR. SCHINDLER:
15 Q. What is Exhibit 224?
16 A. This is a memo from me to Daniel Tom dated October 2nd,
17 1990.
18 Q. And who was Mr. Tom?
19 A. He was my direct supervisor.
20 Q. And what are you doing in this memo? What's the purpose
21 of the memo?
22 A. I'll read it to you. "Authorization to negotiate a
23 motivated sellers program in which the borrower would
24 have until 12-31, 1990, to sell the property. If the
25 property is not sold or in escrow (approved by" First
5844
1 Interstate) "by 12-31, 1990, the borrower would deed
2 the property to the bank. In either situation
3 Symington would sign a" one -- a "note maturing in one
4 year for the full deficiency. The details of the sale
5 and deficiency note are described in the Motivated
6 Sellers Program."
7 Q. As of October, 1990, did you still think Mr. Symington
8 would have enough assets to be able to honor your one-year
9 deficiency note?
10 A. At this time I didn't see he had immediate assets that he
11 could pay us from, no.
12 Q. Why were you willing to do a one-year note with him?
13 A. We anticipated getting some payments and cash and he may
14 have had other sources that could fund some portion from maybe
15 the trust.
16 Q. And you don't need to read the whole thing. The section
17 entitled "Project History," what are you laying out?
18 A. We are describing the physical project itself, the
19 history and why it has not performed as originally
20 anticipated.
21 Q. And going to page 3, there's a reference to a motivated
22 sellers program. Do you see that?
23 A. Yes.
24 Q. And, again, what is a motivated sellers program?
25 A. Essentially we understand that frequently people in the
5845
1 business, real estate developers, are able to sell and at
2 better prices the property than the bank would if we were the
3 seller and we try to motivate them to sell the property and
4 achieve as much for us as soon as possible. And we establish
5 a price that we feel is sufficient and then any amounts
6 greater than that, they may receive some dollar benefit for if
7 they receive greater credit for it.
8 Q. Going to page 4, there's a reference to the deficiency
9 note. Do you see that?
10 A. Yes.
11 Q. Were you still trying to get some money out of
12 Mr. Symington?
13 A. We were trying to get the entire amount, yes.
14 Q. Now, let me direct your attention down to paragraph --
15 the section entitled "Financial Condition of Guarantors." Did
16 you prepare this section?
17 A. Yes.
18 Q. And where did this analysis come from?
19 A. This is an analysis that I performed.
20 Q. And can you read to the members of the jury what you've
21 written?
22 A. "Symington on his 12-31-89 financial statement lists a
23 net worth of $11,161,527. The vast majority of assets
24 are real estate partnerships. The real estate
25 partnership values are based on original appraisals and
5846
1 have not been revalued to current market values. Using
2 a 25 percent decrease in property value reduces
3 Symington's equity in the partnerships to" four
4 point -- "$4,838,000 reducing his net worth to
5 $519,614. Symington's only liquid asset at 12-31-89
6 was cash of $84,000. Symington has submitted a
7 certification of his financial condition (on 9-19-90)
8 that revalues the real estate at $7,814,000 reducing
9 his net worth to" 4.4 -- I'm sorry, "$4,486,616. The
10 9-19-90 net worth figure includes the 5050 North 40th
11 Street building as $300,000 of equity, this figure
12 could actually be a loss of $5 million as described
13 below."
14 Q. Now, in your analysis there, you don't include any
15 references to any other loans that Mr. Symington may have had
16 outstanding as of this date; is that correct?
17 A. I didn't make any specific reference, no.
18 Q. Were you aware of those notes that I asked you about a
19 few moments ago?
20 A. No.
21 Q. Going down to the next paragraph, can you read what
22 you've written to the jury there?
23 A. "His sources of income are distributions from The
24 Symington Company and income distributions from a
25 trust" -- and income distributions from a trust.
5847
1 "According to Symington the distributions from the
2 partnerships are minimal. Based on a brief analysis of
3 the properties size, debt and occupancy, Symington's
4 claim appears to be realistic. Income from The
5 Symington Company is based on the company's ability to
6 generate development fees. Based on the company's 1990
7 cash flow projections the company will break even for
8 the year if it is able to start the retail development
9 of the Esplanade by the end of the year."
10 Q. Let me stop you for a minute. Had Mr. Symington told you
11 that his distributions from the partnership were minimal?
12 A. Yes.
13 Q. And when you wrote here this income from The Symington
14 Company is based on the company's ability to generate
15 development fees, what does that mean?
16 A. The cash flow I was given listed the source of income and
17 the various majority were fees from acting as the general --
18 or the developer.
19 Q. Did you understand that The Symington Company needed to
20 have development fees to stay afloat?
21 A. Yes.
22 Q. Now, did you meet with Mr. Symington -- this information
23 that's reported in your analysis, how did you get that
24 information?
25 A. Well, discussion about his distributions came from him.
5848
1 The information about The Symington Company came from a cash
2 flow statement that Jim Cockerham prepared or supplied to me.
3 Q. How many meetings did you have with Mr. Symington?
4 A. I think maybe four times.
5 Q. And did you discuss his projects and his properties
6 during those meetings?
7 A. Yes.
8 Q. Did he have any problems describing the current state of
9 any of his projects?
10 A. I don't recall any.
11 Q. And did he demonstrate any difficulty with any of the
12 facts relating to his projects?
13 A. No.
14 Q. Did he appear to be knowledgeable?
15 A. Generally, yeah.
16 Q. Intelligent?
17 A. Yes.
18 Q. Now, as of this point in time in October of 1990, was
19 Mr. Symington still attempting to renegotiate the Alta Mesa
20 Village loan with you?
21 A. We -- we had discussed this workout proposal.
22 Q. Let me ask you to turn the page to page 5.
23 Starting at the top, and you don't need to read, if
24 there's a reference there to a trust established by
25 Mr. Symington's grandfather?
5849
1 A. Yes.
2 Q. Where did that information come from?
3 A. I believe from Mr. White.
4 Q. Now, you recall I asked you a few moments ago the
5 Esplanade. You have a paragraph there relating to the
6 Esplanade. Do you see that?
7 A. Yes.
8 Q. Can you read that paragraph to the jury?
9 A. "Symington's most significant assets are his interest in
10 the Esplanade partnerships (I, II & III), representing
11 5.2 million of his 7.8 million real estate
12 partnerships. Symington has granted VNB an assignment
13 of those partnership interests to secure their lines of
14 credit to Symington personally and The Symington
15 Company."
16 Q. How did you know that Mr. Symington has assigned his
17 interest in the Esplanade projects to VNB?
18 A. I believe I was told that.
19 Q. By Mr. Symington?
20 A. I believe so.
21 Q. Did he tell you when he had assigned his interest to
22 Valley?
23 A. The date, no.
24 Q. Going down, skipping the paragraph, can you read the
25 sentence I've highlighted starting with "overall"?
5850
1 A. "Overall, Symington and The Symington Company are
2 continuing business by taking on new development
3 projects that provide development fees immediately but
4 add significant contingent liabilities via Symington's
5 personal guarantees."
6 Q. Now, do you know where The Symington Company was getting
7 development fees as of this point in time? What projects were
8 generating development fees?
9 A. I don't recall off the top of my head.
10 Q. Were you familiar with a loan that an entity formed by
11 Mr. Symington had obtained from Citicorp Real Estate in
12 connection with a --
13 A. Oh, I believe the 5050 building was still under
14 construction. But I don't recall specific fees or --
15 Q. And what about the Esplanade project, was that still
16 under construction?
17 A. I believe so. I --.
18 Q. Now, the balance of that paragraph you make reference to
19 the fact that -- sentence starting with "these liabilities."
20 Do you see that?
21 A. Yes.
22 Q. Can you read that to the jury?
23 A. "These liabilities along with the FIAZ deficiencies may
24 cause Symington to seek reorganization of his debts
25 either through direct negotiations with lenders or
5851
1 through the court system sometime in the next 12 to 24
2 months."
3 Q. Were you concerned that Mr. Symington might go to
4 bankruptcy?
5 A. Yes.
6 Q. How would that affect the Alta Mesa Village guarantee?
7 A. It could, one, slow down the recovery of the asset and if
8 he were -- if he filed a Chapter 7, the deficiency could be
9 wiped out.
10 Q. And how would it affect the Mercado guarantee?
11 A. It would have the same effect.
12 Q. The paragraph just above that there's a reference to the
13 Scottsdale Seville. Do you see that?
14 A. Yes.
15 Q. Now, what date were you writing this memo?
16 A. October 2nd.
17 Q. And as of that point in time, Mr. Symington had provided
18 you that revised certification relating to assets to be
19 received within 12 to 24 months. Do you recall that?
20 A. The statement that came in on the 19th, yeah, the 20th.
21 Q. Were you aware as of this point in time that
22 Mr. Symington had just sold half of his interest in Scottsdale
23 Seville and had received in excess of $500,000?
24 A. No, I was not.
25 Q. Is that information you would have wanted to know?
5852
1 A. Absolutely.
2 Q. Why?
3 A. We have a loan that's -- that needs to be paid and a
4 source of cash would be something I would have asked for.
5 Q. Was the motivating sellers program approved?
6 A. It was -- yes. By my direct supervisors, yes.
7 Q. And did the Alta Mesa Village project sell in 1990?
8 A. No.
9 Q. Did it sell in early 1991?
10 A. I'm not sure when it sold. I think it was much later in
11 the year.
12 Q. All right. Now I want to switch gears for a minute. Do
13 you recall that the shortfall in the Mercado was going to be
14 extended on a one-year note?
15 A. Okay, it wasn't my transaction. I'm not aware of whether
16 it was one year or what the terms of that note were.
17 Q. Okay. But do you recall that there was a deficiency that
18 Mr. Symington --
19 A. Yes.
20 Q. And did you participate in a meeting in 1991 to discuss
21 Mr. Symington's guarantees on both the Alta Mesa Village loan
22 and the Mercado shortfall?
23 A. Yes.
24 MR. SCHINDLER: Your Honor, could the clerk place
25 before the witness Exhibit 233?
5853
1 MR. DOWD: No objection.
2 THE COURT: Exhibit 233 may be received in
3 evidence.
4 BY MR. SCHINDLER:
5 Q. What is Exhibit 233?
6 A. This is a memo dated May 1, 1991, to David Wright from
7 Kathie Sowa.
8 Q. First of all, as of May 1, 1991, was Mr. Symington
9 already Governor at that time?
10 A. Yes.
11 Q. Who is Kathie Sowa and who is David Wright?
12 A. David Wright was the manager of the special assets
13 division.
14 Q. And who was Kathie Sowa?
15 A. Kathie Sowa, I think her title was the real estate team
16 leader.
17 Q. And what was the subject of this memo?
18 A. A meeting with Fife Symington regarding J&F and Mercado
19 loans.
20 Q. In fact, on the first line does she reference a meeting
21 with Mr. Symington to discuss his bank obligations?
22 A. Yes.
23 Q. Down below are these the people who attended the meeting?
24 A. As I recall, yes.
25 Q. And is Mr. Ketron and is that Mele --
5854
1 A. Mele.
2 Q. -- Mele, and Ms. Sowa, all people from First Interstate?
3 A. Yes.
4 Q. And the people on the right-hand side, Mr. Symington,
5 Mr. Todd, Mr. Cockerham, Mr. Wiley, were these all people that
6 were either associated with Mr. Symington or representing him?
7 A. Yes.
8 Q. Incidentally, was anybody from Coopers & Lybrand at that
9 meeting?
10 A. I don't recall. I don't think so.
11 Q. And starting here, can you read the first paragraph under
http://www.azcentral.com/news/symington/scripts/0708trans1.shtml
[an error occurred while processing this directive]
REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
July 16, 1997 9:35 a.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Trial - Volume 35)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
6829
1 I N D E X
2 Witness: Direct Cross Redirect Recross VD
3 David Harrison Bonsall, III
By Mr. Cardona 6830
4 By Mr. Lynam 6872
By Mr. Cardona 6893
5
Jean F. Wong
6 By Mr. Schindler 6906
7
8 E X H I B I T S
9 No. Description Identified Admitted
10 225 Loan presentation 6832 6832
234 Memorandum dated 5-2-91 6835 6835
11 245 Letter dated 6-13-91 6838 6838
246 Memorandum dated 6-21-91 6843 6843
12 249 Letter dated 6-26-91 6844 6844
250 Financial statement 6844 6844
13 251 Handwritten notes 6847 6847
252 Letter dated 6-27-91 6896 6897
14 256 Letter dated 7-18-91 6850 6850
259 Letter dated 7-24-91 6854 6854
15 264 Acknowledgment 6856 6856
266 Memorandum dated 8-20-91 6858 6858
16 267 Letter dated 8-20-91 6886 6887
268 Letter dated 8-22-91 6864 6864
17 273 Letter dated 9-9-91 6862 6862
275 Memorandum dated 10-7-91 6867 6867
18 3612 VNB statements and checks 6905 6905
3613 VNB statements and checks 6905 6905
19 3614 VNB deposits 6905 6905
3615 VNB statements 6905 6905
20 3616 VNB withdrawals 6905 6905
3617 Biltmore deposits and checks 6905 6905
21 3618 Biltmore statements 6905 6905
3619 Biltmore statements and checks 6905 6905
22 3620 Biltmore wire transfer receipt 6905 6905
3621 Biltmore check register 6905 6905
23 3623 Biltmore statements 6905 6905
3626 Biltmore check register 6905 6905
24 3641 Stipulation 6905 6905
25
6830
1 P R O C E E D I N G S
2
3 THE COURT: Good morning, ladies and gentlemen. The
4 record may reflect the presence of the jury with roll call
5 waived, presence of counsel, presence of the defendant.
6 And you may proceed.
7 MR. CARDONA: Your Honor, at this time the
8 government would call David Harrison Bonsall.
9 THE COURT: Please come forward, sir, give your full
10 name to the clerk, and let her administer the oath to you.
11 THE CLERK: Your name, sir?
12 THE WITNESS: David Harrison Bonsall, III.
13 THE COURT: Please take the stand over here, sir.
14 THE COURT: You may proceed.
15 MR. CARDONA: Thank you.
16
17 DAVID HARRISON BONSALL, III,
18 called as a witness herein, having been duly sworn, was
19 examined and testified as follows:
20
21 DIRECT EXAMINATION
22 BY MR. CARDONA:
23 Q. Mr. Bonsall, where are you currently employed?
24 A. Wells Fargo Bank.
25 Q. And did Wells Fargo Bank used to be known as First
6831
1 Interstate Bank of Arizona?
2 A. Yes, sir, it did.
3 Q. When did that change occur, or when did it happen?
4 A. It was a merger between the two institutions and it was
5 consummated in April of last year.
6 Q. How long have you worked at First Interstate Bank of
7 Arizona, now Wells Fargo?
8 A. Since July of 1977.
9 Q. And can you tell the jury what your educational
10 background was before you went to work in banking?
11 A. Yes, sir. My undergraduate degree from the University of
12 Arizona was in finance with a minor in econ and my graduate
13 degree was in law from Arizona State University.
14 Q. And what department are you in or are you in at Wells
15 Fargo and have you been in at First Interstate Bank?
16 A. I am presently in the commercial loan department of Wells
17 Fargo Bank. Previously I was in the legal department of First
18 Interstate Bank.
19 Q. And when did you change from the legal department to the
20 commercial department?
21 A. In April of 1996.
22 Q. What position did you hold at First Interstate Bank?
23 A. General counsel and secretary of the company.
24 Q. Did you have a corporate title?
25 A. Yes, sir.
6832
1 Q. What was that?
2 A. Senior vice president.
3 Q. Were you working at First Interstate Bank in the legal
4 department in the time period 1990 through 1991?
5 A. Yes, sir.
6 Q. And what was your title at that time?
7 A. General counsel and secretary.
8 Q. And at some point while you were working at First
9 Interstate Bank in the legal department did you become
10 involved with certain credits that had been made by First
11 Interstate Bank to Mr. Symington?
12 A. Yes, sir.
13 Q. Do you recall when it was that you first became involved
14 with those credits?
15 A. In approximately May of 1991 in a formal capacity.
16 Q. And had you provided informal counsel prior to that?
17 A. No, sir.
18 Q. Okay. And in May of 1991 -- well, let me show you an
19 exhibit, if we can.
20 MR. CARDONA: May we put in front of the exhibit
21 (sic) what's marked as Exhibit 225, and I believe there's no
22 objection to that.
23 MR. LYNAM: No objection, Your Honor.
24 THE COURT: The exhibit may be received in
25 evidence.
6833
1 MR. CARDONA: And may we activate the jury monitors,
2 Your Honor?
3 THE COURT: Yes.
4 BY MR. CARDONA:
5 Q. Mr. Bonsall, if you have Exhibit 225 in front of you,
6 I've put the first page on the jury monitors and blown it up.
7 Is this an FIB form?
8 A. Yes, sir, it is.
9 Q. What kind of form is this and what's its purpose?
10 A. This is a loan presentation form and it is submitted for
11 approval of the credits.
12 Q. And what department was this at?
13 A. It would be in a special credits department at the bank.
14 Q. And what is the special credits department?
15 A. It was a department that dealt with problem loans.
16 Q. And does this relate to a loan to J&F Investments?
17 A. Yes, sir, it does.
18 Q. And is Mr. Symington connected with that loan?
19 A. Mr. Symington was a guarantor to the credit.
20 Q. And what is this loan presentation form seeking or what's
21 it recommending?
22 A. The purpose section of the form approval is requested to
23 negotiate a motivated seller's program.
24 Q. And we've already heard testimony about that. I'm not
25 going to ask you about that. But I would like to draw your
6834
1 attention down to the bottom. At the very bottom, is that
2 your signature?
3 A. Yes, sir, it is.
4 Q. And what was your role in connection with this?
5 A. At this point in time, the bank had been operating under
6 a so-called operating agreement with the Federal Banking
7 Regulatory Authority. The Federal Banking Regulatory
8 Authority was actively in the bank every day. The process
9 within the organization to comply with the federal regulatory
10 requirement was very important at that point in time. And my
11 okay on this form simply was to indicate that the process that
12 had been established within the organization was being
13 followed and that the credit and the change, the modification
14 or amendment would be documented appropriately from a legal
15 standpoint.
16 Q. This operating agreement you mentioned, when was that put
17 in place, if you recall?
18 A. It was at the end of 1989.
19 Q. And what types of procedures were put in place under
20 that? What were the procedures you went through?
21 A. Very extensive procedures relating to credit.
22 Modification in credit, change in credit, any number of just
23 basic organic banking regulatory requirements.
24 Q. And were those procedural requirements?
25 A. Both procedural and policy requirements, yes, sir.
6835
1 Q. And was your review of this to ensure that to the best of
2 your ability this complied with those requirements?
3 A. Yes, sir.
4 Q. Now, you mentioned that you became involved more formally
5 in May of 1991. And I would like to put another memo in front
6 of you.
7 MR. CARDONA: If we could put Exhibit 234 in front
8 of the witness.
9 And, Your Honor, for this one I would ask if we
10 could switch to the Elmo.
11 THE COURT: Yes.
12 MR. CARDONA: And I believe there's no objection.
13 MR. LYNAM: No objection.
14 MR. CARDONA: There's a redacted version of the
15 exhibit.
16 THE COURT: The redacted version of the exhibit may
17 be received.
18 BY MR. CARDONA:
19 Q. And, Mr. Bonsall, I've put a redacted version of the
20 original which should be in front of you up on the screen.
21 Now, do you recognize this?
22 A. Yes, sir.
23 Q. What is it?
24 A. It is a memo that was addressed to me.
25 Q. And it says that it's from a Philip Ketron. Who was he
6836
1 and what was his relationship to you?
2 A. Mr. Ketron was an attorney who worked in the law
3 department of the bank. I managed the department.
4 Q. And what's the date of the memo?
5 A. The 2nd day of May, 1991.
6 Q. And in the first paragraph he references a -- a meeting
7 with Mr. Symington. Do you see that?
8 A. Yes, sir.
9 Q. Were you at that meeting?
10 A. No, sir.
11 Q. And if you can, I would just like you to read to the jury
12 the second paragraph omitting the redacted -- the redacted
13 portion.
14 A. "Mr. Symington generally reviewed his overall status with
15 lenders on his different projects." "He did not have
16 any settlements finalized with his recourse lenders.
17 He is meeting next week with Citicorp in New York.
18 Mr. Symington indicated that he had no ability to repay
19 debt in the near future, had limited net worth due to
20 the status of the real estate market and would have
21 limited income potential over the next four years."
22 Q. And if you move down through the memo, does the memo
23 reflect that Mr. Symington agreed to present to the bank
24 proposals on the two loans the bank had outstanding?
25 A. Yes, sir.
6837
1 Q. And finally, if you move down to the last paragraph,
2 which I will try and get on the screen, can you read for the
3 jury what he says in the last paragraph?
4 A. "Incidentally, Mr. Symington believed the financial
5 statement which was recently published in the New Times
6 was a statement he had provided First Interstate. He
7 apparently has a personal code he enters on such
8 statements to determine their destination. Although
9 not critical, he wanted us to know."
10 Q. Now, did you know how Mr. Symington had coded his
11 financial statements?
12 A. No, sir.
13 Q. At this point in time, when you received this May memo
14 and it referenced the May 1st meeting, had you yet received a
15 compiled financial statement from Coopers & Lybrand?
16 A. No, sir.
17 Q. Now, after May of 1991, did you have a series of
18 conversations and correspondence with an attorney named
19 Richard Mallery?
20 A. Yes, sir.
21 Q. Who was Mr. Mallery representing?
22 A. Mr. Symington and related persons.
23 Q. And what firm was Mr. Mallery at?
24 A. Snell & Wilmer.
25 Q. Did you know an attorney named Jay Wiley?
6838
1 A. Yes, sir.
2 Q. Was he at that same firm?
3 A. Yes, sir.
4 Q. Did Mr. Wiley also represent Mr. Symington?
5 A. Yes, sir.
6 MR. CARDONA: If we could, could we put in front of
7 the witness what's marked as Exhibit 245.
8 And, Your Honor, I believe there's an agreement and
9 I'll offer that at this time.
10 MR. LYNAM: No objection.
11 THE COURT: The exhibit may be received.
12 MR. CARDONA: Thank you. And may we switch back to
13 the computer system?
14 THE COURT: Yes.
15 BY MR. CARDONA:
16 Q. And, Mr. Bonsall, you should have the original in front
17 of you. Is this a letter you wrote?
18 A. Yes, sir, it is.
19 Q. And who was it addressed to?
20 A. Richard Mallery.
21 Q. And what was the date?
22 A. June 13, 1991.
23 Q. In the first paragraph it references meetings and
24 telephone conversations. Had you participated in those
25 meetings and telephone conversations or meeting and telephone
6839
1 conversation?
2 A. Yes, sir.
3 Q. And what was your general purpose in writing this
4 letter?
5 And if you would like to take a moment and read
6 through it, that's fine.
7 A. The general purpose of this communication was to discuss
8 the status of efforts to resolve the credit relationships,
9 modify and amend them. The commentary here reflects
10 Mr. Mallery's message that he considered aggressive leasing
11 could add additional value, a suggestion that time would be
12 needed beyond the current maturity date of the obligation.
13 Q. Let me ask you about a couple of specific portions. At
14 this point in time was Mr. Symington the Governor?
15 A. Yes, sir.
16 Q. And in the sentence I've highlighted, could you just read
17 that for the jury? It's the last sentence in the second
18 paragraph on page 1.
19 A. "You have also suggested that the Bank should consider
20 extending the term of repayment on these loans beyond
21 Mr. Symington's service as Governor to allow him an
22 opportunity to re-establish his earning capacity in the
23 private sector."
24 Q. And was that something that First Interstate Bank was
25 willing to consider?
6840
1 A. Yes, sir.
2 Q. And in the next paragraph, can you tell the jury just in
3 general terms, you can either read it or if you just want to
4 summarize it, what were you telling Mr. Mallery? What were
5 you telling him there?
6 A. The bank was stating to Mr. Mallery that it recognized
7 the high visibility of the client that he represented, its
8 interest in avoiding unnecessary publicity and disagreement,
9 but that the first obligation of the bank was to serve its
10 best interests in full compliance with the state and federal
11 statutory and regulatory guidelines; and that in dealing with
12 Mr. Symington as the guarantor on these credits, that we would
13 do everything we could to deal in a commercially reasonable
14 manner, to treat him a manner that was similar to that
15 afforded to other similarly situated troubled credits.
16 Q. And if you turn over to page 2, there's a reference in
17 the second paragraph to an offer that First Interstate Bank
18 made that had been rejected by Mr. Symington. Do you see
19 that?
20 A. Yes, sir.
21 Q. Do you recall what that offer was?
22 A. I do not.
23 Q. If you move down that page, and the paragraph I've
24 highlighted, there is a discussion of Alta Mesa retail
25 center.
6841
1 A. Yes.
2 Q. And what are you telling Mr. Mallery there?
3 A. We are reciting there that Mr. Mallery has reported that
4 Mr. Randy Todd felt that the offer which had been extended
5 was -- or the letter of intent which had been issued was as
6 good an offer as might be anticipated under the circumstances
7 and that they recommended accepting the offer.
8 Mr. Mallery had explained that he intended to
9 personally inspect the property.
10 Q. And you mentioned under the circumstances, at this time
11 in May of 1991, what was the state of the real estate market
12 in Phoenix, if you are aware?
13 A. It had been in substantial decline.
14 Q. And how long had it been in substantial decline?
15 A. Quite a period of time. Starting in '88 forward.
16 Q. I didn't hear that last part.
17 A. For quite a long period of time, certainly starting in
18 1988.
19 Q. And then if we turn over to the next page, page 3, in the
20 next to the last paragraph, there's a reference to financial
21 statements for Mr. Symington. Do you see that?
22 A. Yes, sir.
23 Q. What was the bank's purpose in seeking a financial
24 statement?
25 A. The subject matter of the undertaking at that point in
6842
1 time was a compromisation or settlement of resolution on the
2 credits. And in order to do so, the bank needed financial
3 information concerning the guarantor on the loans. The
4 undertaking that I was about and the position that I was
5 employed in was to put together a package of material to be
6 submitted to the board of directors of the bank, which
7 detailed the facts of the credits, which contained a
8 management recommendation for compromisation of the credits,
9 and which contained opinions respecting the commercial
10 reasonableness of the management recommendation to the board
11 so that that board might do its job in reviewing the facts,
12 exercising its best business judgments, and reaching a
13 decision.
14 Q. And in assessing commercial reasonableness, why was a
15 financial statement from the guarantor important?
16 A. Because the proposal and the recommendation of management
17 was a compromisation of the credit and to know as precisely or
18 as well as possible the financial position of the guarantor
19 was important in the decision-making process that the board
20 would entertain.
21 Q. And as attachments to this letter, did you enclose
22 certain forms in connection with this request for a financial
23 statement?
24 A. Yes, sir.
25 Q. And what were the forms you enclosed?
6843
1 A. Personal form financial statement and a certification
2 regarding financial statements.
3 Q. And are those attached to the exhibit?
4 A. Yes, sir, they are.
5 Q. Now, shortly after this, and I would like to turn --
6 MR. CARDONA: If we could, could we put Exhibit 246
7 in front of the witness?
8 And, Your Honor, I would offer that at this time.
9 MR. LYNAM: No objection.
10 THE COURT: It may be received in evidence.
11 BY MR. CARDONA:
12 Q. And, Mr. Bonsall, I'll put Exhibit 246 up on the screen.
13 And is this an internal First Interstate Bank memorandum?
14 A. Yes, sir, it is.
15 Q. And it says it's from someone named Jim LeValley. Who
16 was that?
17 A. Mr. LeValley was an attorney who was working within the
18 law department for the bank.
19 Q. And does this memo refer to a telephone conversation
20 between Mr. LeValley and Mr. Mallery?
21 A. Yes, sir, it does.
22 Q. And does it indicate in the second paragraph that
23 Mr. Mallery had in fact gone and looked at the Alta Mesa
24 property?
25 A. Yes, sir.
6844
1 Q. Can you read what it says in the third paragraph of this
2 memo?
3 A. He said he has some good ideas for making Mercado more
4 viable, but he thinks that the Alta Mesa property is truly a
5 dog and he's convinced that Randy Todd is correct; in other
6 words, that the present offer outstanding on the Alta Mesa is
7 as good as we can anticipate and it should be accepted.
8 Q. And in the final paragraph is there also a reference to a
9 financial statement from Mr. Symington?
10 A. Yes, sir.
11 Q. Now, shortly after this, did you in fact receive a
12 financial statement for Mr. Symington?
13 A. Yes, sir.
14 MR. CARDONA: And if we could put Exhibits 249 and
15 250 in front of the witness.
16 And I would offer those at this time.
17 MR. LYNAM: No objection.
18 THE COURT: Each may be received.
19 BY MR. CARDONA:
20 Q. And, Mr. Bonsall, I would ask you first to take a look at
21 Exhibit 249. Is that a letter you received from Mr. Mallery?
22 A. It is.
23 Q. And what's the date on the letter?
24 A. June 26th, 1991.
25 Q. And what does the letter say it's forwarding to you?
6845
1 A. I enclose Fife Symington's current financial statement as
2 of December 31, 1991.
3 Q. Does it appear that the 1991 is a typographical error?
4 A. Yes.
5 Q. Turn over to Exhibit 250.
6 Is this the financial statement you received with
7 that letter?
8 A. Yes, sir.
9 Q. And what's the date that it says the financial condition
10 is as of?
11 A. December 31, 1991.
12 Q. And was this received by you in June of 1991?
13 A. Yes, sir.
14 Q. What does the financial statement indicate for
15 Mr. Symington's net worth?
16 A. It reports a negative net worth of $4,100,963.
17 Q. And on the second page of the financial statement, which
18 is page 3 of the exhibit, that has been signed by
19 Mr. Symington?
20 A. Yes, sir. It appears to be.
21 Q. And what's the date next to his signature?
22 A. June 17th, 1991.
23 Q. And if you can, since it's in kind of small print, could
24 you read for the jury the little block of language that's
25 right above Mr. Symington's signature?
6846
1 A. "In submitting the foregoing statement, both the printed
2 and written portions of which I have carefully read, I
3 guarantee its accuracy with the intent that it be
4 relied upon by the Bank addressed in extending credit
5 to me. I warrant that I have no known obligations,
6 direct or contingent, which have not been set forth
7 hereon and that I have not knowingly withheld any
8 material information of an adverse nature. I agree to
9 notify the said Bank immediately, in writing, of any
10 unfavorable change in my financial condition. I hereby
11 authorize you to investigate my credit record and to
12 check statements I have made."
13 Q. Mr. Bonsall, was this financial statement, as it came to
14 you with the letter, acceptable to the bank?
15 A. No, sir.
16 Q. Why not?
17 A. There was no executed certification form accompanying
18 this statement other than the statement at the bottom of
19 the -- of the statement but not the separate certification
20 form that had been enclosed.
21 And this statement also did not reflect contingent
22 liabilities which the guarantor had -- had incurred. The
23 review of credit statements within the First Interstate Bank
24 was the responsibility of the loan officers and the value and
25 appraisal department of the company. So upon receipt of this
6847
1 statement, it was forwarded to those persons.
2 Q. And after you got this financial statement, did you have
3 additional conversations with Mr. Mallery?
4 A. Yes.
5 Q. Did those conversations address in part the financial
6 statement?
7 A. Yes, sir.
8 MR. CARDONA: If we could, could we put Exhibit 251
9 in front of the witness?
10 And, Your Honor, I would offer that at this time.
11 MR. LYNAM: No objection.
12 THE COURT: It may be received in evidence.
13 BY MR. CARDONA:
14 Q. And, Mr. Bonsall, do you recognize this?
15 A. I do.
16 Q. What are they?
17 A. Those are my handwritten notes.
18 Q. And what are they notes of?
19 A. Discussions with Mr. Mallery.
20 Q. And what were they discussions about?
21 A. First inquiry was what would the bank do if Mr. Symington
22 were not the Governor. And the answer was that precisely
23 because he is a seated Governor, that we must do exactly what
24 we would otherwise do, deal with him in a very commercially
25 reasonable manner.
6848
1 And that conversation was interrupted and
2 Mr. Mallery indicated that he would call back following a
3 meeting. He did so. And the notes that follow reflect
4 certain of the discussion. Mr. Symington's net worth had been
5 eliminated. Mrs. Symington had sole and separate assets.
6 Mr. Symington had inheritance potential at a future point in
7 time.
8 Q. And is there a second page of these same notes?
9 A. Yes, sir, there is. There's a back page. It also
10 addresses a conversation on June 26th with Mr. Mallery.
11 Q. And in note three, can you read on the second page item
12 three, can you read what that says or what did you write
13 there?
14 A. "Financial statements delivered."
15 Q. And did that refer to the financial statement we have
16 just been looking at?
17 A. Yes, sir.
18 Q. Was your telephone conversation and discussion with
19 Mr. Mallery on the same day you received that financial
20 statement?
21 A. I believe it was.
22 Q. There's a reference in the next item, item four. Can you
23 just read what you've written there?
24 A. "Randy will run the business as a new entity. Fife will
25 serve as advisor when and where necessary."
6849
1 Q. And what were you referring to there?
2 A. The business of the Symington businesses.
3 Q. And who was Randy?
4 A. Mr. Randy Todd.
5 Q. And had you had prior dealings with Mr. Todd or did you
6 know who he was?
7 A. No, sir, I had no business dealings with Mr. Todd at
8 all. I did know who he was. We had been in Indian Guides
9 group together.
10 Q. And what was his position at The Symington Company at
11 this time, if you know?
12 A. I do not know.
13 Q. Okay. Then there's a note in item five. Can you read
14 what you've written there and tell us what you're referring
15 to?
16 A. "Mr. Mallery undertook to verify the nature of
17 Mr. Symington's trusts and to report his findings to the
18 bank."
19 Q. And had you made that request to him?
20 A. Yes, sir.
21 Q. Why?
22 A. Because we did not have information concerning those
23 trusts.
24 Q. And if you move down in item nine, what have you written
25 there?
6850
1 A. Promise to deliver proposal before the next board -- the
2 next meeting of the board of directors.
3 Q. And was that again in response to a request you had made
4 to Mr. Mallery?
5 A. Yes, sir.
6 Q. And after you had these conversations, did you in fact
7 receive a letter with a proposal from Mr. Mallery?
8 A. Yes, sir.
9 MR. CARDONA: And if you could put Exhibit 256 in
10 front of the witness. And I would offer that at this time.
11 MR. LYNAM: No objection, Your Honor.
12 THE COURT: 256 may be received.
13 BY MR. CARDONA:
14 Q. Mr. Bonsall, do you recognize Exhibit 256?
15 A. I do.
16 Q. Is it a letter that you received from Mr. Mallery?
17 A. Yes, sir, it is.
18 Q. What's the date?
19 A. July 18, 1991.
20 Q. If you move down, does this letter enclose another
21 financial statement for Mr. Symington?
22 A. Yes, sir.
23 Q. And can you just read what's said in the -- I guess it's
24 the second full paragraph.
25 A. "The enclosed financial statement, dated as of May 31,
6851
1 1991, for Governor Symington is nearly complete. As
2 soon as he has confirmed the updated value and income
3 from his oil and gas interests, the status of his
4 income tax liability and refunds, the indebtedness due
5 to his mother, and the assets held in the spendthrift
6 trusts, he will sign the certification. However, the
7 new numbers will not materially alter the negative net
8 worth shown on the financial statement."
9 Q. And was a copy of the financial statement attached when
10 you received this?
11 A. Yes, sir.
12 Q. And if you turn over to page -- I believe it's 4. In
13 this instance did Mr. Mallery send you back a copy of the
14 certification form?
15 A. Yes, sir.
16 Q. And had this yet been signed?
17 A. No. No, sir.
18 Q. If you would turn to page 6, was this the financial
19 statement you received?
20 A. It was.
21 Q. And what was the date that this financial statement
22 stated the financial condition as of?
23 A. May 31st, 1991.
24 Q. And what was the net worth indicated?
25 A. Negative 26,493,000 -- 493,764 dollars.
6852
1 Q. And had this financial statement, which Mr. Mallery
2 referred to as a preliminary one, yet been signed?
3 A. No. No, sir.
4 Q. Now, in addition to providing the financial statements,
5 did Mr. Mallery in his letter also make the proposal he had
6 promised to make?
7 A. Yes, sir.
8 Q. And if you turn over to page 2, does that contain --
9 A. Yes, it does.
10 Q. -- the proposal?
11 A. Yes, it does.
12 Q. Before we get there, up at the top, is there a reference
13 to your prior request to him or Ms. Sowa's request to him to
14 have the financial statement reflect contingent liabilities?
15 A. Yes, there is.
16 Q. Who was Ms. Sowa?
17 A. Ms. Sowa was a loan officer in the -- employee of the
18 bank responsible for the account relationships.
19 Q. And do you recall what department she was in?
20 A. No, I do not.
21 Q. Okay. Now the restructuring proposal, did Mr. Mallery
22 talk about both the Alta Mesa Village and the Mercado project?
23 A. Yes.
24 Q. And if you could, could you just read to the jury the
25 first full paragraph under "Mercado"?
6853
1 A. "I am pleased to report that we are close to being able
2 to obtain the release of $125,000 from the UDAG funds
3 which will go to First Interstate. In addition, the
4 Governor and I had a constructive negotiating session
5 yesterday with McMorgan and Company, the advisor of the
6 pension trust funds holding the first deed of trust
7 lien on the Mercado, and we now have a preliminary
8 understanding to modify that first lien to a cash flow
9 obligation with no personal liability."
10 Q. Now, when Mr. Mallery told you that they had a
11 preliminary understanding to modify that first lien to a cash
12 flow obligation with no personal liability, would that have
13 represented a change?
14 A. Yes.
15 Q. Prior to this, did Mr. Symington have personal liability
16 on the Mercado permanent loan?
17 A. Yes, sir.
18 Q. In considering how you were going to proceed with your
19 workout negotiations with Mr. Symington, was this an important
20 fact for you?
21 A. It certainly was a fact to be considered.
22 Q. And why?
23 A. It would have improved Mr. Symington's financial
24 condition.
25 Q. And why would that be of importance to First Interstate
6854
1 Bank at this point in time?
2 A. Because First Interstate Bank wished to be repaid on the
3 obligations which it had extended to Mr. Symington's
4 entities.
5 Q. Now, if you turn to the third page, is the letter copied
6 to certain people?
7 A. Yes, sir.
8 Q. Or at least it indicates that it's copied to them. Who
9 was Mr. Randall?
10 A. Mr. Randall was president and chairman of First
11 Interstate Bank.
12 Q. And does it also indicate that it was copied to
13 Mr. Symington?
14 A. Yes, sir.
15 Q. After you received this letter, did you ever get a phone
16 call or a letter from Mr. Mallery advising you that his
17 reference to the preliminary understanding with McMorgan was
18 incorrect?
19 A. No, sir.
20 Q. Did you ever receive a letter or a telephone call from
21 Mr. Symington advising you that this was incorrect?
22 A. No, sir.
23 Q. Now, was the proposal made by Mr. Mallery in this letter
24 accepted or rejected by First Interstate Bank?
25 A. It was rejected.
6855
1 MR. CARDONA: And if we could put in front of the
2 witness what's marked as Exhibit 259. And I would offer that
3 at this time.
4 MR. LYNAM: No objection.
5 THE COURT: It may be received.
6 BY MR. CARDONA:
7 Q. Is this a letter you wrote back to Mr. Mallery on July
8 24th, 1991?
9 A. It is.
10 Q. And what were you telling Mr. Mallery?
11 A. That the offer was rejected.
12 Q. It references a board meeting of July 18th, 1991. Had
13 you attended that board meeting?
14 A. Yes, sir.
15 Q. And had it been a board meeting that the decision was
16 made to reject the offer?
17 A. Yes, sir.
18 Q. Had Mr. Mallery been advised of this previously?
19 A. Yes, sir.
20 Q. When?
21 A. Sometime prior to the meeting.
22 Q. Prior to --
23 A. Prior to the board -- had Mr. -- I'm sorry, would you
24 repeat the question.
25 Q. When did you first advise Mr. Mallery that First
6856
1 Interstate Bank was rejecting his offer?
2 A. I believe Mr. Randall called Mr. Mallery following the
3 board meeting.
4 Q. And is that what's referenced in the first sentence?
5 A. Yes, sir.
6 Q. Now, if you recall in some of the letters we looked at
7 earlier, there was a reference to the sale of Alta Mesa
8 Village. Did First Interstate Bank ultimately approve that?
9 A. Yes, sir.
10 MR. CARDONA: And if we could, could we put in front
11 of the witness Exhibit 264.
12 And, Your Honor, I would offer that at this time.
13 MR. LYNAM: No objection.
14 THE COURT: It may be received in evidence.
15 BY MR. CARDONA:
16 Q. And, Mr. Bonsall, do you recognize this?
17 A. Yes, sir.
18 Q. What is it?
19 A. It's an acknowledgment of the form called an
20 acknowledgment which addresses itself to the sale of the
21 property.
22 Q. And who were the parties to this acknowledgment?
23 A. First Interstate Bank of Arizona; J&F Investments I
24 Limited Partnership; and through its general, Double S,
25 J. Fife Symington, III; Ann Symington; Double S Investments I
6857
1 Partnership; through its general partner J. Fife Symington,
2 III, and Jerry H. Strauss; and Jerry H. Strauss individually,
3 a married man, individually dealing in his sole and separate
4 property.
5 Q. And you reference First Interstate to allow the sale, is
6 that reflected on paragraph 2 this page?
7 A. Yes, sir.
8 Q. What was the sales price that the property was going be
9 sold at?
10 A. This reflects a sales price of $965,000.
11 Q. And if you turn over to page 3 -- I'm sorry, page 2, is
12 there a discussion there about the sales price?
13 A. Yes, sir, there is.
14 Q. And can you just read what it says in the paragraph (i)?
15 A. "They have requested that First Interstate approve the
16 sale of the property to Scharff and, except for another
17 offer received from Scharff but thereafter revoked, the
18 965,000 sales price represents the best offer received
19 by the Borrower during the period Borrower has sought
20 to sell the Property, and the Borrower and Guarantors
21 believe that the price is reasonable in light of
22 current market conditions."
23 Q. And did this sale in fact go through?
24 A. I believe it did, yes, sir.
25 Q. And do you recall how much First Interstate Bank received
6858
1 from the sale?
2 A. I believe it was $852,000.
3 Q. Was that sufficient to pay off First Interstate's
4 outstanding loan against the property?
5 A. No, sir.
6 Q. Now, after this, did you have additional discussions with
7 Mr. Mallery?
8 A. Yes, sir.
9 Q. And did those pertain in part to your attempts still to
10 obtain a financial statement?
11 A. They did.
12 MR. CARDONA: If we could put Exhibit 266 in front
13 of the witness. And I would offer that at this time.
14 MR. LYNAM: No objection.
15 THE COURT: It may be received in evidence.
16 BY MR. CARDONA:
17 Q. Mr. Bonsall, do you recognize Exhibit 266?
18 A. Yes, sir.
19 Q. Is this a memo you authored?
20 A. It is.
21 Q. And what was the date of your memo?
22 A. This memo is dated August 20th, 1991.
23 Q. And there's a reference in the first paragraph to the
24 deficiency on the J&F Alta Mesa credit. Was that a result of
25 the sales price being less than the loan?
6859
1 A. Yes, sir.
2 Q. And in the first paragraph, what are you referencing
3 there?
4 A. That the accounting firm of Coopers & Lybrand was
5 reported to be presently delivering financial statements
6 prepared for Mr. Symington to the bank. Mr. Symington would
7 execute and deliver the bank's standard short-form
8 certification concerning the financial statements.
9 Q. And the certification form you're referring to there, is
10 that the same certification form we've seen before in some of
11 the exhibits?
12 A. No, sir, I believed it to be the same form of
13 certification that we have seen in previous exhibits.
14 Q. That two-page form?
15 A. Yes, sir.
16 Q. Okay. Then moving down in item C, is there a reference
17 to the closing of the escrow on the sale of the Alta Mesa
18 project?
19 A. Yes, there is.
20 Q. And what is the expectation as to the net proceeds First
21 Interstate Bank is going to receive?
22 A. $857,000.
23 Q. And is there subsequent discussion of Mr. Mallery making
24 another proposal to resolve these two loans?
25 A. Yes, sir, there is.
6860
1 Q. What was it that Mr. Mallery was proposing?
2 A. He recited in Paragraph D, Mr. Mallery authorized by his
3 client to prepare a letter offer concerning the deficiency on
4 the J&F Alta Mesa credit resulting from application of
5 whatever the net proceeds of the sale of the shopping center
6 may be to the principal together with accrued interest balance
7 owing on the obligation and resolution of the Mercado problem
8 Mercado credit. Executed letter will propose execution and
9 delivery of full recourse personal promissory notes to the
10 bank by Mr. Symington in dollar sums equivalent to the
11 percentage of ownership in the projects held by
12 Mr. Symington. 42 percent Mercado, 35 percent on Alta Mesa.
13 Multiplied by the principal together with accrued interest
14 balance.
15 THE COURT REPORTER: I can't understand the witness,
16 Your Honor.
17 THE COURT: Please bear in mind it all has to be
18 taken down by the court reporter.
19 THE WITNESS: I'm sorry, I apologize.
20 Multiplied by the principal together with accrued
21 interest balance presently owing on the obligations after
22 application of net sale proceeds on the Alta Mesa extension.
23 BY MR. CARDONA:
24 Q. Was he proposing that there be some incentive for early
25 payment?
6861
1 A. Yes, he was.
2 Q. Would this proposal have reduced the amount that
3 Mr. Symington owed under his guarantees?
4 A. Yes, it would have.
5 Q. And in the last paragraph on this page -- I'll blow that
6 up so we can see the whole thing. What are you referring to
7 there? What did Mr. Mallery ask you to do?
8 A. Mr. Mallery asked that I step aside from the current
9 negotiations.
10 Q. For what purpose?
11 A. Asked that I step aside from negotiations to advise
12 whether a deed in lieu undertaking would better serve the best
13 interests of all concerned.
14 Q. And what would a deed in lieu transaction be?
15 A. A deed in lieu transaction, the obligor would simply deed
16 the property interest which he or she held in the property to
17 the -- to the creditor.
18 Q. And what was your response to that?
19 A. It's recited there in the letter that the bank had
20 already agreed to the sales transaction on the J&F Alta Mesa
21 property subject to certain conditions, which had been
22 communicated and expressly identified in correspondence and in
23 documentation delivered to the escrowee and to get on with it.
24 Q. At the bottom on the last page of the memo there's an
25 indication that it's copied to a number of people.
6862
1 A. Yes, sir.
2 Q. Who are those people?
3 A. Mr. Randall was the CEO of the bank. Mr. Clabby was the
4 chief credit officer of the bank. Pat Stone headed the
5 special credits department. And Kathie Sowa was the
6 responsible loan officer on the account.
7 Q. Why were your communications about this loan being copied
8 to Mr. Randall, the CEO?
9 A. Well, for the very same reason that had been communicated
10 to Mr. Mallery, that he -- it was a very high-level, visible
11 relationship and that the matter would be dealt with by the
12 board of directors of the -- of the bank.
13 Q. Now, we saw the reference in here to the Coopers &
14 Lybrand financial statements. Did you ultimately receive
15 those?
16 A. Yes, sir.
17 MR. CARDONA: And if we could put in front of the
18 witness Exhibit 273.
19 And, Your Honor, I would offer that at this time.
20 MR. LYNAM: No objection.
21 THE COURT: It may be received.
22 BY MR. CARDONA:
23 Q. And, Mr. Bonsall, do you recognize Exhibit 273?
24 A. Yes, sir.
25 Q. Is this a letter you received?
6863
1 A. It is.
2 Q. And who was it from?
3 A. From Jay Wiley.
4 Q. And did it indicate that it was copied to Mr. Symington?
5 A. Yes, sir, it did.
6 Q. Did it also indicate it was copied to a Mr. Kent
7 Stevens? Who was that?
8 A. Mr. Stevens is an attorney with the Streich Lang law firm
9 and represented First Interstate Bank of Arizona.
10 Q. And does this enclose certain forms, including financial
11 statements prepared by Coopers & Lybrand?
12 A. Yes, sir.
13 Q. Now, prior to receiving this letter, had you received
14 preliminary drafts or preliminary versions of those financial
15 statements?
16 A. I personally had not, no, sir.
17 Q. Did someone else at the bank?
18 A. I don't know. Perhaps.
19 Q. Okay. In any event, was this the final form of the
20 financial statements that you received?
21 A. No, sir.
22 Q. Okay. Let me turn you over to page 2 and see if I can
23 maybe refresh your memory a little.
24 Turn over to page 2. Is that a certification form?
25 A. Yes, sir.
6864
1 Q. And was this the certification form that First Interstate
2 Bank had been asking for?
3 A. Yes, sir.
4 Q. And if you turn over to page 3, is that signed by
5 Mr. Symington?
6 A. Yes, sir.
7 MR. CARDONA: And if we could, could we put Exhibit
8 268 in front of the witness.
9 And, Your Honor, I would offer Exhibit 268 at this
10 time.
11 MR. LYNAM: No objection.
12 THE COURT: 268 may be received.
13 BY MR. CARDONA:
14 Q. Let me go back in time a little bit and see if we can
15 clear this up.
16 Do you recognize Exhibit 268?
17 A. Yes, sir.
18 Q. What is it?
19 A. It is a letter written to Mr. Mallery and executed by
20 Mr. Stevens.
21 Q. And was Mr. Stevens acting as counsel to the bank in
22 connection in part with these loans?
23 A. He was.
24 Q. And do you see in the first paragraph it references the
25 receipt from Coopers & Lybrand of a statement of financial
6865
1 condition?
2 A. Yes, sir.
3 Q. And indicates that Mr. Stevens had had an opportunity to
4 review it?
5 A. Yes, sir.
6 Q. And in the letter, does Mr. Stevens pose some questions
7 with respect to the financial statement?
8 A. Yes. Yes, sir.
9 Q. And in particular, in the second paragraph, does he
10 reference that the financial statements you received had not
11 been signed and had not been accompanied by the certification
12 form?
13 A. Yes, sir.
14 Q. Then in the next question are there some questions about
15 the accuracy of the financial statement?
16 A. Yes, sir, there are.
17 Q. Relating in particular to the Alta Mesa and Mercado loan?
18 A. Um-hmmm, yes.
19 Q. And was that based on information from the bank's files?
20 A. Yes, sir.
21 Q. And did that continue -- and in the last paragraph, does
22 he make clear that the bank can't go forward with his proposal
23 or with its consideration of Mr. Symington's proposal for a
24 workout until it's received a dated and signed financial
25 statement with a signed certification form?
6866
1 A. Yes, sir.
2 Q. And this was back in August of '91?
3 A. Yes, sir.
4 Q. Now, was it after that letter that you then received
5 Exhibit 273?
6 A. Yes, sir.
7 Q. And does Exhibit 273 contain, as we've seen, the
8 now-signed certification form?
9 A. Yes, it did.
10 Q. Together with attachments that included the Coopers &
11 Lybrand statement of financial condition?
12 A. Yes, sir.
13 Q. After you received these financial statements, and let me
14 take you over to page 10. And if you could, could you hold up
15 for the jury -- I think you've got either one or two blue
16 books from Coopers & Lybrand. Can you just hold those up so
17 the jury can see them? Because the computer won't show that.
18 A. (Witness complied.)
19 Q. Is that the statement of financial condition you received
20 from Coopers & Lybrand?
21 A. Yes, sir.
22 Q. And if you turn to what's marked as page 10 of the
23 exhibit, and I think there are little numbers on the bottom
24 right of each page.
25 A. Yes.
6867
1 Q. On page 10, is there an indication of the net worth
2 reflected in this financial statement?
3 A. Yes, sir, there is.
4 Q. And what is it?
5 A. It's a negative $22,676,573.
6 Q. After First Interstate Bank received this financial
7 statement, did First Interstate Bank go ahead and approve a
8 settlement with Mr. Symington?
9 A. Ultimately.
10 Q. Okay. And do you recall the terms of the settlement?
11 A. It would be helpful to me to --
12 MR. CARDONA: Why don't we --
13 THE WITNESS: -- have it.
14 MR. CARDONA: -- put Exhibit 275 in front of the
15 witness. I realize it was a long time ago. But try and look
16 at some documents.
17 And, Your Honor, I would offer Exhibit 275.
18 MR. LYNAM: No objection.
19 THE COURT: It may be received in evidence.
20 BY MR. CARDONA:
21 Q. Is this another internal First Interstate Bank memo?
22 A. It is.
23 Q. Is this from Ms. Sowa, the loan officer, to Ms. Stone?
24 A. Yes, sir.
25 Q. And I think you've told us before who they were.
6868
1 Does this relate to Mr. Symington's J&F, that is
2 Alta Mesa Village and Mercado credits?
3 A. Yes, sir.
4 Q. And does it outline a proposed settlement?
5 A. That is correct.
6 Q. And on the first page is that outlined in Section 1?
7 A. Yes, sir.
8 Q. And which project does this relate to?
9 A. This would be the J&F Investments project.
10 Q. And what's being recommended as the settlement on
11 Mr. Symington's guarantee?
12 A. That Mr. Symington execute a note for the full amount of
13 the deficiency. The interest rate was to be at eight
14 percent. He would begin making payments at the level of $1500
15 at the beginning of the fifth year. And it would be applied
16 to interest accruing on the loan. Should Mr. Symington,
17 pursuant to this internal memo and recommendation, pay
18 $340,552 on or before the 1st day of September, '96, or
19 $681,104 on or before September 1, 1988, the balance of the
20 deficiency note would be forgiven.
21 Q. And let me ask you about one section of that in
22 particular, the indication that Symington would begin making
23 monthly payments at the beginning of year five --
24 A. Yes, sir.
25 Q. Was the recommendation be that there would be no payments
6869
1 due or made before that time?
2 A. Yes, sir.
3 Q. Now, if we turn over, is there later a discussion at the
4 Mercado?
5 A. Right.
6 Q. And in connection with that, is there similarly a
7 recommendation made as to a settlement on Mr. Symington's
8 guarantee?
9 A. Yes, sir, there is.
10 Q. What are the terms that are recommended for that
11 settlement?
12 A. These are similar structural proposals that the Mercado
13 note in that instance would continue to exist. The first
14 amount of the guarantee would be $1,300,000 plus representing
15 principal and interest through the 19th of September, interest
16 again to accrue at a rate of eight percent. Mr. Symington to
17 begin making monthly payments of a thousand dollars at the
18 beginning of year five, similarly to be applied to interest
19 accruing on the obligation. And then should Mr. Symington
20 make a payment of $273,735 before September 1, '96, or
21 $547,469 on or before September 1, '98, the balance of the
22 deficiency would be forgiven.
23 Q. So did this proposal similarly call for Mr. Symington to
24 make no payments for five years?
25 A. Yes, sir, it did. But for the prepayment opportunities
6870
1 which were extended to him.
2 Q. And the prepayment opportunities were extended to provide
3 an incentive for early payment in exchange for reducing the
4 amount due?
5 A. Yes, sir.
6 Q. Now, if we turn over, was there a discussion in this memo
7 of Mr. Symington's financial condition?
8 A. Yes, sir.
9 Q. Was that a factor in this proposal?
10 A. Well, yes, sir.
11 Q. And does it discuss the financial statement that had been
12 provided by Coopers & Lybrand?
13 A. Yes, sir.
14 Q. Had the bank retained its own accounting firm to review
15 that financial statement?
16 A. Yes, sir, it had.
17 Q. Who had the bank retained?
18 A. Ernst and -- the firm of Ernst & Young.
19 Q. And are they a large accounting firm?
20 A. Yes, sir.
21 Q. And does Ms. Sowa, in her memo, if you turn over to page
22 5, lay out some of the important results of Ernst & Young's
23 review?
24 A. Yes, sir.
25 Q. And are those set forth in the memo on pages 5 and 6?
6871
1 A. Yes, sir.
2 Q. Now, if you turn over to the last page, page 8, was this
3 recommendation approved?
4 A. Yes, sir.
5 Q. And --
6 A. In substance it was.
7 Q. Let me blow up that page. Who's signed off on the
8 recommendation?
9 A. Ms. Sowa, Mr. Wilson.
10 Q. And who was Mr. Wilson?
11 A. Mr. Wilson was in the credit administration department of
12 the bank.
13 Mr. Clabby, the chief credit officer, Mr. Hickey,
14 the chief financial officer, and Mr. Randall, the president.
15 Q. And do you recall, were settlements entered into on
16 substantially these terms?
17 A. Yes, sir.
18 Q. Did Mr. Symington make payments under the settlement?
19 A. No, sir.
20 Q. What happened?
21 A. Nothing happened.
22 Q. Okay. Was there ultimately a bankruptcy filed?
23 A. Oh, yes, sir.
24 Q. Did First Interstate Bank become a claimant in the
25 bankruptcy proceeding?
6872
1 A. Yes, sir.
2 MR. CARDONA: And with that, Your Honor, I have no
3 further questions.
4
5 CROSS-EXAMINATION
6 BY MR. LYNAM:
7 Q. Good morning, Mr. Bonsall.
8 A. Good morning.
9 Q. Am I correct that First Interstate's loan for the Alta
10 Mesa Village shopping center was made to a partnership?
11 A. Yes, sir.
12 Q. J&F Investments, correct?
13 A. Yes, sir.
14 Q. And Mr. Symington was not the borrower on that, correct?
15 A. That's correct.
16 Q. He was a guarantor along with another partner named Jerry
17 Strauss; is that right?
18 A. Yes, sir.
19 Q. Would you take a look at Exhibit 225, please.
20 Do you have that in front of you?
21 A. No, sir.
22 Q. This is the first document that Mr. Cardona showed you.
23 And this recognizes or this document states who the borrower
24 is, the partnership, correct?
25 A. Yes, sir.
6873
1 Q. And it identifies the two guarantors, Mr. Symington and
2 Mr. Strauss; is that right?
3 A. Yes, sir.
4 Q. Would you read for the jury, please, what the bank stated
5 was the repayment source, primary and secondary for the loan?
6 A. Primary, sale of center. Secondary, permanent
7 financing.
8 Q. The bank's documents --
9 THE COURT REPORTER: I didn't hear the question,
10 Your Honor.
11 BY MR. LYNAM:
12 Q. The bank's documents indicate that it looked to the sale
13 of the shopping center as the primary source of repayment,
14 correct?
15 A. That is correct.
16 Q. And the secondary source would be a permanent loan which
17 would pay off the construction loan; is that correct?
18 A. I believe that's correct, yes.
19 Q. In other words, the long-term mortgage that would be
20 placed on the shopping center?
21 A. Yes, sir.
22 Q. Would you turn, please, to page 2. Well, before you get
23 to that, you -- I believe you testified that there was a
24 reference in here to the motivated seller's program?
25 A. There is.
6874
1 Q. On the first page?
2 A. There is a reference here to the motivated seller's
3 program, yes, sir.
4 Q. Would you turn, please, to page 2 then. And on page 2,
5 is there a description? If you look at the screen, you can
6 see the paragraph I'm highlighting. Is there a description
7 about what happened with regard to the shopping center?
8 A. Yes, sir, there is.
9 Q. Could you read that paragraph, please?
10 A. Yes. "The center did not meet pro forma absorption" --
11 Q. Please read a little slower so the court reporter can get
12 it.
13 A. "The center did not meet pro forma absorption or lease
14 rates due to, number one, competition from two anchored
15 community shopping centers three-quarters of a mile to
16 the west of the subject; number two, lack of an anchor
17 or draw tenant; and, number three, the general
18 oversupply of retail space in the Mesa area."
19 Q. Now, I would ask you to direct your attention to the
20 fourth page of the document regarding the motivated seller's
21 program.
22 Would the Court like to --
23 THE COURT: We will take our morning recess and
24 reconvene in 15 minutes.
25 (A recess was taken.)
6875
1 THE COURT: The record may reflect the presence of
2 the jury with roll call waived, presence of counsel, presence
3 of the defendant.
4 And you may proceed.
5 MR. LYNAM: Thank you.
6 BY MR. LYNAM:
7 Q. Mr. Bonsall, when we broke, we were looking at First
8 Interstate's loan presentation summary, Exhibit 225. And I
9 would ask you to look at page 4 of the document where it says
10 "Motivated Seller's Program." Do you see that?
11 A. Yes, sir.
12 Q. I'm going to highlight the first few lines of that on the
13 screen and ask if you could read that to the jury, please?
14 A. "The proposed plan would call for Symington and J&F
15 Investments to begin marketing the property
16 immediately. The borrower would have the right to sell
17 the property for $800,000 (net); in which case
18 Symington would sign a deficiency note for the balance
19 of the debt. For every dollar more than $800,000
20 (equivalent of $30 square foot gross) that is netted by
21 the bank from the sale, Symington's deficiency would be
22 reduced by two dollars."
23 Q. So the loan amount then was actually greater than
24 $800,000, correct?
25 A. Yes, sir.
6876
1 Q. But the bank agreed that the property could be sold for
2 $800,000 or something greater, correct?
3 A. Yes, sir, that was the proposal at that point in time, as
4 I understand it, pursuant to this internal memo.
5 Q. And for every dollar that Alta Mesa was sold above
6 $800,000, the deficiency -- actually every dollar that the
7 bank got above $800,000, the deficiency would be reduced by
8 two dollars, correct?
9 A. No, sir, I believe that the sales proceeds would be
10 applied to the obligation to establish the deficiency and then
11 the motivated seller program would see the reduction in the
12 deficiency amount, depending on the time of it, two dollars
13 for one.
14 Q. That's what I was asking, two dollars for one dollar
15 if -- if that one dollar above $800,000 was received by the
16 bank?
17 A. Yes.
18 Q. That's the motivation given to the seller, if you can
19 sell this for more than $800,000, you have a motive to do so,
20 because we will give you a two-for-one credit, more or less,
21 on the deficiency; is that fair to say?
22 A. Yes.
23 Q. So this was a way of trying to work out the Alta Mesa
24 loan in 1990, correct?
25 A. Yes, sir.
6877
1 Q. And that involved, therefore, some -- if this was
2 realized, it involved some forgiveness of the deficiency if
3 the bank actually realized the money above $800,000, correct?
4 A. That is correct.
5 Q. And the date of this document is October, 1990, correct?
6 A. Yes, sir.
7 Q. And in October, 1990, Fife Symington was not the Governor
8 of Arizona, correct?
9 A. I believe that's correct.
10 Q. And in October, 1990, the bank was willing to consider
11 and actually wrote up this proposal whereby if achieved, there
12 would be some debt forgiveness, correct?
13 A. Yes, sir.
14 Q. Now, you were shown Exhibit 234. Could you take a look
15 at that, please.
16 MR. CARDONA: Your Honor, this was shown on the
17 Elmo. May the Elmo be enabled?
18 THE COURT: It may be.
19 BY MR. LYNAM:
20 Q. Do you remember being asked about the reference -- by
21 the way, Exhibit 234 is a memo to you from someone else in the
22 law department, correct?
23 A. Yes, sir.
24 Q. And do you remember being shown the reference on the
25 bottom to Mr. Symington believing that the financial statement
6878
1 that was recently published in one of the newspapers was a
2 statement he had provided First Interstate Bank? Do you see
3 that?
4 A. I do.
5 Q. Now, do you know whether First Interstate Bank leaked
6 Mr. Symington's financial statement to the press?
7 A. I do not. But I have been told that following inquiry,
8 there was no reason to believe that any person in the employ
9 of the bank had done so, but, no, sir, I do not personally
10 independently know.
11 Q. Okay. Now, I believe you testified that at the time this
12 was going on and you were working on this in 1991, First
13 Interstate Bank had government regulators in the bank actually
14 physically in the bank?
15 A. Yes.
16 Q. And that you were following procedures and you were
17 documenting things in order to comply with what the regulators
18 wanted; is that right?
19 A. That's correct.
20 Q. Am I correct that prior to this time period that the bank
21 had a rather informal process in handling commercial loans?
22 A. It was certainly more informal than it was after the
23 outset of the operating agreement, that is correct.
24 Q. And when you say "the operating agreement," that's when
25 the government regulators were in the bank?
6879
1 A. Yes.
2 Q. Would you take a look at Exhibit 250, please.
3 MR. LYNAM: And may we switch over to the computer
4 system, Your Honor?
5 THE COURT: You may.
6 BY MR. LYNAM:
7 Q. Remember being shown Exhibit 250, the personal financial
8 statement with the typo date saying 1991, but it was really
9 1990? Do you remember seeing that?
10 A. Yes, sir.
11 Q. Do you remember seeing the net worth was a negative
12 $4.1 million?
13 A. Yes, sir.
14 Q. Would you take a look at the asset side at how the real
15 estate and buildings were valued on that financial statement?
16 A. Yes, sir.
17 Q. What does it say?
18 A. $150,000 with an asterisk.
19 Q. And with regard to that asterisk, can you turn to the
20 second page where it has the schedule for real estate?
21 A. Yes, sir.
22 Q. And does it indicate there under Schedule 3 what the
23 asterisk refers to?
24 A. Current liquidation value.
25 Q. And the current liquidation value of all the real estate
6880
1 then was stated as $150,000, correct?
2 A. Yes, sir.
3 Q. And I believe you testified that you understood that in
4 1991, that there was a real estate crash or a real estate
5 depression or the economy in the real estate market was very
6 slow; is that fair to say?
7 A. Yes, sir.
8 Q. So would it be difficult to sell properties during that
9 slowdown and realize significant values; is that fair to say?
10 A. It would certainly be difficult to sell properties. The
11 realization of significant value, I would guess, would be a
12 function of the property. But, yes, sir.
13 Q. But you recognize that the market was very slow at that
14 time?
15 A. Yes, sir. Yes.
16 Q. Now, would you take a look at Exhibit 256, please. That
17 is the letter from Mr. Mallery, the attorney at Snell &
18 Wilmer, correct?
19 A. Yes, sir.
20 Q. And the date is what?
21 A. July 18, 1991.
22 Q. And am I correct that the first thing that Mr. Mallery
23 refers to in the letter on the third line is that he's
24 enclosing the financial statement, correct?
25 A. Yes, sir.
6881
1 Q. And am I correct that that date on the letter, July 18th,
2 1991, was the date of a board meeting at First Interstate?
3 A. Yes, sir, you are.
4 Q. And, in fact, the letter was actually hand delivered; is
5 that right?
6 A. That is correct.
7 Q. And am I also correct that the letter actually got there
8 after the board meeting had already begun?
9 A. You are correct.
10 Q. Now, do you see at the bottom the last paragraph on the
11 first page and going to the top of the second, could you read
12 that, please?
13 A. "The financial statement has been restated in order to
14 address the specific questions raised in our meeting
15 and in Ms. Sowa's letter to me of June 27, 1991, and to
16 reflect certain contingent and other liabilities where
17 the ultimate indebtedness cannot be determined with
18 certainty."
19 Q. Okay. You can stop there. So in the letter, Mr. Mallery
20 is stating that the ultimate indebtedness cannot be determined
21 with certainty, but, nevertheless, the bank wants it expressed
22 in the financial statement; is that fair to say?
23 A. That's one way to say it, yes.
24 Q. Well, the letter does say that the bank has raised
25 specific questions about contingent liabilities. And isn't
6882
1 Mr. Mallery saying that ultimate indebtedness cannot be
2 determined with certainty?
3 A. Yes, he has.
4 Q. But the bank wanted this information shown as -- as
5 accurately or as completely as it could; is that right?
6 A. As accurately as possible in terms of guarantees that
7 Mr. Symington might have entered and so forth, yes, sir.
8 Q. Now, on page 2 of the letter, Mr. Mallery goes on to talk
9 about two projects, correct, Alta Mesa and Mercado?
10 A. That's correct.
11 Q. Those are the two projects the bank had the construction
12 loan on, correct?
13 A. Yes.
14 Q. Now, on Alta Mesa, he starts off by saying that he, I
15 guess meaning Mr. Symington; is that right?
16 A. Yes, sir.
17 Q. He will proceed with the sale of Alta Mesa and all the
18 proceeds will go to the bank, correct?
19 A. Yes, sir.
20 Q. So would you agree that this is a specific thing that is
21 now going to happen, that the sale will now go through and the
22 bank will get the proceeds?
23 A. It certainly was the intent. Arguably no one could
24 absolutely guarantee it until the closing, but, yes, it was
25 very specific. It was proceeding, a transaction.
6883
1 Q. And in fact the sale did go through?
2 A. It did indeed.
3 Q. And in fact the bank did get the proceeds?
4 A. It did indeed, yes, sir.
5 Q. Now, on the Mercado, he goes on to say the first thing he
6 says is he's pleased to report that they are close to being
7 able to release $125,000 from the UDAG funds which will go to
8 First Interstate. Do you see that?
9 A. Yes, sir.
10 Q. And the UDAG funds were grant funds that the City of
11 Phoenix was able to obtain for the Mercado; is that right?
12 A. Yes, sir.
13 Q. And he says in his letter, Mr. Mallery says that we are
14 close to being able to obtain those funds. But he doesn't say
15 the funds have actually been obtained yet, correct?
16 A. That's correct.
17 Q. So you can't count on the $125,000 yet, correct?
18 A. That is correct.
19 Q. Then he goes on to say we had a constructive meeting, or
20 rather, a constructive negotiation session with McMorgan. Do
21 you see that?
22 A. Right.
23 Q. And he goes on to say we have a preliminary understanding
24 with McMorgan, correct?
25 A. Yes, sir.
6884
1 Q. He doesn't say we have an agreement with McMorgan; is
2 that right?
3 A. That is correct.
4 Q. And the preliminary understanding relates to the cash
5 flow obligation and personal liability, correct?
6 A. Yes, sir.
7 Q. Is it fair to say that in this letter, Mr. Mallery
8 doesn't tell you any specifics as to how the preliminary
9 understanding can be turned into an agreement?
10 A. That is very safe, yes, sir.
11 Q. And it goes on to page 3 to state that we have commenced
12 negotiations with the Rouse Company about assuming management
13 of the Mercado, correct?
14 A. Yes, sir.
15 Q. So again he doesn't say that there's an agreement with
16 the Rouse Company. They've just started negotiating with
17 them; is that fair to say?
18 A. Yes.
19 Q. And is it also fair to say that he does not indicate in
20 the letter whether securing the Rouse Company as the manager
21 for the Mercado is required in order for the preliminary
22 understanding that he referred to to become an actual
23 agreement, correct?
24 A. No, sir.
25 Q. So unlike the Alta Mesa project where a specific action
6885
1 is about to happen, is it fair to say that on the Mercado,
2 there are still some things that have to be finalized here?
3 A. Yes, sir.
4 Q. The understanding is just preliminary, it hasn't become
5 an agreement, correct?
6 A. That is correct.
7 Q. And do you recall any particular discussion at the board
8 meeting regarding the preliminary understanding that was
9 described in Mr. Mallery's letter?
10 A. No, sir.
11 Q. And the proposal that was made by Mr. Mallery in the
12 letter to extend the Mercado loan was rejected by the board
13 the same day, correct?
14 A. That is correct.
15 Q. And the board actually voted unanimously to reject it,
16 correct?
17 A. That is correct.
18 Q. So is it fair to say that the reference in the letter to
19 a preliminary understanding, which Mr. Mallery put in the
20 letter, wasn't significant to the board's decision?
21 A. It was just one -- it was not significant to the
22 decision, no, just one item.
23 Q. And if First Interstate Bank wanted to know more details
24 about how the negotiations with McMorgan were going, First
25 Interstate Bank could have talked to McMorgan directly,
6886
1 correct?
2 A. Yes, sir.
3 Q. Now, I believe you said that Mr. Randall from the bank
4 called Mr. Mallery after the board meeting and said that the
5 proposal -- told him that the proposal was rejected, correct?
6 A. Yes, sir.
7 Q. Now, the government asked you some questions about the
8 fact that the letter was copied to Mr. Symington. Do you
9 remember that?
10 A. Yes, sir.
11 Q. And whether or not you ever got a call from Mr. Symington
12 saying that anything in the letter was not accurate. Remember
13 that question?
14 A. Yes, sir.
15 Q. Is it fair to say that you don't know when Mr. Symington
16 actually got a copy of this letter?
17 A. I have no idea, yes, sir.
18 Q. And you don't know when Mr. Mallery would have told
19 Mr. Symington about the board's decision rejecting the
20 proposal?
21 A. No, sir.
22 Q. So with regard to whether Mr. Symington ever called to
23 say there was something in the letter that wasn't accurate,
24 you also wouldn't know whether any of the corrections, if you
25 wanted to make any, would have been moot --
6887
1 A. I have no idea.
2 Q. -- by the time he heard about the letter, because the
3 board had already rejected the proposal?
4 A. That is true.
5 Q. Would you take a look at Exhibit 267, please.
6 Is that another proposal that Mr. Mallery made in
7 August of 1991?
8 A. Yes, sir.
9 Q. And Mr. Mallery was your primary point of contact then on
10 these negotiations?
11 A. Yes, sir.
12 MR. CARDONA: Your Honor, Exhibit 267 isn't in
13 evidence.
14 MR. LYNAM: I'm sorry.
15 MR. CARDONA: I don't object to it coming in.
16 MR. LYNAM: I would offer. I thought the government
17 had moved it in.
18 THE COURT: The exhibit may be received in
19 evidence.
20 BY MR. LYNAM:
21 Q. And in this letter in August, does Mr. Mallery make a
22 proposal regarding the two loans?
23 A. Yes, sir.
24 Q. And included in the proposal, does Mr. Mallery state on
25 page 2 -- and I'll highlight the last sentence of that
6888
1 paragraph -- that contrary to the earlier proposal, he's no
2 longer requesting a release of the partners from personal
3 liabilities on the Mercado loan?
4 A. Yes, sir.
5 Q. And then on page 3, does Mr. Mallery indicate that the
6 other guarantor on the Mercado loan, Chicanos Por La Causa,
7 CPLC, would -- the bank would still have the right to proceed
8 against them for their share of the guarantee? Do you see
9 that?
10 A. Yes, sir, I do.
11 Q. And ultimately in the workout agreement that the bank
12 entered into with Mr. Symington, Chicanos Por La Causa was
13 released from any liability, correct?
14 A. Yes, sir.
15 Q. And Mr. Symington agreed to remain as the sole guarantor,
16 correct?
17 A. That is correct.
18 Q. Would you take a look at Exhibit 268, please.
19 This is a letter from the bank's attorney,
20 Mr. Stevens; is that correct?
21 A. Yes, sir.
22 Q. Where he's raising some questions about the information
23 on the financial statements, correct?
24 A. Yes, sir.
25 Q. And the financial statement that he's referring to is the
6889
1 financial statement that had been received from Coopers &
2 Lybrand, correct?
3 A. Yes, sir.
4 Q. So even after Coopers & Lybrand had worked on the
5 statement, the bank still had some additional questions,
6 correct?
7 A. Yes, sir.
8 Q. There was some questions about what the outstanding loan
9 amounts were; is that right?
10 A. That is correct.
11 Q. And then the bank ultimately got those questions answered
12 and was satisfied with the financial statement they ultimately
13 received, correct?
14 A. That is correct.
15 Q. Would you take a look at Exhibit 275, please.
16 And is this the bank memorandum discussing the
17 settlement and workout agreement?
18 A. Yes.
19 Q. With J&F and Mercado?
20 A. Yes, sir.
21 Q. And it again indicates that the guarantors are
22 Mr. Symington, his wife as to community property, and Jerry
23 Strauss, correct?
24 A. Yes, sir.
25 Q. Would you turn to page 5, please.
6890
1 A. Yes, sir.
2 Q. At the top of page 5, would you read that paragraph,
3 please?
4 A. Yes. "The last statement received on 9-10-91 appears to
5 be a reasonable representation of his financial
6 condition. It is attached for your review. The
7 statement was compiled by Coopers & Lybrand on August
8 6, 1991, and presents Mr. Symington's financial
9 condition as of May 31, 1991."
10 Q. So you would agree then that the bank was ultimately
11 satisfied with the financial information it received?
12 A. Yes, sir, I do.
13 Q. Would you turn to page 6, please. And I would ask you to
14 read the paragraph that I've highlighted that begins "in the
15 account officer's opinion."
16 A. "In the account officer's opinion, the presentation of
17 Mr. Symington's real estate interests is typical of a
18 developer's financial statement. It is rare to obtain
19 an audited financial statement from a real estate
20 developer. The additional information supplied by
21 Ernst's provides much more than the bank typically
22 receives when considering a debt compromise."
23 Q. Would you go on to read the paragraph I've highlighted
24 that's in number eight, "in conclusion."
25 A. "In conclusion, the financial information Symington has
6891
1 presented to the bank is comparable to information
2 received from other borrowers in similar situations.
3 He has signed a statement prepared by the bank wherein
4 he certifies that the financial statement provided
5 represents his financial condition."
6 Q. So the bank had other borrowers in the same situation or
7 similar situation as Mr. Symington, correct?
8 A. That is correct.
9 Q. And would you read under "commercial reasonableness,"
10 would you read that paragraph, please?
11 A. Yes, sir. "Because of Mr. Symington's position as
12 Governor of the State of Arizona, much effort has been
13 made to put together a commercially reasonable
14 settlement. The proposed settlement is similar to
15 settlements with other troubled borrowers and does not
16 reflect any favoritism."
17 Q. Is it fair to say that the bank did not want to be open
18 to any criticism for settling and working out this matter with
19 a borrower who is now a public official?
20 A. Yes, sir, it is fair to say that. But it is also very
21 important that the bank wanted to effect this compromisation
22 in a manner that was consistent with the requirements of the
23 law and was commercially reasonable in every -- in every way.
24 Q. The bank wanted to treat Mr. Symington no differently
25 than any other customers, correct?
6892
1 A. That is correct.
2 Q. And when you say "commercially reasonable," then you
3 mean, do you not, that if Mr. Symington were not the Governor,
4 that the agreement would have to be commercially reasonable
5 and consistent with other agreements reached with people who
6 weren't public officials?
7 A. Very much so, yes, sir.
8 Q. So the bank didn't want to treat -- the bank did not
9 refuse, however, to work this out with Mr. Symington because
10 he was the Governor either?
11 A. No, sir.
12 Q. That wouldn't have been fair either, would it?
13 A. No, sir.
14 Q. But the bank didn't do anything special or show any
15 favoritism because he was the Governor, correct?
16 A. No, sir.
17 Q. And if you look at page 7, do you see on the Mercado --
18 A. Yes, sir.
19 Q. -- discussion there?
20 A. Um-hmmm.
21 Q. There is a discussion of what the debt forgiveness might
22 amount to if all the conditions are met; is that right?
23 A. Yes.
24 Q. And included in the -- the borrower would be the
25 partnership, correct?
6893
1 A. Correct.
2 Q. And included under J&F, is there an indication here that
3 the bank is also compromising with the other partner,
4 Mr. Strauss?
5 A. There is.
6 Q. We've already seen in the motivated seller's program in
7 1990, before Mr. Symington got elected, the bank was
8 considering a proposal where there would be a two-for-one
9 credit on the payoff of Alta Mesa, correct?
10 A. Yes, that's correct.
11 MR. LYNAM: Thank you. No further questions.
12 THE COURT: Further questions?
13 MR. CARDONA: Thank you, Your Honor.
14
15 REDIRECT EXAMINATION
16 BY MR. CARDONA:
17 Q. Mr. Bonsall, you recall Mr. Lynam asking you some
18 questions about the motivated seller's program?
19 A. Yes, sir.
20 Q. And was the purpose of the motivated seller's program to
21 provide the borrower, in this case, Mercado -- J&F
22 Investments, with an incentive to go out and try and sell the
23 property for as much as they could possibly get?
24 A. Yes, sir.
25 Q. Because the more they could get for it, the more the bank
6894
1 was going to recover, right?
2 A. That's correct.
3 Q. And from the documents we looked at before, that's what
4 the partnership did, right? I mean --
5 A. Yes, sir.
6 Q. They went out and they marketed it to get as much as they
7 can, right?
8 A. That's correct.
9 Q. And ultimately what they came up with was the -- I think
10 it was $965,000 that I think we saw referenced in one of the
11 memos?
12 A. Yes, sir.
13 Q. And in the acknowledgment, did they indicate expressly
14 that that was the best price they could get in the market at
15 the time?
16 A. That is correct.
17 Q. Now, when First Interstate Bank was trying to figure
18 out -- well, first of all, was it important for First
19 Interstate Bank to try and figure out exactly what assets
20 Mr. Symington did have at this time?
21 A. Yes, sir.
22 Q. And was that because or was the bank looking or hoping to
23 be able to look to whatever assets Mr. Symington had as a
24 source of repayment?
25 A. Yes, sir.
6895
1 Q. Now, if you remember, Mr. Lynam showed you -- I think it
2 was on the first exhibit where he showed you where it listed
3 the two sources of repayment, primary and secondary?
4 A. Yes, sir.
5 Q. Now, if those sources didn't come through, was the bank
6 also looking to Mr. Symington's guarantee?
7 A. Yes, sir.
8 Q. And the ability to pay on that guarantee, that would be
9 affected by Mr. Symington's financial condition?
10 A. Yes, sir.
11 Q. Is that why the bank was so interested in a financial
12 statement that accurately set forth assets and liabilities?
13 A. Yes.
14 Q. Now, along those lines, Mr. Lynam showed you the first
15 financial statement you got, which was the one that was
16 misdated 12-31-91. Do you remember that?
17 A. Yes, sir.
18 Q. And that had -- well, let me go ahead and pull that up
19 if I could for a second. I think that was Exhibit 250.
20 And this was the one that was misdated December
21 31st, 1991?
22 A. Yes.
23 Q. And if we move down, I think Mr. Lynam drew your
24 attention to the real estate and buildings line that I've got
25 on the screen, right?
6896
1 A. Yes, sir.
2 Q. With the asterisk?
3 A. Yes, sir.
4 Q. Then on the second page, he took you over. And on this
5 one there is an asterisk that says "current liquidation
6 value." Do you see that?
7 A. Yes, sir.
8 Q. Now, when First Interstate Bank was looking at the
9 assets, was -- were they primarily interested in the current
10 liquidation value, or were you more interested in the market
11 value?
12 A. I am unable to answer that question.
13 Q. Okay.
14 A. In anyone's contemplation of liquidation I would think at
15 that point in time within the bank.
16 Q. Were you doing the credit analysis on these loans?
17 A. No, sir. No, sir. No.
18 Q. Who was?
19 A. The credit officers and there was, as I testified
20 earlier, a valuation and appraisal department that was staffed
21 with licensed appraisors.
22 Q. When you forwarded the financial statement on to the
23 credit officers, I think it would be in the special credits
24 department, were they supposed to go through this and figure
25 out what they wanted?
6897
1 A. Yes, sir.
2 Q. Was Kathie Sowa one of those people?
3 A. Yes, she was.
4 Q. Now, Mr. Lynam asked you I think about the financial
5 statement that you received back from Mr. Mallery on July
6 18th. And he drew your attention to the line where you refer
7 to the letter that had been sent by Ms. Sowa.
8 A. Yes.
9 Q. What I would like to do, is --
10 MR. CARDONA: If we could put in front of the
11 witness Exhibit 252.
12 And, Your Honor, if I could have one moment.
13 MR. LYNAM: May I see the document, Your Honor?
14 THE COURT: Yes.
15 MR. LYNAM: Well, Your Honor, this was not
16 introduced during the cross. I would object, it's beyond
17 cross.
18 THE COURT: And what is the subject matter that
19 would relate to the --
20 MR. CARDONA: Your Honor, Mr. Lynam asked
21 Mr. Bonsall about there was a reference in Mr. Mallery's
22 letter to the request he had received from Ms. Sowa for
23 additional information. And Mr. Lynam asked some questions
24 about that and about Mr. Mallery's response. This letter in
25 fact is the letter that Ms. Sowa writes that lays out what it
6898
1 is.
2 THE COURT: You may proceed.
3 MR. CARDONA: And, Your Honor, I would offer Exhibit
4 252 at this time.
5 THE COURT: It may be received.
6 BY MR. CARDONA:
7 Q. Mr. Bonsall, is this the June 27th, '91 letter from
8 Ms. Sowa to Mr. Mallery?
9 A. It is.
10 Q. And in the middle paragraph, does it reference the
11 concerns that she was expressing to Mr. Mallery about the
12 financial statement, that is the one we've just looked at, the
13 one that was misdated December, 1991?
14 A. That is correct.
15 Q. And what does she indicate in the first line of that
16 paragraph?
17 A. "Insufficient information provided as to Mr. Symington's
18 real estate assets and liabilities."
19 Q. Now, does she go on to identify the fact that there
20 are -- Mr. Symington has a personal liability for the
21 outstanding debt?
22 A. Yes, that is correct. It was not scheduled in the
23 original statement and, for that matter, the outstanding
24 balance was improperly reported.
25 Q. Then Mr. Lynam showed you Exhibit 256, which was what you
6899
1 then got back from Mr. Mallery in response, the July 18th
2 letter?
3 A. Yes, sir.
4 Q. And I think he took you over and showed you on page 2 the
5 reference to Ms. Sowa's letter. Do you see that?
6 A. Yes, sir.
7 Q. Then attached to this was this new financial statement,
8 right?
9 A. Yes, sir.
10 Q. And on the certification form, in item four, what does it
11 say?
12 A. "Except as otherwise noted thereon, the financial
13 statements list all assets at fair market value."
14 Q. Why don't you turn over to the financial statement form.
15 Under "real estate and buildings," what does it refer to?
16 A. Schedule 3.
17 Q. And is there any asterisk here?
18 A. It just says, "See Schedule 3."
19 Q. And if we turn over to the second page, under "real
20 estate and buildings," what does it say?
21 A. "See Schedule 3 attached."
22 Q. Is there any reference there to liquidation value?
23 A. I'm sorry?
24 Q. Is there any reference there to liquidation value?
25 A. No, sir.
6900
1 Q. If you turn over to Schedule 3, is that the real estate
2 interests schedule?
3 A. Yes, sir.
4 Q. And does that refer to liquidation value?
5 A. I'm sorry, but I can't read that.
6 Q. I'm sorry. I thought -- you don't have it in front of
7 you. Let's go ahead and put that in front. Sorry about
8 that.
9 THE CLERK: 250?
10 MR. CARDONA: Exhibit 256.
11 THE WITNESS: No, sir.
12 BY MR. CARDONA:
13 Q. Now, Mr. Lynam then asked you about another part of this
14 letter, which was back on the text of the letter on the
15 Mercado.
16 A. Yes, sir.
17 Q. And asked you some questions about the timing of the
18 board meeting and when you got this letter.
19 A. Yes.
20 Q. Now, the specific proposal that Mr. Mallery was making in
21 this letter was rejected at the board meeting, right?
22 A. That is correct.
23 Q. And at the board meeting, as you've said, you didn't
24 discuss in particular his representations in this paragraph?
25 A. That is correct.
6901
1 Q. Now, after the board meeting, First Interstate Bank
2 continued to be involved in workout negotiations, right --
3 A. Yes, sir.
4 Q. -- with Mr. Symington?
5 Relating to both the Mercado loan and the Alta Mesa
6 loan?
7 A. Yes, sir.
8 Q. And did the representation that there had been this
9 preliminary understanding to modify the first lien to a cash
10 flow obligation with no personal liability play a role as a
11 factor in the ongoing considerations of the workouts?
12 A. I don't believe so, no.
13 Q. Wouldn't the bank be interested in the fact that
14 Mr. Symington was going to be released from his personal
15 liability on the Mercado loan?
16 A. Yes, sir, indeed.
17 MR. LYNAM: Objection, Your Honor, leading.
18 THE COURT: Sustained.
19 THE WITNESS: The bank would be --
20 MR. LYNAM: Excuse me.
21 MR. CARDONA: I'll ask another question.
22 BY MR. CARDONA:
23 Q. Was it of interest to the bank if Mr. Symington was going
24 to be released from his personal liability?
25 A. The occurrence of either one of these events would have
6902
1 benefited Mr. Symington, as I believe I testified before. And
2 that would be of benefit to First Interstate Bank because it
3 wished to be repaid the obligations that it had extended.
4 Q. And would that be something the bank would consider when
5 you're deciding what to do in a workout?
6 A. Yes, sir.
7 Q. After this letter, I think as you testified on direct,
8 and let me just make sure that's true. After you got this
9 letter, did you ever get any information back telling you that
10 this representation in this letter was incorrect?
11 A. No, sir.
12 Q. Now, if we turn to Exhibit 275, which was one that
13 Mr. Lynam showed you as well. And this was -- and we will
14 give you the hard copy, too.
15 This was the memo that we looked at in October of
16 '91?
17 A. Yes.
18 Q. From Ms. Sowa to Ms. Stone?
19 A. Yes, sir.
20 Q. And there's a couple of things I want to ask you about.
21 Let me find them first.
22 And Mr. Lynam asked you about Chicanos Por La
23 Causa. Do you remember that?
24 A. Yes, sir.
25 Q. And they, in fact, were released from their liability?
6903
1 A. Yes, sir.
2 Q. And on page 2 -- on page 4 of this memo, is there a
3 discussion of why that recommendation to release them from
4 liability was made?
5 A. Yes, sir, there is.
6 Q. And what was the reason?
7 A. That the assets of the entity consisted almost entirely
8 of their investment in the Mercado project.
9 Q. So they basically had nothing else that First Interstate
10 Bank could pursue to collect on?
11 A. That is correct.
12 Q. And Mr. Lynam asked you a series of questions about
13 what's set forth on page 5 and 6. And is that where Ms. Sowa
14 sets forth her discussion of Mr. Symington's financial
15 statement and the analysis of that by Ernst & Young?
16 A. Yes, sir.
17 Q. Let me find the part. If you go over to page 6, under
18 item six, what did Ms. Sowa set out as the major concern in
19 the first sentence?
20 A. Major concern is whether the valuations of his various
21 real estate projects are reasonable.
22 Q. And what did Ms. Sowa say about how Coopers had
23 determined the values?
24 A. "Coopers utilized 'commonly used techniques' when
25 determining project valuations. However, a significant
6904
1 reliance was placed upon net operating income figures
2 supplied by Symington's accountants."
3 Q. And based on all of this, including Mr. Symington's
4 financial statement and the other information you received
5 from Mr. Symington, I think we saw on direct, did everybody
6 sign off on this recommendation?
7 A. Yes, sir.
8 Q. And when you state your conclusion, was that because you
9 concluded based on all of that information that this was a
10 commercially reasonable settlement?
11 A. Yes, sir.
12 MR. CARDONA: Nothing further.
13 THE COURT: You may step down, sir. You may be
14 excused at this time.
15 THE WITNESS: Thank you, sir.
16 MR. CARDONA: Your Honor, at this time there are two
17 matters very briefly. First there's been a stipulation
18 reached between the parties pertaining to Federal Deposit
19 Insurance Corporation insurance. And what I would like to do
20 at this time is read the stipulation and then move it into
21 evidence. So if I could.
22 THE COURT: You may.
23 MR. CARDONA: This is a stipulation entitled
24 "Stipulation re FDIC Insurance." And it's between the
25 government, Mr. Symington, and Mr. Symington's counsel. And
6905
1 I'll read it.
2 Paragraph 1: At all times relevant to the
3 Indictment in this case, and at all times between June 1st,
4 1961, and September 1st, 1996, the accounts of First
5 Interstate Bank of Arizona, FIB, were insured by the Federal
6 Deposit Insurance Corporation. Effective September 1st, 1996,
7 FIB's name was changed to Wells Fargo Bank of Arizona.
8 Paragraph 2: At all times relevant to the
9 Indictment in this case and at all times between June 1st,
10 1981, and March 31st, 1993, the accounts of Valley National
11 Bank of Arizona, VNB, were insured by the Federal Deposit
12 Insurance Corporation. Effective March 31st, 1993, VNB's name
13 was changed to Bank One, Arizona.
14 Paragraph 3: At all times relevant to the
15 Indictment in this case, and at all times between January
16 15th, 1971, and the present, the accounts of Mercantile Safe
17 Deposit and Trust Company were insured by the Federal Deposit
18 Insurance Corporation.
19 And the stipulation is then signed by myself,
20 Mr. Symington, and Mr. Dowd.
21 And I would offer that as Exhibit 3641.
22 THE COURT: The exhibit may be received in
23 evidence.
24 MR. CARDONA: Then one other quick matter, Your
25 Honor. At this time, I would offer as bank records pertaining
6906
1 to various accounts held by Mr. Symington the following
2 Exhibits: 3612, 3613, 3614, 3615, 3616, 3617, 3618, 3619,
3 3620, 3621, 3623, and 3626.
4 MR. LYNAM: No objection.
5 THE COURT: Each may be received in evidence.
6 MR. CARDONA: And with that the government would
7 call its next witness, Jean Wong.
8 THE COURT: Please come forward, give your full name
9 to the clerk, and let her administer the oath to you.
10 THE WITNESS: Jean Fay Wong.
11 (The witness, Jean Fay Wong, was duly sworn.)
12 THE COURT: Please take the stand over here.
13 You may proceed.
14 MR. SCHINDLER: Thank you, Your Honor.
15
16 JEAN FAY WONG,
17 called as a witness herein, having been duly sworn, was
18 examined and testified as follows:
19
20 DIRECT EXAMINATION
21 BY MR. SCHINDLER:
22 Q. Good morning, Ms. Wong.
23 A. Good morning.
24 Q. Ms. Wong, could you please tell the jury a little bit
25 about your educational background.
6907
1 A. I graduated from University of Arizona in May of 1976.
2 Q. Let me stop you for a minute. Could you just pull that
3 microphone closer to you so they can hear you.
4 A. May of 1976, I graduated from University of Arizona with
5 a bachelor's degree with a major in accounting.
6 Q. And did you eventually become a certified public
7 accountant?
8 A. Yes. I passed the CPA exam in May of '76. And I became
9 certified two years later in June of 1978.
10 Q. Are you still certified as a CPA?
11 A. Yes, I am.
12 Q. Now, after you graduated from Arizona State University,
13 can you just give the jury --
14 A. University of Arizona.
15 Q. That's a terrible faux pas, I'm sorry.
16 After you graduated from the University of Arizona,
17 can you take the jury through your work history? Where did
18 you go to work after that?
19 A. Upon graduation I moved to Phoenix and I went to work for
20 Coopers & Lybrand. I started out on the audit staff. And I
21 eventually transferred to the tax department.
22 Q. How long were you at Coopers & Lybrand?
23 A. I was with the firm for five years.
24 Q. How long were you in audit and then how long were you in
25 the tax department?
6908
1 A. I was on the audit staff about a year and a half,
2 although I did work in the tax department during the busy
3 season both of those years. And then I was on the tax staff
4 for a full three and a half years.
5 Q. Did you have a particular specialty, things that you
6 worked on in particular?
7 A. In the tax department I specialized in real estate and
8 partnership taxation.
9 Q. Now, do you know Mr. Symington?
10 A. Yes, I do.
11 Q. When did you first meet Mr. Symington?
12 A. I met Fife, it was approximately 1977, '78.
13 Q. Have you known Mr. Symington then since 1977 or '78?
14 A. Yes, I have.
15 Q. How did you first meet Mr. Symington?
16 A. I was in the office and Fife came in the office and he
17 needed a loan amortization schedule run. So I was available
18 so I did that for him. And when I completed that, we got to
19 talking about a project that he was working on. And he talked
20 to me about what work we could possibly do for him. And he
21 basically gave me a try. And I think he was happy with my
22 work. And after that he became one of my major clients.
23 Q. Just so it's clear, this was at a time when you were
24 working at Coopers & Lybrand?
25 A. Yes, it is.
6909
1 Q. And so when he approached you to run this loan
2 amortization schedule, it was when you were working at C&L?
3 A. Yes, it was.
4 Q. And were you in the tax department by that time?
5 A. Yes, I was.
6 Q. Now, did you know what Mr. Symington did for a living at
7 that point in time?
8 A. I knew he was a real estate developer.
9 Q. And did you eventually learn anything over time about
10 Mr. Symington's background?
11 A. Fife used to be a client of Coopers & Lybrand years
12 before I was handling his work. And a tax manager at
13 Coopers & Lybrand basically gave me a brief update on Fife's
14 background.
15 Q. Now, at some point did you go to work with Mr. Symington?
16 A. Yes. I went to work for The Symington Company in May,
17 1981.
18 Q. And how is it that came to work for The Symington
19 Company?
20 A. While I was at Coopers & Lybrand, Fife was one of my
21 major clients. And I was handling all of his work for the
22 partnerships that he had developed projects with as of that
23 point in time.
24 Q. Did you ask Mr. Symington to go work at The Symington
25 Company, or did he ask you to come work for him?
6910
1 A. He asked me to come work for him.
2 Q. Now, did you have discussions with Mr. Symington about
3 your compensation, how you would be paid at The Symington
4 Company?
5 A. Those discussions took place basically over a two-year
6 period. Fife had extended offers for me to go work for him
7 for basically two years before I eventually did go to work for
8 him. So during that two-year period, we did have discussions
9 about my compensation.
10 Q. And what was the deal that you struck with Mr. Symington?
11 A. What we agreed upon was I would have a salary. And I
12 actually took a cut in pay to go to work there from Coopers &
13 Lybrand. And in addition to my salary, I would have interests
14 in the real estate projects.
15 Q. What were you hired to do at The Symington Company?
16 A. I was hired to basically run the company, the operations
17 of the company.
18 Q. Did you have a title?
19 A. Not when I joined the company, no.
20 Q. Did you eventually get a title?
21 A. I eventually became, in terms of the corporation, I was
22 vice president and corporate secretary and director of The
23 Symington Company.
24 Q. Now, you mentioned that you were hired to run
25 operations. Can you just give the jury a sense, what were
6911
1 your responsibilities? What were you supposed to do?
2 A. My responsibilities basically involved supervising the
3 recordkeeping for the company. I coordinated communications
4 with the partners in terms of collecting capital
5 contributions. I coordinated with the lenders in terms of
6 submitting draw requests.
7 Q. How many other people were working at The Symington
8 Company when you joined?
9 A. When I joined? There were two other employees. There
10 was Joyce Bateman, the secretary, and Frank Kelly, a
11 construction manager.
12 Q. And then Mr. Symington?
13 A. And Mr. Symington.
14 Q. And was Mr. Symington the boss of The Symington Company?
15 A. Yes. Fife was the boss.
16 Q. At the time that you joined, what was the business at The
17 Symington Company? In other words, how did the Symington
18 Company make money?
19 A. At the time that I joined, The Symington Company was a
20 developer. And in the early years, we were also acting as the
21 general contractor for the buildings that we were developing.
22 So basically while the buildings were under construction, we
23 would get fees from development and also fees from being the
24 general contractor.
25 Q. At some point did The Symington Company start managing
6912
1 properties?
2 A. Yes. When the buildings were completed construction, at
3 that point in time, The Symington Company also managed the
4 buildings.
5 Q. And was it paid a fee for doing that?
6 A. Yes, it was.
7 Q. How long did you remain at The Symington Company?
8 A. I was at The Symington Company from May, 1981. I
9 resigned effective December 31st, 1985. But I was at the
10 company for three additional months until March of 1986 for
11 transition reasons.
12 Q. And what was your title when you left?
13 A. My title was executive vice president.
14 Q. Now, did you part on friendly terms with Mr. Symington?
15 A. Yes, I did.
16 Q. Now, after you left The Symington Company, did you
17 continue to have contact with Mr. Symington?
18 A. Yes. We would have conversations on the phone and
19 eventually we had partners' meetings where I would have
20 contact with him.
21 Q. Now, you made reference to partners' meetings. Were you
22 partners with Mr. Symington?
23 A. Yes, I was.
24 Q. And explain how it is you came to be partners with
25 Mr. Symington.
6913
1 A. As part of my compensation package when I left Coopers &
2 Lybrand, part of that was that I would share in the ownership
3 interests that he had in the partnerships. So from day one
4 when I joined The Symington Company, I was a partner with him
5 in -- in the projects as we developed them.
6 Q. We are going to come back to the specific projects, but
7 approximately how many different projects were you partners
8 with Mr. Symington on?
9 A. Approximately 12.
10 Q. Now, during the time that you worked at The Symington
11 Company, did you have occasion to observe Mr. Symington during
12 meetings?
13 A. Yes. We worked very closely together.
14 Q. Did you observe him during negotiations with lenders?
15 A. Yes. I would have been in some of those meetings.
16 Q. How about in discussions or negotiations with potential
17 limited partners, did you observe him during those?
18 A. Yes, I would have been in some of those meetings also.
19 Q. How would you describe Mr. Symington?
20 A. Fife is very smart. He's -- he's very good at making
21 you a believer. He's very convincing. He's a risk taker.
22 He's a fighter. He's someone who needs to be in control.
23 Q. You said Mr. Symington was smart. Did you have
24 conversations with Mr. Symington during the time you worked
25 for him about commercial real estate?
6914
1 A. We worked very closely together. So we would have had
2 discussions of that type.
3 Q. Did Mr. Symington appear to be knowledgeable about
4 commercial real estate?
5 A. Yes, very knowledgeable. I had a great deal of respect
6 for him.
7 Q. How about the particular real estate projects that were
8 developed by The Symington Company or that the two of you were
9 partners in, was he knowledgeable about those projects?
10 A. Yes, he was.
11 Q. Did Mr. Symington appear to understand the difference
12 between construction loans and permanent loans?
13 A. Yes, he did.
14 Q. When it came time to obtain loans for the projects, who
15 did -- who was in charge of those negotiations?
16 A. Well, Fife would handle the initial negotiations and
17 contacts with the lenders. And then when the basic terms of
18 the loans had been finalized and agreed upon and at the point
19 in time where coordination would be made with the attorneys in
20 terms of review of the loan documents, typically at that point
21 in time is when I became involved.
22 Q. You said the basic terms. Do the basic terms include the
23 amount of a particular loan?
24 A. Yes.
25 Q. What about guarantees as to whether there would be any
6915
1 guarantees on a loan? Is that something Mr. Symington would
2 negotiate over?
3 A. Yes, that would be agreed upon at the very beginning.
4 Q. Did you ever see Mr. Symington perform calculations of
5 the current market value of projects?
6 A. Did I ever see him perform calculations?
7 Q. I mean did you ever see him take a calculator and sit
8 down and figure out -- run the numbers?
9 A. Yes, I did.
10 Q. Can you explain that to the jury?
11 A. Oftentimes in meetings Fife would have his Hewlett
12 Packard calculator and he was very handy with it. And he
13 could very quickly just in that meeting do calculations,
14 capitalizing the income that the project was projecting, and
15 he would be able to calculate what the value of that project
16 was.
17 Q. Was he able to figure out a net present value of a
18 capitalized value?
19 A. Yes, he was.
20 MR. SCHINDLER: Your Honor, you are looking at me
21 with that lunch look, so I'm going to assume --
22 THE COURT: We will take our noon recess at this
23 time and reconvene at 1:30.
24 (The noon recess was taken.)
25 <
http://www.azcentral.com/news/symington/scripts/0716trans1.shtml
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REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
August 15, 1997 11:08 a.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Question)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
2
1 P R O C E E D I N G S
2
3 THE COURT: Good morning, gentlemen. This is in
4 Cause No. CR 96-250, United States versus John Fife
5 Symington.
6 Will counsel please note their appearances for the
7 record.
8 MR. SCHINDLER: Your Honor, David Schindler and
9 George Cardona on behalf of the United States.
10 MR. DOWD: Good morning, Your Honor, John Dowd, Lou
11 Mejia and Terence Lynam on behalf of Mr. Symington.
12 THE COURT: Thank you, Counsel. This matter is
13 under seal and in chambers. Present with me are the two law
14 clerks and bailiffs and also the court reporter and the
15 courtroom deputy clerk. Certainly counsel are entitled to be
16 here and if at any point it is your desire to do so, we can
17 adjourn these telephonic proceedings and have you here.
18 There are two issues that I want to discuss with
19 you. One, and it is the principal matter, is a question from
20 the jury. The other is questions from some jurors that were
21 presented to the Jury Commissioner. I believe that the first
22 question from the jury --
23 MR. DOWD: Your Honor?
24 THE COURT: Yes.
25 MR. DOWD: John Dowd. I would like to be present in
3
1 your chambers. I would much prefer to do it that way than
2 over the telephone if you don't mind.
3 THE COURT: I certainly don't mind. The matter that
4 we will discuss perhaps would best be dealt with here. It is
5 a question from the jury that needs some -- some thoughtful
6 consideration. How long will it take all of you to get here?
7 MR. DOWD: Your Honor, we can be there in five
8 minutes.
9 MR. SCHINDLER: Your Honor, it will take us about
10 ten.
11 THE COURT: We will see you as soon as you can get
12 here. Thank you.
13 (A recess was taken.)
14 THE COURT: The record may reflect that this is a
15 sealed and closed proceeding in Cause No. 96-250.
16 Will counsel please note their appearances for the
17 record.
18 MR. SCHINDLER: Good morning, Your Honor, David
19 Schindler and George Cardona on behalf of the United States.
20 MR. DOWD: Good morning, Your Honor, John Dowd,
21 Terence Lynam, and Lou Mejia on behalf of Mr. Symington.
22 THE COURT: The record may also reflect the presence
23 of the courtroom deputy clerk, the court reporter and both law
24 clerks.
25 There are three matters to take up. First is the
4
1 jury would like to go out for lunch today and so they are
2 going to the Matador. And in order to accomplish that in an
3 orderly manner, we are going to take them over there by car.
4 In order to do that, we need to make two runs. In order to do
5 that, we need four bailiffs. And in order to accomplish that,
6 we need Grace Ochoa as a bailiff. In order to accomplish
7 that, we need, A, your consent and, B, to swear her.
8 A, do we have your consent?
9 MR. DOWD: Certainly, Your Honor.
10 THE COURT: B, will Mrs. Ochoa please stand so that
11 the court reporter may administer the oath to you.
12 THE CLERK: Merilyn administered the oath in the
13 courtroom. I was sworn in in the courtroom a moment ago.
14 THE COURT: Well, there you go.
15 The record may reflect that Mrs. G. Ochoa is now a
16 sworn bailiff in the matter.
17 Now, there are two matters that bring us here. One
18 I regard essentially as a security matter. And for that
19 reason I believe it is justified in holding a sealed
20 proceeding.
21 The other is a question from the jury and I believe
22 it is appropriate also to seal those proceedings. And let me
23 just read the case authority for that so that if there's any
24 disagreement about the matter we can discuss it as well.
25 It's not a Ninth Circuit case and it's an old case.
5
1 There may be more law on this. I've asked one of my law
2 clerks to research the issue. But basically the case of
3 United States versus Gurney, United States Court of Appeals
4 for the Fifth Circuit, 1977, it is 558 F.2d 1202, provides,
5 among many other things, "The press clearly has no
6 constitutional right of access to the written communications
7 between judge and jury. Compelling governmental interest in
8 the integrity of the jury deliberation requires that the
9 privacy of such deliberations and communications dealing with
10 them be preserved. Confidentiality is a shield against
11 external considerations entering into the deliberative
12 process. Such a shield prevents undermining the integrity of
13 the jury system. Juries must be permitted to deliberate fully
14 and freely, unhampered by the pressures and extraneous
15 influences which could result from access by the press to the
16 deliberative process."
17 That's the case statement of the matter. And
18 because if the jury doesn't conclude its deliberations today,
19 it would have a weekend, and it's likely that there would be
20 media coverage of the question, I felt it was appropriate to
21 do it in this manner.
22 The question is: "Your Honor, we respectfully
23 request direction. One juror has stated their final opinion
24 prior to review of all counts. (Juror's name), foreperson."
25 Obviously the obligation of the jurors is to review
6
1 the evidence and consider each count. I had started to draft
2 a response and I can just read to you where I was and then we
3 can discuss it further.
4 "In response to your question, all jurors are
5 referred to the Court's instructions which are to be
6 considered as a whole as previously stated. In following my
7 instructions, you must follow all of them and not single out
8 some and ignore others. They are all equally important.
9 "In this regard, you will recall that among others,
10 you were instructed that when you retire, you will then
11 discuss the case with your fellow jurors to reach agreement if
12 you can do so. Each of you must decide the case for yourself,
13 but you should do so only after you have considered all the
14 evidence, discussed it fully with the other jurors, and
15 listened to the views of your fellow jurors. Do not be afraid
16 to change your position if the discussion persuades you that
17 you should, but do not come to a decision simply because other
18 jurors think it is right."
19 And we could go on. "It is important that you
20 attempt to reach unanimous verdict, but, of course, only if
21 each of you can do so after you have made your own
22 conscientious decision. Do not change an honest belief about
23 the effect and weight of the evidence simply to reach a
24 verdict."
25 There are, of course, many places in the
7
1 instructions that speak to the jurors' varying duties. But I
2 think that covers the primary duty that we want them to focus
3 upon here, and that is that they ought to discuss the case
4 with their colleagues. "Consider all the evidence and discuss
5 it with your colleagues and then make up your mind."
6 MR. SCHINDLER: Your Honor, can we see the note that
7 was sent to the Court just so I can read that one more time?
8 MR. DOWD: Your Honor, are you -- is it the -- is
9 it the Court's instruction that a juror cannot reach a final
10 opinion unless they participate in all discussions with the
11 other jurors? Because I've got page 68 of your instructions
12 and I can understand where a juror could say, Well, I reviewed
13 all the evidence in my own mind. I've reached a final
14 opinion.
15 And I -- essentially I think what (juror's name) is
16 asking is does that juror have to walk lockstep with the rest
17 of us as we review it or can that juror make up its own mind.
18 And so I guess the question is, are we going to --
19 are you going to go back and say, no, that juror can't reach a
20 final opinion. He has to or she has to review all the
21 evidence with them.
22 Suppose the juror says, look, I've heard enough. I
23 mean there are really four sets of charges here. And they
24 haven't reviewed all the 1014 counts. But in terms of 1014,
25 I've just -- I've made up my mind.
8
1 MR. SCHINDLER: I think, Your Honor, what the Court
2 is proposing at this point is fine. I think we probably don't
3 know whether this is a situation as Mr. Dowd is describing or
4 if it's the other end of the spectrum with a juror who's
5 refusing to deliberate at all, such that that would be, in
6 essence, juror misconduct. We don't know what's going on.
7 And perhaps the proper course at this point is to send back in
8 the instruction the Court is proposing, see what happens, and
9 at that point if we get another note back from the jury, we
10 will have a better sense of if it's a situation where a juror
11 has simply -- is refusing to deliberate, or, on the other
12 hand, has made up his or her mind based upon his or her
13 independent review of the evidence.
14 MR. DOWD: What I would like to do, could we print a
15 copy of what you are saying?
16 THE COURT: Each of you must decide the case for
17 yourself but you should do so only after -- only after you
18 have considered all the evidence. About all I am doing here
19 is just quoting from page 68 of the instructions.
20 MR. DOWD: Right.
21 THE COURT: Let's just see. Okay, we will print
22 this off, if you could pick this up and we can use that as a
23 starter.
24 While we are getting that, let me raise the other
25 concern I had. There are several other security matters that
9
1 we might discuss while we are here in a sealed proceeding.
2 It's just when the verdicts are returned how to handle various
3 matters.
4 One of them concerns juror identities. And the
5 reason it comes up now is because I received a note from Anna
6 Baca. And she says, "A few jurors have been in and asked if
7 their names would be released after the trial is over. I told
8 them I would relay this message to the Judge's staff so they
9 can relay the message to Judge Strand," and have an answer
10 for them. "They just mainly want to know what to expect after
11 it's all over."
12 The question is should we respond to that question
13 now while they are in the midst of their deliberations or
14 not. And that I felt was an important thing to ask you about
15 because there is a concern that this very issue puts some
16 duress upon them and concern. I had previously concluded that
17 at the close of the trial I would tell them that during the
18 trial their names had not been disclosed in order to protect
19 them from harassment and other intrusions that might bother
20 them during their jury service, but that now that the case was
21 over, those concerns were no longer present and that as in all
22 cases, civil and criminal in this district, your names and the
23 town or city of your residence will be made public at the
24 close of the proceedings.
25 In any event, that's what I was going to tell them
10
1 then. The question is do we want to tell them that now or is
2 that inappropriate to tell them that now or --
3 MR. SCHINDLER: Our suggestion, Your Honor, would be
4 that you respond to the jurors that we received your note,
5 your inquiry regarding juror --
6 MR. CARDONA: Names.
7 MR. SCHINDLER: -- juror names. We will address
8 that matter in the future. You need not concern yourself with
9 that at this time, in essence, to take that off the table of
10 their discussions at this point and let them know that their
11 concern has been registered and you'll deal with it or
12 instruct them later on.
13 MR. DOWD: I wouldn't do it that way. I would just
14 advise the Jury Commissioner that -- what the Court normally
15 does and simply hold it until they are through. I wouldn't
16 inject it into the deliberations at this time.
17 THE COURT: Normally we don't hold it until it's
18 through. Usually during voir dire they just get up and state
19 their name and whether they are from North Phoenix or Peoria
20 or Scottsdale or whatever it is.
21 MR. DOWD: Well, whatever you want to do, I guess
22 that was what I was referring to.
23 THE COURT: We could tell the Jury Commissioner to
24 just say -- what did you suggest, John, that -- that the Jury
25 Commissioner tell them that, what, that in -- that the
11
1 general practice in the district --
2 MR. DOWD: Yes.
3 THE COURT: -- is to disclose the name and the city.
4 MR. DOWD: Yes.
5 THE COURT: And just leave it at that?
6 MR. DOWD: Yes, I would do that.
7 THE COURT: And then that lets them know and --
8 does that sound fair enough?
9 MR. CARDONA: That sounds fine. But I think it
10 would make more sense for the instruction to come from you
11 rather than the Jury Commissioner.
12 MR. DOWD: I think it elevates it unnecessarily. I
13 don't like it going into the jury room.
14 THE COURT: What I can do, since that question came
15 to the Jury Commissioner, I can say -- I can say to her that
16 in response to inquiries you have received, you may inform the
17 jury that it is the practice in this Court -- it is the
18 practice in the District of Arizona to make public the jurors'
19 names and their city or town of residence.
20 MR. LYNAM: Your Honor, does the juror have an
21 option of saying, "I prefer that my name not be released"?
22 Because maybe some jurors are -- maybe that's where they are
23 thinking.
24 THE COURT: Well, that raises an interesting
25 matter. I have spent some time concerned with this issue.
12
1 And our jury plan is in accordance with the -- well, whatever
2 the statutory framework is for jury plans. There's a
3 statutory mandate that courts adopt a plan and that's set
4 forth in the Jury Selection and Service Act of 1968, 28 U.S.C.
5 1861. Our plan is in accordance with that statute and tracks
6 some of its language. And it says on the issue under
7 summoning of jurors, "Names drawn from the qualified jury
8 wheel shall not be made public until the panel of jurors have
9 been summoned and have appeared at the courthouse, provided
10 that the Chief Judge or designated judges may order the names
11 be made public at an earlier date or be kept confidential in a
12 case where the interests of justice so require."
13 That language tracks the language of the federal
14 statute. Where the interests of justice so require, however,
15 requires a hearing and findings and/or at the very least
16 findings. But, I mean, I assume there would be a hearing
17 because you would need to make the findings that are adduced
18 in connection with that issue. And I think it's certainly at
19 this point hard to imagine facts that would lead the Court to
20 make such a conclusion.
21 And so that's why I thought, well, I'll just tell
22 them that after the verdicts are received and as I'm thanking
23 them for their service and telling them about the fact that
24 there are two groups of people who no doubt would want to
25 speak with you, lawyers and media, and I'll tell them what
13
1 their rights are in that regard.
2 But, and then I would tell them that those names
3 would be made public then but because of this question, it's
4 raised it now. And if you think the response as I just gave
5 it to Grace -- do you have that, Grace?
6 THE CLERK: Um-hmmm.
7 THE COURT: So Anna would give it to them. But it
8 would come from the Court in the sense that it's not her
9 saying that that's what we do. It's the Court saying it.
10 That would at least give a response to them and put it out of
11 their mind. Is that fair enough?
12 MR. DOWD: Fair enough.
13 MR. CARDONA: That's fine.
14 THE COURT: Insofar as other security things while
15 we are on that for a moment. As I understand it, the
16 defendant and his family as well, I think, have spoken with
17 DPS personnel and they will, I guess, when I say the family as
18 well as the defendant will exit down the elevator and in
19 accordance with whatever security arrangements DPS has in
20 place for them.
21 With respect to the jury, after I thank them and
22 tell them that under our rules the lawyers can't approach
23 them, but if you wish to speak with lawyers you can, and then
24 sort of the same with the media except that the media can
25 approach them, I will tell them that they can do it or not.
14
1 And then I'm going to invite the jury in here for an informal
2 visit for probably about half an hour. And that will let the
3 courtroom be cleared.
4 You folks will probably be down -- it's not unlikely
5 that they might have a question or two for you. You know,
6 obviously, so they will be down there and you will be down
7 there. And I will tell them again here, now, like, you know,
8 this is entirely up to you. If you want to speak with the
9 media, that's fine, and if so, they certainly would be anxious
10 to talk with you. They have a table down there and they will,
11 you know, let you be heard and will have people from the
12 Marshal's Service down there as well just to make sure it's
13 orderly.
14 On the other hand, if you don't want to speak to
15 them, that is your decision -- and that is your decision,
16 then those of you who don't want to speak with the media, and
17 there may be a group of them, do any of you want to, yourself,
18 go down and advise the media of that or not. That's your
19 choice. If you don't want to, I would ask the clerk of our
20 court, Mr. Weare, to go down and just advise the members of
21 the media that the jurors have elected not to do so. And then
22 when they are ready to leave here, those who do not want to
23 visit with the media will be escorted down and out the front
24 door, but to vans and then be taken to their cars.
25 So I -- I want to share those plans with you to see
15
1 if -- if there was any comment on those matters. And
2 hopefully within about 15 minutes after the verdicts, the
3 courtroom can be cleared and locked. I know the jury wants to
4 see Merilyn's realtime and that kind of thing. So we will
5 take them back in there for a few minutes and do that.
6 All right. So, we've got that solved. Now let's go
7 back to this question.
8 First of all, does anyone see any reason that these
9 proceedings should not be sealed, both -- both aspects of it,
10 the --
11 MR. DOWD: We have no objection, Your Honor.
12 MR. SCHINDLER: No, Your Honor.
13 Your Honor, with respect to the jury note, we would
14 recommend that you read the third and fourth paragraphs on
15 page -- or write out the third and fourth paragraphs on page
16 68 in their entirety. In other words, you now have, "When you
17 retire," and then you picked up, "you will then discuss the
18 case with your fellow jurors to reach agreement if you can do
19 so." And then you have the first sentence of the --
20 THE COURT: Oh, I see. When you're saying -- you
21 mean second and third? Or second, third, and fourth?
22 MR. SCHINDLER: Second, third and fourth would be
23 fine, to read those in their entirety.
24 THE COURT: What I could do, of course, is just
25 simply reread this whole instruction.
16
1 MR. DOWD: That's what I would do.
2 THE COURT: Then we are not picking up and chopping
3 out. Does that sound good?
4 MR. DOWD: I think that's a good idea.
5 THE COURT: Then it would say, "In response to your
6 question, all jurors refer to the Court's instructions which
7 will be considered as a whole."
8 MR. DOWD: In particular you refer to --
9 THE COURT: "In particular, I would draw your
10 attention to the following instruction."
11 MR. CARDONA: And then either rewrite it or reread
12 it or just call their attention to it.
13 THE COURT: We will do it in writing and send it
14 back in to them.
15 MR. CARDONA: That's fine.
16 THE COURT: In particular, I would draw your -- draw
17 your attention to the following instruction and then just
18 quote page 68 and say with this and all of the other
19 instructions the Court reminds you of, you may return to your
20 deliberations.
21 MR. SCHINDLER: You might remind them that this is
22 the instruction that appears at page 68 of your packet so they
23 know it's not a new instruction.
24 THE COURT: To the following instruction which
25 appears at page 58.
17
1 MR. SCHINDLER: 68, Your Honor.
2 MR. DOWD: Page 68.
3 THE COURT: 68 of your instruction packet.
4 All right. Who was -- Cheryl, would you like to
5 put this into form?
6 Do you have the instructions on disk so that you can
7 just block --
8 THE CLERK: Cari has them.
9 THE LAW CLERK: I'll see if I can find them.
10 THE COURT: Can you read it? It's just the
11 handwriting now. Can you read that? If you can, you get --
12 you graduate to Cari's level.
13 THE LAW CLERK: What's in --
14 THE COURT: Gosh, I can't read that.
15 THE LAW CLERK: I assume it's in response but I
16 can't read that.
17 THE COURT: I'm wrong. It starts out here: In
18 response to your questions, all jurors are referred to the
19 Court's instructions which are to be considered as a whole.
20 In particular, I would draw your attention to the following
21 instruction which appears on page 68 of your instruction
22 packet. And then quote page 68, that whole instruction.
23 THE LAW CLERK: Okay.
24 THE COURT: And then just this last line with this
25 and all of the other instructions, okay?
18
1 THE LAW CLERK: Okay.
2 THE COURT: Off the record.
3 (A discussion was held off the record.)
4 THE COURT: Back on the record just a moment. In
5 dealing with the issues that have been presented here, does
6 any party feel that it is important to have the presence of
7 the defendant to consider these matters?
8 MR. DOWD: No. If I did, Your Honor, I would speak
9 up. You can assume, unless I tell you otherwise, you can
10 assume that it's unnecessary. I did communicate with the
11 Governor and I always tell him we are going to meet. And I
12 always tell him what my view is as to whether he should be
13 present or not.
14 THE COURT: I appreciate that and I just wanted to
15 make sure that --
16 MR. DOWD: Your Honor, I know there's a commotion
17 with the media. But, on the other hand, it's -- I would
18 rather see the note. I mean, you know --
19 THE COURT: That's fine.
20 MR. DOWD: I don't want to raise a hassle, but, on
21 the other hand, you know, I've got to report to him.
22 THE COURT: Exactly.
23 MR. DOWD: And he wants to know that I've looked at
24 it.
25 THE COURT: That's fine.
19
1 MR. DOWD: He trusts us and he gives us a lot of
2 leeway. He's a very easy man to represent. And we try to be
3 very careful. So I know it's a hassle but we have that extra
4 obligation there.
5 THE COURT: That's fine. We are done.
6 MR. SCHINDLER: The only thing we would ask --
7 THE COURT: We are still back on.
8 MR. SCHINDLER: Which is fine. Understanding
9 Mr. Dowd's concerns, the one advantage of having at least
10 notice at the time of the initial call is it allows us the
11 opportunity, for example, if this note had been read to us
12 even before we came over, if there were other materials to
13 bring or research, it would allow us --
14 THE COURT: I don't think --
15 MR. DOWD: I don't have any objection to that. I
16 don't have any objection to starting off with a call, no.
17 THE COURT: Sure. And in that way, then, if the
18 inquiry is insignificant, like we need more pens --
19 MR. SCHINDLER: Right.
20 THE COURT: -- then obviously we don't have to.
21 MR. SCHINDLER: That's essentially what we were
22 trying to communicate --
23 THE COURT: All right.
24 MR. SCHINDLER: -- earlier.
25 THE COURT: That's fine. We will do that. Let me
20
1 have back, if I might, the copies that I gave you just so we
2 don't have any of that kind of stuff from the sealed
3 proceeding around.
4 Now off the record.
5 (A discussion was held off the record.)
6 MR. SCHINDLER: You need the last line about they
7 should return to -- with this instruction in mind, they
8 should return to their deliberations.
9 THE COURT: Yeah.
10 THE LAW CLERK: Oh. Okay.
11 THE COURT: And do we want to single space and
12 indent the actual instruction so that it's clear that it's a
13 real instruction?
14 MR. SCHINDLER: That's fine.
15 THE COURT: All right. And I guess do I sign it
16 right on the bottom of that?
17 THE LAW CLERK: I'll ask Grace.
18 MR. SCHINDLER: Yes, you do, Your Honor, you sign
19 the bottom.
20 MR. CARDONA: Do you want these drafts back?
21 (A discussion was held off the record.)
22 THE COURT: And having reviewed the instruction or
23 rather the response to the jury's inquiry, is that appropriate
24 from the standpoint of the government?
25 MR. SCHINDLER: Yes, Your Honor.
21
1 THE COURT: And the defendant?
2 MR. DOWD: Yes, Your Honor.
3 (The court stood in recess.)
4 * * *
5
6
7 C E R T I F I C A T E
8
9
10 I, MERILYN A. SANCHEZ, do hereby certify that I am duly
11 appointed and qualified to act as Official Court Reporter for
12 the United States District Court for the District of Arizona.
13 I FURTHER CERTIFY that the foregoing pages constitute a
14 full, true, and accurate transcript of all of that portion of
15 the proceedings contained herein, had in the above-entitled
16 cause on the date specified therein, and that said transcript
17 was prepared under my direction and control.
18
19
20 DATED at Phoenix, Arizona, this 18th day of August,
21 1997.
22
23
24
25 MERILYN A. SANCHEZ, CRR
http://www.azcentral.com/news/symington/scripts/0815trans1.shtml
[an error occurred while processing this directive]
REPORTER'S TRANSCRIPT
OF PROCEEDINGS
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ARIZONA
UNITED STATES OF AMERICA, Plaintiff,
vs.
JOHN FIFE SYMINGTON, III, Defendant.
NO. CR 96-250 PHX-RGS
Phoenix, Arizona
August 19, 1997 1:38 p.m.
REPORTER'S TRANSCRIPT OF PROCEEDINGS
(Jury Question)
BEFORE THE HONORABLE ROGER G. STRAND
APPEARANCES:
For the Plaintiff:
David J. Schindler, Esq.
George Cardona, Esq.
Assistant U.S. Attorneys
312 N. Spring Street
1200 U. S. Courthouse
Los Angeles, California 90012
For the Defendant:
John M. Dowd, Esq.
Terence J. Lynam, Esq.
Luis R. Mejia, Esq.
Akin, Gump, Strauss, Hauer & Feld
1333 New Hampshire Avenue NW, Suite 400
Washington, D.C. 20036
Court Reporter:
Merilyn A. Sanchez, CRR
230 N. 1st Ave., Room 3411
Phoenix, AZ 85025
(602) 257-4204
Proceedings taken by stenographic court reporter
Transcript prepared by computer-aided transcription
2
1 P R O C E E D I N G S
2
3 (The following proceedings were held in chambers:)
4 THE COURT: The record may reflect the presence of
5 counsel, the absence of the defendant, the absence of the jury
6 in chambers in this closed proceeding, the reporters'
7 transcript of which and any notes reflective of the content of
8 this session shall be filed under seal.
9 Court has received a communication from the jury.
10 It is not a question but a statement. The Court has given
11 counsel a copy to review. I'll read it into the record.
12 "We, the jury, respectfully request that this
13 information be kept confidential.
14 "We have earnestly attempted to follow your last
15 directive to continue with our deliberations. However,
16 the majority of the jurors sincerely feel that the
17 juror in question cannot properly participate in the
18 discussion with us.
19 "Reasons: Inability to maintain a focus on the
20 subject of discussion.
21 "Inability to recall topics under discussion.
22 "Refusal to discuss views with other jurors.
23 "All information must be repeated two to three times
24 to be understood, discussed, or voted on. Immediately
25 following a vote, the juror cannot tell us what was
3
1 voted.
2 "We question the ability to comprehend and focus on
3 the information discussed.
4 "This is the same juror of concern in our last
5 communication.
6 "We have carefully read the instructions from the
7 Court and we feel that page 68, paragraph 3, addresses
8 our concerns.
9 "(Juror's name), foreperson."
10 The communication from the jury obviously poses a
11 significant problem for the jury and issues for the Court. At
12 the outset, I suppose it is important to try to characterize
13 the communication, that is to try to determine what it is
14 exactly that they suggest the problem is that they are
15 experiencing.
16 For example, is it a juror who they believe lacks
17 competence to perform the duties of a juror? That is perhaps
18 suggested by their reasons which indicate a concern to
19 maintain focus on the subject, inability to recall,
20 information needs to be repeated two to three times, inability
21 to recall the nature of the vote shortly after it's taken.
22 Or is it a disinclination to participate in the
23 deliberative process which might be suggested by the second of
24 the items under "reasons," specifically refusal to discuss
25 views with other jurors.
4
1 MR. SCHINDLER: That's the third thing. Just so
2 it's clear, that's the third thing that you read.
3 THE COURT: Pardon me?
4 MR. SCHINDLER: That's the third item. I'm sorry,
5 third item, refusal to discuss views with other jurors.
6 I would guess it would be either one of those two
7 characterizations. I don't know if counsel can think of any
8 others.
9 MR. DOWD: Well, it appears, Your Honor, there is a
10 reference, this is the same juror they had the problem with,
11 I've just got the record here of our previous meeting. And
12 let me read that record if you don't mind.
13 The question is, "Your Honor, we respectfully
14 request direction. One juror has stated their final opinion
15 prior to review of all counts. (Juror's name), foreperson."
16 So I expect that has to be put in the mix of the
17 list here, is this juror someone who has just made up their
18 mind or do -- and they don't want to go any further.
19 The only suggestion I have, Your Honor, is as I
20 really think if it is a question of competence or refusal to
21 follow the instructions of the Court, I think you've got to
22 make that determination somehow by having the juror in here
23 and inquiring. I mean I think there's a sufficient basis to
24 do that. What do you think?
25 MR. LYNAM: I think so, too. I don't know how else
5
1 you resolve it.
2 MR. SCHINDLER: Your Honor, I think, though I'm
3 somewhat in agreement with Mr. Dowd, but I think the inquiry
4 should be of the foreperson perhaps first, and the Court can
5 make inquiry of the foreperson to establish a factual record
6 to be able to make the determination the Court will ultimately
7 have to make if in fact there was a refusal to deliberate or
8 lack of competence. I think to establish that record the
9 Court should, I think, communicate first with the foreperson.
10 MR. DOWD: I have no problem with that.
11 MR. SCHINDLER: The note does suggest to us, Your
12 Honor, that it is both a lack of competence and a refusal to
13 participate in the deliberative process as required by that
14 juror. Our suggestion respectfully would be that you speak
15 first to the foreperson.
16 THE COURT: Has either counsel any experience with
17 the issue of removing a juror from a deliberating jury?
18 MR. SCHINDLER: There's a recent case, Your Honor,
19 in the Ninth Circuit that came down about a month ago dealing
20 specifically with removal of a juror for failing to
21 participate. And if we could be permitted a few moments, we
22 could go pull that up.
23 THE COURT: We may have that. Do you recall?
24 LAW CLERK GILES: Is that the one where it was a
25 habeas and they are following the state law instructions where
6
1 the --
2 MR. SCHINDLER: To be honest, Your Honor --
3 LAW CLERK GILES: That's the one I'm aware of -- but
4 the Judge doesn't have that one -- where they actually
5 substituted jurors.
6 MR. SCHINDLER: I think they actually removed the
7 juror and went to 11. But to be honest, off the top of my
8 head, Your Honor, I'm loathe to say without taking a moment.
9 I can make a phone call and get that answer for you.
10 THE COURT: Well, the clerks did some quick research
11 here and I haven't had a chance to look at any of them. I'm
12 not sure if that's one of the cases that was -- but none of
13 them appear to be as recent as you're speaking of.
14 Well, shall we ask the presiding juror to come in
15 here?
16 MR. DOWD: Yes, Your Honor.
17 LAW CLERK GILES: Does someone need to stay with the
18 other 11?
19 THE COURT: Pardon?
20 LAW CLERK GILES: Does the bailiff need to stay with
21 the other 11 while the foreperson is gone?
22 THE COURT: That isn't a bad idea because they
23 shouldn't be deliberating obviously, so it's as though they
24 are not in session --
25 MR. SCHINDLER: Is it possible to bring him in
7
1 through the court so he doesn't have to pass through the
2 reporters? Great.
3 Your Honor, perhaps just before the foreperson gets
4 here it might be appropriate for you to remind him before he
5 starts talking not to --
6 THE COURT: I will.
7 A JUROR: Hello.
8 MR. DOWD: Hello, (juror's name).
9 A JUROR: Would you like me to sit here?
10 THE COURT: Good afternoon. Please take the chair
11 over there, if you would.
12 The record may reflect the entry into chambers of
13 (juror's name), the presiding juror.
14 (Juror's name), we've asked you to come in here, of
15 course, because of the communication which you have sent to
16 us. And at the outset, let me make one thing clear. As we
17 discuss whatever we discuss, one thing we don't want to know
18 is anything about how the jury stands on any of the
19 substantive issues that are presented to you. So it's
20 important that you not discuss in any sense or reveal in any
21 way to us how the jury is proceeding substantively with the
22 issues that are before you for your consideration. But we, of
23 course, need to discuss with you the matters that you raised
24 in your communication.
25 You first sent a note to us on August 15th
8
1 concerning the same juror, as I understand it --
2 A JUROR: That's correct.
3 THE COURT: -- from your communication. And on that
4 occasion indicated -- indicated that one juror had stated
5 their final opinion prior to review of all of the counts. And
6 then we responded to that and you re-entered upon your
7 deliberations.
8 Your communication to the Court today indicates that
9 a majority of the jurors feel that the juror in question
10 cannot properly participate in the discussion with his or her
11 fellow jurors. And then you list a number of reasons. And I
12 think we need to understand from you the manner in which this
13 juror's actions appear to -- to you and your colleagues, that
14 is to say, is it your feeling that the juror is, for whatever
15 reasons, perhaps finding it difficult to be able to accomplish
16 the responsibilities of a juror, which would be more
17 reflective of his or her ability to accomplish those items, or
18 is it, on the other hand, in your judgment and the judgment of
19 your colleagues a concern for the willingness of the juror to
20 engage in the deliberative process as opposed to their ability
21 to engage in the deliberative process?
22 And I'm not sure whether that makes it clear enough
23 for you to help us --
24 A JUROR: It does, I believe.
25 THE COURT: -- to help us in that regard.
9
1 A JUROR: Let me tell you that it -- first of all,
2 that it was very difficult for us to come together to write
3 the letter.
4 THE COURT: I can understand it.
5 A JUROR: We all have affection for everybody
6 involved in our jury. And I think our first concern when we
7 first saw the problems might have been towards the direction
8 that you asked of the willingness. But with your direction to
9 return to deliberation, we -- we tried to proceed in that
10 manner. And it became more and more evident that it was the
11 ability and not the willingness.
12 Would you like any examples, or --
13 THE COURT: I think that would he helpful to us, if
14 you could.
15 A JUROR: We would table a subject and share
16 viewpoints between people. And this one juror
17 characteristically never seemed to pay attention and we would
18 come up to a vote, and to make sure that we were focused on a
19 specific idea, we would like read it again to say this is what
20 we are deciding on, not a broad spectrum, but this narrow
21 area.
22 And then it had to be repeated again, what we just
23 had maybe two hours of conversation on this narrow subject.
24 We would vote. And then when we became suspicious of the
25 problems of concentration and memory and other abilities, we
10
1 would say after the vote, "Now what did we just vote on?" And
2 it's sad to say that we never got an answer back. We would
3 get a rambling discourse about many things. And we would stop
4 and say, "Excuse me, but we had asked a question on this
5 subject." And the juror could not remember what we had just
6 talked about.
7 We felt that the juror wasn't being a member of our
8 group and participating. We are very much enthusiastic about
9 hearing all viewpoints. And we wanted to hear this viewpoint,
10 too. And the viewpoint could not be expressed when we pressed
11 and said, "Please tell us why you feel this way." And we
12 never got an answer that even related to that question.
13 Pretty rambling.
14 MR. SCHINDLER: Your Honor, could the Court inquire,
15 has this happened more than once?
16 A JUROR: This happens repeatedly on every issue
17 that we come up to. And it's been to the point where we've
18 almost had a, I won't say an interpreter, but someone to sit
19 next to her and say, Now here's the document, or Here is the
20 item, or the issue at hand. Do you remember this? And trying
21 to help and say, Here's exactly what we are talking about.
22 And it never seemed to work.
23 When we would question and say on something, some
24 people have this view and others, we would like to give and
25 take and see what it is, we would get an answer saying, "I
11
1 don't feel a need to talk to anyone. I don't have to explain
2 anything. You're all picking on me."
3 And we would immediately respond, "Oh, gosh, no, we
4 are friends here." We heartily encourage any viewpoint to be
5 tabled.
6 MR. DOWD: Your Honor, this was occurring prior to
7 the note we received the other day, or is it subsequent to the
8 note we received the other day? In other words, do you think
9 it's because of the final opinion that the juror had reached,
10 or was it something that was occurring prior to the juror
11 rendering a final opinion?
12 A JUROR: It's hard to say.
13 MR. DOWD: I'm just wondering if it's a person who
14 has rendered a final opinion, dug in their heels, and just is
15 not going to cooperate anymore, or is it more complicated than
16 that?
17 A JUROR: We all seem to express a desire and a
18 recognition of the need to share information, because as sharp
19 as we all might want to be in the notes that we take and our
20 recollection, I'm sure, can be aided by someone else. And we
21 have a fairly open share of information between people. And I
22 think at first we were taking information from this juror and
23 believing it was this free exchange of information in part of
24 it. But as we progressed, all of us started to notice these
25 statements coming that made no sense.
12
1 And from your response, we tried to focus more upon
2 deliberation and working together. But it's just not really
3 functioning that way.
4 MR. DOWD: I see.
5 MR. SCHINDLER: Is this juror --
6 A JUROR: It also affects the rest of us.
7 MR. DOWD: It sure does.
8 A JUROR: If we feel that perhaps there is -- we
9 have one of our group that isn't giving a hundred percent in
10 all of their abilities to help us make our decision, it's sad
11 to say that maybe we must question our decisions because we
12 didn't have the benefit of their information to help us. And
13 I think that goes to the direction of where we are coming
14 from. We want to do a good job and do it properly.
15 MR. DOWD: Your Honor, is the juror aware of this
16 note to the Court?
17 A JUROR: Yes. No communication has been sent
18 without everybody being in on it, agreeing, and my signature
19 has been on it because I've been the presiding juror. But
20 nothing has been done without everybody in agreement and
21 sharing into it and spending some time in organizing our
22 thoughts.
23 THE COURT: What juror --
24 A JUROR: And it was hard to say this.
25 THE COURT: Sure.
13
1 A JUROR: It almost gets to the point of wondering
2 if someone might be too old to keep up. I hate to say it.
3 MR. SCHINDLER: Sure.
4 A JUROR: Because we have affection for everybody
5 there.
6 THE COURT: What is the perception of the juror, as
7 this note was being formulated, and as the perceived necessity
8 to create the note, what -- how did that juror react and
9 indeed did he or she have anything to say --
10 A JUROR: Yes.
11 THE COURT: -- to say with respect to sending it?
12 A JUROR: There's a lot of thought that went into
13 coming to that point to write that. Some of us were brought
14 to tears over it and I was one of them. It's tough to do. So
15 we tried to communicate and to ask for views and feedback and
16 how do you feel about this and what do you think. Please
17 understand what we're saying and why we're saying it and what
18 is your feedback.
19 And for a long time we got disconnected answers that
20 were rambling and really had nothing to do with it.
21 MR. SCHINDLER: The answers --
22 A JUROR: Then there was some anger. Then there was
23 some resignation of do what you want. But we constantly at
24 all times tried to communicate. "We care about you and we
25 want to be friends. We have a concern here and this is where
14
1 our concern comes from. Could we please talk about this issue
2 or if you have something to relate to us, we would certainly
3 like to hear it." And our answers back were very rambling and
4 not to the point at all.
5 MR. SCHINDLER: Just so it's clear, the answers that
6 you got back seemed to not make sense even to the question or
7 what was going on in this note?
8 A JUROR: Correct. And that was our concern. We
9 want to work together as 12 and we feel that we are 11
10 with -- we don't know.
11 THE COURT: Anyone have any other questions?
12 MR. SCHINDLER: No, Your Honor.
13 MR. DOWD: No, Your Honor.
14 THE COURT: Anything further that you think could be
15 of assistance to us at this point, (juror's name)?
16 A JUROR: No. I think we took some time to put the
17 letter together. I think it expresses our views. We quoted
18 one page and a paragraph because I think that addresses
19 directly our concerns about the proper deliberation process.
20 And I don't think that it's proceeding properly with that in
21 mind.
22 Again, we would like everybody's viewpoint to be
23 known and expressed freely and openly without reservation and
24 the proper way to express it. And we are not getting that at
25 all. And we can ask a direct question --
15
1 THE COURT: Your perception of the reason is not
2 that this juror has just made up his or her mind and just
3 doesn't want to talk about it further, but is something else,
4 would you say?
5 A JUROR: Yes.
6 THE COURT: I don't mean to suggest --
7 A JUROR: At first we almost felt it was someone
8 that had their mind made up, which we were trying to work with
9 and around. Everyone is certainly entitled their opinion.
10 That's what this is about. But as it progressed and we tried
11 to press for that opinion, because maybe it would affect ours
12 and we wanted that input to add to ours and share, we got such
13 rambling answers that we were all looking at each other around
14 the circle like, my gosh, this answer's so off the wall it is
15 not connected to the discussion in any way. And we would
16 finish a vote or a discussion or something that was tabled.
17 The discussion might have taken an hour. We would end and
18 immediately say, Now what did we just talk about? And we
19 never could get an answer that answered what we just finished
20 talking about.
21 THE COURT: Thank you very much, (juror's name).
22 MR. SCHINDLER: Thank you.
23 THE COURT: We will --
24 A JUROR: Thanks for listening to our letter and
25 responding to it.
16
1 THE COURT: Thank you very much.
2 (Juror's name)?
3 A JUROR: Yes.
4 THE COURT: We need to ask you who the juror is
5 though so that we may speak perhaps with that juror.
6 A JUROR: Yes, it was Mary Jane Cotey.
7 THE COURT: You got that?
8 A JUROR: And that was some of the reason of asking
9 for quiet -- it's kind of a delicate subject and we have
10 affection for the lady and would not like to embarrass anyone,
11 okay?
12 THE COURT: Thank you, (juror's name).
13 (The presiding juror exited chambers.)
14 THE COURT: Who is that juror, Grace, do you know?
15 THE CLERK: She's 161. She's the lady with the
16 broken arm.
17 THE COURT: Any comments from counsel?
18 MR. DOWD: Well, Your Honor, I think you've got to
19 inquire of her and it involves -- her competence has been
20 called into question, her ability to follow the Court's
21 instructions. I think it's only fair -- the fair thing to do
22 to her before we make a decision.
23 LAW CLERK GILES: Your Honor, (juror's name) asked
24 what he should tell the other jurors if they ask him what was
25 said, which he's sure they will. Do you want me to bring him
17
1 in to have you answer?
2 THE COURT: Yes, if you would.
3 (The presiding juror re-entered chambers.)
4 A JUROR: Yes, sir.
5 THE COURT: That's certainly a fair question. And I
6 think the best response to your colleagues is just that we
7 asked you to elaborate concerning the matters expressed in
8 your communication to us and that we will pursue the matter
9 further. We will speak with the juror.
10 I think probably that's about all that need be
11 said. In other words, there isn't much more that we have.
12 A JUROR: Would it be all right if I don't say that
13 you will speak to the juror and you will summon the juror if
14 you wish?
15 THE COURT: That's fine.
16 A JUROR: Is that all right if I say they are
17 talking about it and I expressed our opinions?
18 THE COURT: That's fine. Thank you, sir.
19 (The presiding juror exited chambers.)
20 MR. SCHINDLER: Your Honor, I'm a little concerned
21 about bringing the juror in, especially in front of all of the
22 parties. If she is feeling attacked or for whatever reason is
23 not able to comprehend properly, bringing her in in front of
24 all of the lawyers, I think, would only exacerbate. Nor do I
25 think it really is going to help the ultimate decision that is
18
1 really before us. Because the issue here really goes to
2 whether or not, based on what (juror's name) has told us, this
3 juror is competent to serve as a juror.
4 It appears she is not. And I'm not sure that
5 questioning her, certainly questioning her in front of the
6 lawyers will add anything to that fact-finding mission.
7 I concur with Mr. Dowd that ultimately if she is
8 excused, the Court would need to speak with her. But I don't
9 think that's going to add anything to the mix in light of the
10 note and the fact that it is the 11 other jurors who are
11 indicating that this juror is unable to function as a juror.
12 MR. DOWD: Your Honor, I completely disagree. We
13 are going to participate in this process. This is a juror.
14 This juror -- there's only one way to find out. The juror
15 knows she's serving in this capacity. The Court has got to
16 make the inquiry. I think, you know, we could be of
17 assistance to the Court, depending on how it goes. But I
18 would not agree to any inquiry of a juror without being
19 present.
20 MR. SCHINDLER: I'm not --
21 MR. DOWD: I think you need to do it. I think it's
22 the only fair thing to do.
23 THE COURT: There's no question in my judgment that
24 it has to be done and at the very least that lead counsel
25 should be here. I guess what Mr. Schindler is suggesting is
19
1 the less burdensome the event is for her, the better. And but
2 I don't mind if all of the lawyers are here. We can -- we
3 can lessen the presence of people just to lessen the
4 embarrassment or the concern that she might have. Certainly
5 lead counsel should be here. But as I say, all counsel can be
6 here if they choose to be. And I think that would be all
7 right. But I could ask Grace and the law clerks to excuse
8 themselves just to make it a little less --
9 MR. DOWD: I have no quarrel with that.
10 THE COURT: -- public for her.
11 Before we bring her in, what lines of inquiry do you
12 think best to pursue with this sort of a matter? I mean
13 obviously --
14 MR. DOWD: Your Honor, I would ask her if she is
15 aware of really the contents of the note and maybe in a more
16 gentle way some of the problems they have. I mean you don't
17 have to repeat exactly what they said, but I think that I
18 would find out what she knows about it, but also in reference
19 to the event of the other day, whether the fact that she had
20 reached a final opinion. I think it was the 15th. And then
21 to proceed through the note.
22 MR. SCHINDLER: Your Honor, I would disagree with
23 that last question that Mr. Dowd asked. I don't think it's
24 appropriate to ask a juror essentially where she is standing.
25 MR. DOWD: I didn't. If she reached a final
20
1 opinion. That's all I asked. I didn't ask what the opinion
2 was. But that's the predicate for this note.
3 MR. SCHINDLER: Our view, Your Honor, is that the
4 Court should inquire about the deliberative process and about
5 the note rather than get into reaching final opinion or not
6 reaching final opinion. And perhaps one of the areas the
7 Court can inquire about is what is her understanding of why
8 the Court has asked her to come in. I mean, if, in fact, she
9 is unable to even articulate what the problems are with her
10 fellow jurors, that might be indicative of some competence
11 questions.
12 THE COURT: What is the juror's name?
13 LAW CLERK GILES: Mary Jane --
14 THE COURT: I can't hear you.
15 LAW CLERK GILES: Mary Jane Cotey, C-o-t-e-y.
16 Cotey.
17 MR. DOWD: C-o-t-e-y, Your Honor.
18 MR. LYNAM: Your Honor, one observation I have to
19 listening to the presiding juror is that maybe this juror
20 has -- has just thought that this has gone on long enough and
21 she just doesn't want to discuss it anymore and so she is
22 responding that way because she's sort of getting tired of
23 them and the way they are handling it. And we don't know, and
24 maybe she's totally competent and has an opinion and she's
25 already reached her opinion and she just is reacting this way
21
1 based on the way the rest of the jurors are responding. So --
2 MR. SCHINDLER: But, Your Honor --
3 MR. LYNAM: -- I think we have to inquire along
4 those lines as to whether that's what the problem is.
5 MR. SCHINDLER: We disagree strongly, Your Honor.
6 That would be an inappropriate inquiry. What the presiding
7 juror told us is not what Mr. Lynam is suggesting. What he
8 told us was she was having difficulty participating, not that
9 she was reaching opinions. In fact, he told us several times
10 that her responses seemed to be nonsequiturs in response to
11 what the questions were that were being posed, nor was she
12 able even to articulate what they were discussing. And that
13 is a far cry from someone who has reached an opinion and is
14 simply attempting to hold their ground.
15 If, in fact, this was a juror who had simply reached
16 an opinion and was attempting to hold her ground, she
17 certainly would have no problems saying the issue on the table
18 is X, and I happen to believe it's one way and the rest of you
19 or six of you or whoever believe differently. But that's not
20 what we were hearing from the presiding juror.
21 LAW CLERK GILES: Your Honor?
22 MR. DOWD: Your Honor, let me add one thing if I
23 could. I recall this juror being -- answering questions on
24 voir dire. She's an elderly woman from Illinois. She was
25 very cogent and coherent. That's why I was a little bit
22
1 surprised when she was identified. When she was in here with
2 her broken arm and it had to be rebroken, I found her to be
3 remarkably clear and coherent for a woman her age. I mean,
4 and particularly as cool as she was when she was about to have
5 her arm broken. I think she said she didn't even want to take
6 Tylenol or something like that, whatever the record reflects.
7 So that's why I think Mr. Lynam's point is well
8 taken. It's -- I have a picture of Ms. Cotey that is
9 different than what is being described by the presiding
10 juror.
11 MR. SCHINDLER: Of course, the difference, Your
12 Honor, is that our interactions with her have been brief. Her
13 fellow jurors have been with her for five or six days. And I
14 think one of the most salient points that (juror's name)
15 articulated is obviously a fondness for her and they would
16 have no reason whatsoever to want to bring up an issue such as
17 this that is difficult if there really were not fundamental
18 problems with her ability to function as a juror. And I think
19 the jurors are entitled to substantial deference based on
20 their observations with this juror. I think ultimately the
21 Court is going to want to --
22 LAW CLERK GILES: Your Honor, Rose and I had two
23 dealings with her just prior to the jury going in to
24 deliberate on the first day that might shed some light on this
25 issue. The first one is when the government had handed out
23
1 that exhibit to all the jurors and then we needed to collect
2 it, we announced to all the jurors we needed to collect that
3 exhibit and they all handed it in but we only had 11. And we
4 specifically said, "Who has not turned theirs in?" And
5 Ms. Cotey was right in front of me and Rose and were standing
6 together.
7 We said, "Who has not turned one in? Have you
8 turned one in?" No one said anything. Finally the woman next
9 to her said, "Oh, let's see if she has," and looked through
10 her book, looked through Ms. Cotey's book, and said, "Oh, here
11 it is," and gave it to us. Then we walked into the jury
12 room. And Ms. Cotey had no idea whether or not she was an
13 alternate.
14 LAW CLERK THOMAS: I asked the jurors, "Who are the
15 alternates?" And three people raised their hands right away.
16 And she was standing next to me and I asked her, "Are you an
17 alternate?" And she said, "I have no idea." So she was not
18 aware of whether she was an alternate or not.
19 I would also mention that she is unable to complete
20 her lunch menu without assistance of another juror.
21 THE COURT: Well, would you bring her on in. We
22 need to speak with her.
23 And, Grace, if you and Rose and Cheryl would excuse
24 yourselves.
25 (Juror Cotey entered chambers.)
24
1 THE COURT: Good afternoon, Ms. Cotey, please come
2 and join us and grab a seat here if you would, please.
3 JUROR COTEY: Thank you.
4 THE COURT: You know all of the lawyers here.
5 How's your arm feeling? Has that gotten better?
6 JUROR COTEY: It's getting better. I'm getting a
7 little more pressure and movement in it.
8 THE COURT: That's good. How long ago did you get
9 your --
10 JUROR COTEY: Rebreak?
11 THE COURT: Your -- well, no, the cast off.
12 JUROR COTEY: Oh, it was about a week and a half
13 after the rebreak, which was about the 4th of June.
14 THE COURT: Well, that's nice to have that
15 progressing.
16 We are here because we got a communication from all
17 of you and can you tell us really the essence of that
18 communication? What is it that all of you are trying to tell
19 us by that?
20 JUROR COTEY: Well, for one thing, I can't agree
21 with the majority all the time, at least temporarily. And I'm
22 still researching and looking for more in the case. And so
23 we've -- I nominated the foreman and it was never formally
24 accepted. And then it lost its businesslike quality along the
25 way and he lost his indolent attitude.
25
1 The man that parked up against the wall like this
2 (indicating) all of a sudden turned to this (indicating),
3 which was all right. It had nothing to do with me.
4 But I found myself backed up against the wall for a
5 vote every time, an objection to my vote on a specific count
6 or an element of the count.
7 THE COURT: One thing I would ask you is to not tell
8 us anything about any of your --
9 JUROR COTEY: No, I won't.
10 THE COURT: -- about your vote.
11 JUROR COTEY: You are talking about the human.
12 THE COURT: We are talking about the procedure but
13 don't tell us about any issue.
14 JUROR COTEY: That's how it was going. And I seem
15 to be isolated each time with a "yes" or "no." "Well,
why?"
16 "Well, can you prove it?" It's not up to me, et cetera.
17 And then a couple of voices in place, I would lose
18 the question over here when I was trying to answer this
19 question over here. And I gave up and whatever I said.
20 THE COURT: What -- what are the concerns of your
21 fellow jurors? Can you tell us what you think they are
22 with -- in other words, what did they -- what were they
23 trying to tell us by this message?
24 JUROR COTEY: All I can think of is a settling of
25 the thing. They are talking about with a complete unanimous
26
1 vote. They don't seem to want to put it off for a while
2 because we've been through it enough, things like that. It's
3 a lot of them have to go back to work. A lot of them have
4 families, things like that.
5 THE COURT: Is there any difficulty in discussing
6 issues fully amongst all of the varying jurors? Does anybody
7 have any -- any problems in that respect?
8 JUROR COTEY: No, I don't think so. When we get an
9 isolated or specific thought or way to go on it, we discuss
10 that thoroughly, as far as I'm concerned. But then we demand
11 a vote immediately and, you know, and if anyone objects,
12 everyone starts talking.
13 THE COURT: Is there anything about the process that
14 is not working? I mean the procedure as you see it of
15 deliberating? Is there --
16 JUROR COTEY: No, I wouldn't say so, not about the
17 process as it stands, as I see it.
18 THE COURT: Any -- any thoughts from counsel?
19 MR. SCHINDLER: No, Your Honor.
20 MR. DOWD: No, Your Honor.
21 Maybe the last one on the first page, Your Honor, of
22 the note.
23 THE COURT: When -- when you're considering issues
24 in the case, does -- do one of you raise an issue and then
25 you all try to focus on that and discuss it, or procedurally
27
1 without talking about how you --
2 JUROR COTEY: We are going through the Indictment in
3 that respect trying to include our notes -- the method you
4 are talking about?
5 THE COURT: Um-hmmm.
6 JUROR COTEY: Our notes from the trial based on the
7 Indictment, your rules, and like that. But there's a --
8 seems to be a need to end -- to find an end in each one with
9 a vote which can't seem to be put off for another day or
10 delayed for another day. And --
11 THE COURT: Well, if -- if a juror has a differing
12 view as to how to decide an issue, do you discuss that
13 freely?
14 JUROR COTEY: Maybe you've got it now. It's sort of
15 when we have a majority maybe vote one way or the other, then
16 everybody brings in their arguments all at once all around the
17 table without maybe the businesslike manner of identification,
18 recognition, you know, something like that. It's kind of a
19 free-for-all at that point.
20 I hate to say that because everyone seems to be in
21 very pleasant moods and have good attitudes towards each
22 other. Maybe it is the familiarity, I don't know, that we all
23 pop in all of a sudden.
24 THE COURT: Well, do you find that you are not able
25 to resolve different points as you go along, or I assume that
28
1 someone will suggest that there's a subject matter that you
2 want to talk about --
3 JUROR COTEY: Um-hmmm.
4 THE COURT: -- and then you discuss that?
5 JUROR COTEY: Um-hmmm.
6 THE COURT: And then what do you do? Take a vote as
7 to how you all feel about a particular issue?
8 JUROR COTEY: Um-hmmm.
9 THE COURT: And is that process working
10 appropriately or not?
11 JUROR COTEY: Well, I would say if there was a --
12 if they are all affirmative and one negative vote or something
13 like that, the other way around, negative and one affirmative,
14 everybody's up -- uptight, gets up and tells exactly at the
15 same time, "Why?" Then it gets personal. Then it gets
16 pointed. Then it gets lectured. And I don't feel like it's
17 run very businesslike, to tell you the truth or courtwise.
18 In any group you've got to have some type of
19 organization, but you also have to have some kind of pulling
20 together as opposed to --
21 THE COURT: How would you suggest procedurally the
22 process go forward in a more effective way?
23 JUROR COTEY: Oh, no, I think it's just the people.
24 I think the process --
25 THE COURT: Pardon?
29
1 JUROR COTEY: I think the process and the
2 businesslike attitude is good. And I think possibly we can --
3 we have come close to each other. We've known each other's
4 foibles and faults. Jokes start to relieve the tension. I
5 think it's tension for a long time to tell you the truth, in a
6 way.
7 MR. DOWD: Your Honor, does she have any difficulty
8 understanding issues?
9 THE COURT: Could you hear the question? Do you
10 have any difficulty understanding the issues that are
11 presented?
12 JUROR COTEY: I don't believe so. I don't think
13 so. Did somebody say that?
14 THE COURT: Well, we are just trying to determine
15 what -- what was your understanding of the concerns expressed
16 by your colleagues.
17 JUROR COTEY: Well, you read what my colleagues
18 said. I mean my colleague read what he said. And I realized
19 I was the one isolated. But I also realized I told him I was
20 a separate juror and had a right and I didn't like being
21 bullied down on a point. So -- which meant he didn't get a
22 vote again.
23 So I just felt like I was being rushed too far to a
24 unanimous vote on item one, two, three, whatever we are
25 talking about, on everything. You need some time to gather
30
1 things together in your head and to compare things back and
2 forth. There are points at which you're not ready to say,
3 "yes" or "no."
4 THE COURT: Are you fully willing to discuss all of
5 the issues with your fellow jurors?
6 JUROR COTEY: Yes, if they will come at me one by
7 one and not un, deux, trois, quatre, you know.
8 THE COURT: I'm not sure --
9 JUROR COTEY: If there is a dissenting vote, Your
10 Honor --
11 THE COURT: Pardon?
12 JUROR COTEY: If there is a dissenting vote, and you
13 get five to six voices at you to explain yourself, I'm told I
14 have to explain my vote. I haven't even made it fully yet.
15 This is a "yes" or "no." It's not a vote. And you get
16 different personal things like, "Well, you have to explain
17 yourself." I don't have to explain anything. I'm still
18 trying to make judgments here.
19 And then I feel it's because of that, it's a little
20 pressure, but it hasn't bothered me that much. I can take
21 it.
22 THE COURT: Any other --
23 MR. DOWD: No, thank you, Your Honor.
24 MR. SCHINDLER: No, Your Honor.
25 THE COURT: -- areas of inquiry?
31
1 MR. SCHINDLER: No.
2 THE COURT: Thank you, Ms. Cotey. If you would
3 rejoin your colleagues for the moment.
4 JUROR COTEY: I hopes it satisfies. Thank you,
5 gentlemen.
6 (Juror Cotey exited chambers.)
7 THE COURT: Comments by any counsel?
8 MR. SCHINDLER: Your Honor, I think it's sad, but
9 unfortunately some of her answers were nonsequiturs in
10 response to the Court's questions. And she seems to have
11 moments that are lucid and then I think what (juror's name)
12 described we saw here where her answers would be disconnected
13 from the question.
14 The Court asked her several times what the note was
15 about and she seemed to have difficulty even articulating what
16 this note says. And it is very unfortunate and it is sad. It
17 does appear that she is -- in addition, it's almost an
18 antithesis of what Mr. Dowd had asked about earlier about her
19 having reached a final opinion and been dug in, and in the
20 same sentence she says, I haven't reached any votes at all.
21 Some of the responses were simply not coherent.
22 We would ask that the Court excuse her and either --
23 defense's request or choice, either bring in an alternate or
24 go to 11. Because she's clearly having an impact on the
25 ability of the jury to perform its function.
32
1 MR. DOWD: I disagree. I didn't find any of her
2 responses -- I didn't have any difficulty understanding
3 exactly what she said or that she comprehended what the
4 problem was. I think she feels a little bullied and
5 pressured. But as she said, she can put up with it, the
6 difficulty. I thought she answered the questions very well
7 and I would object to her being excused.
8 THE COURT: The issue is obviously a very
9 significant one in the case. We have heard, in effect, two
10 witnesses and there have been two observations.
11 There are really two ways to proceed. Well, there's
12 several, I suppose.
13 MR. DOWD: May I make a suggestion, Your Honor? I
14 would have no objection to inquiring of two more jurors. I
15 mean, I was surprised. I think there are -- I don't think it
16 hurts to take a little bit more testimony. That may be of
17 assistance to the Court. And I might suggest one of the
18 jurors is a (juror's name), who sits next to her. I would be
19 interested to hear what she has to say because she sits next
20 to Mrs. Cotey throughout the trial, always seemed to look
21 after her, help her with her water and, you know, with her arm
22 and so forth. I don't know if the Court would find that of
23 assistance. But I would have no objection to it.
24 Would you?
25 MR. LYNAM: No.
33
1 MR. DOWD: If we had a little more testimony.
2 MR. SCHINDLER: Only concern we have, Your Honor, is
3 that the more we turn this into a mini trial, with testimony
4 and -- we are straying far afield from in essence what the
5 jury is charged to do. And even our selection, for example,
6 of which two jurors, to use Mr. Dowd, would be in and of
7 itself of some concern or discussion of the remaining ten at
8 this point and why we chose this one and that one and not all
9 ten. And it starts to get problematic.
10 MR. DOWD: Well, Your Honor, let me put it this
11 way: You are -- you understand when you say it's a
12 significant problem. I have never seen anything like this.
13 And the only way I know to try to get to the bottom of it is
14 for the Court to inquire and we've got appropriate
15 circumstances. And if the Court wants to inquire of the
16 remaining ten, I have no objection. But whatever you think
17 would assist you in trying to get a better handle, because I
18 don't think you have a good handle now. You've got --
19 MR. SCHINDLER: May I make one --
20 MR. DOWD: I think these two jurors have butt heads
21 a little bit.
22 MR. SCHINDLER: May I --
23 MR. DOWD: Let me finish, please.
24 I just think that whatever we can do to continue to
25 search for information, that makes for a better decision. And
34
1 that's what I think we ought to do.
2 MR. SCHINDLER: I have no quarrel with what Mr. Dowd
3 says. May I make a suggestion, Your Honor, so that perhaps it
4 will aid?
5 (Juror's name) indicated that this note was a
6 jointly crafted note of the remaining 11. I think, in
7 essence, asking all 11 if this note reflects their
8 understanding of the problem as opposed to something else
9 might provide the additional type of information Mr. Dowd is
10 suggesting short of bringing them in individually to conduct
11 an inquiry. And a simple response from the Court, is this
12 note -- does this note reflect the observations and beliefs of
13 all jurors, all 11 jurors, and have them uniformly either
14 agree or disagree, that will, at a minimum, avoid any
15 suggestion that this is simply (juror's name) butting heads
16 with Ms. Cotey.
17 And I should add, (juror's name)'s demeanor
18 suggested anything other than someone who was butting heads.
19 He clearly was troubled and saddened by even being in that
20 situation. And it didn't strike me as a juror who was having
21 personality conflicts with one juror. Rather, it was a juror
22 who was trying desperately to come to some consensus in terms
23 of the process. But in any event, that might be one way to do
24 it in short.
25 THE COURT: Well, I think it is -- it's a very
35
1 significant issue. It's one that all of the jurors are
2 obviously aware of because they did draft the note together
3 and I think it probably makes sense to bring each one in. And
4 I think the inquiry can be brief and just say we have received
5 an inquiry -- a note from you. And, in fact, we could have a
6 copy for them so that they could refresh their own mind as to
7 exactly what was articulated and then ask them if that is
8 their understanding and belief with respect to the matter
9 and/or if anyone has any other question, we can ask them --
10 MR. DOWD: I didn't --
11 THE COURT: It would give us a feel and it would let
12 us know that if there was an error in that, someone could
13 point that out to us. And if they are -- and I'm not so sure
14 that it will be unanimous, because the --
15 MR. DOWD: It says majority.
16 THE COURT: It says a majority of the jurors. So
17 that doesn't necessarily indicate that it's everyone's
18 perception. And it would be --
19 MR. SCHINDLER: May I make one request, Your Honor?
20 I think the inquiry should be very limited and should be done
21 just by the Court. And I think simple question of what's your
22 understanding of what the problem is, or some articulation.
23 THE COURT: Maybe what's your understanding of what
24 the problem is.
25 MR. DOWD: That's fine. But I don't want to be --
36
1 I don't want to be cut off from suggesting questions to the
2 Court.
3 THE COURT: No, you can.
4 MR. DOWD: Some may occur to me.
5 THE COURT: I'll look to each of you. And if you
6 have a suggestion that you think is appropriate, there's
7 nothing wrong with that and you can suggest them to the
8 Court. And I'll either restate them or allow them to come
9 through me.
10 MR. LYNAM: One suggestion after we ask the question
11 what's your understanding of what the problem is, it seems to
12 me a follow-up we need to ask is is the problem
13 insurmountable, something like that. Is the problem something
14 that you can resolve among yourselves? You know, is this --
15 MR. DOWD: Perhaps something the Court can --
16 MR. LYNAM: That the Court could ask.
17 MR. DOWD: Yeah.
18 MR. LYNAM: Is this an insurmountable problem or can
19 you work it out yourselves.
20 MR. DOWD: You can say is there something I can do
21 to assist.
22 MR. CARDONA: I think that last is a very good
23 idea.
24 THE COURT: I'm sorry, George?
25 MR. CARDONA: I think that last is a very good idea
37
1 asking if there's anything you can do to help, any instruction
2 or guidance that you can provide.
3 MR. SCHINDLER: I think in your inquiry, Your Honor,
4 given what the issues are, it's fair for you to ask them as
5 well does this other juror appear to understand. I mean I
6 think you can follow along the lines of the concerns raised by
7 (juror's name), namely this inability to articulate what the
8 vote was or what the issue was that was on the table just
9 moments before.
10 THE COURT: Okay. Let's take a three-minute break
11 while we make a copy of this for the juror and while we do
12 other items.
13 MR. DOWD: Your Honor, is that Ninth Circuit case
14 available?
15 THE COURT: Why don't you speak with Rose and maybe
16 we can find it.
17 (A recess was taken.)
18 THE COURT: The record may reflect the return of
19 counsel. At this point I guess we may as well just bring in
20 each member of the jury in order.
21 Grace, do you have the -- what will you use, the
22 diagram that you have?
23 THE CLERK: Or I'll go pull my exhibit -- or my --
24 my appearance sheet. It's in the courtroom.
25 MR. SCHINDLER: Your Honor, just at the outset if
38
1 you could make sure that they don't --
2 THE COURT: I'm sorry?
3 MR. SCHINDLER: At the outset, if you could tell
4 each juror not to tell us how they are standing or how they
5 are voting.
6 THE COURT: Yes.
7 Grace, what have we got?
8 THE CLERK: I have their attendance list by number,
9 and I think they all know their numbers. If you want to call
10 their number, (juror's number), which is the third juror.
11 THE COURT: Okay, just let us know what their name
12 is as you bring them in, right?
13 LAW CLERK GILES: Did you get a copy of this?
14 THE COURT: No.
15 LAW CLERK GILES: Does he want us in or out?
16 THE COURT: What is this case?
17 LAW CLERK GILES: That's the case that Mr. Schindler
18 had referred to.
19 MR. SCHINDLER: In essence, Your Honor, it says if
20 the Court finds good cause to excuse a juror.
21 THE COURT: Okay.
22 MR. SCHINDLER: That's a basis. But ultimately
23 you're going to have to make a factual determination.
24 MR. CARDONA: But, Your Honor, I think the case also
25 stresses the importance of not inquiring as to how anybody is
39
1 voting and making sure that the jurors understand that you are
2 not interested in how they are voting.
3 THE COURT: Who do we have coming?
4 LAW CLERK GILES: The first person would be (juror's
5 name), Juror (juror's number).
6 THE COURT: Okay.
7 LAW CLERK GILES: Do you want me to go get her?
8 THE COURT: Yes, that would be good.
9 LAW CLERK GILES: Do you mind if the law clerks sit
10 in or not?
11 THE COURT: That's fine.
12 LAW CLERK GILES: Okay.
13 THE COURT: Now, where's my copy of the questions?
14 MR. DOWD: Your Honor, they took it to be copied.
15 MR. SCHINDLER: You can borrow mine.
16 MR. DOWD: I gave it, because you wanted to give
17 copies to the jurors and I gave it to Grace.
18 MR. SCHINDLER: You are welcome to mine.
19 Grace, would you just get me one, please.
20 (A discussion was held off the record.)
21 (Juror's name) entered chambers.)
22 THE COURT: Good afternoon, (juror's name). Please
23 come forward and grab a seat here in the seat we have reserved
24 for you.
25 A JUROR: Okay.
40
1 THE COURT: Thank you for joining us. You know we
2 received a communication from you through your presiding juror
3 and we just wanted to talk with you a little bit about that.
4 At the outset let me caution you to please be sure
5 you don't tell us anything about how any of you stand on any
6 of the substantive issues.
7 A JUROR: Okay.
8 THE COURT: We just really want to talk about the
9 communication you sent to us and how that is affecting your
10 ability as a jury to go forward.
11 Merilyn just handed you a copy of the note. And I
12 guess you, perhaps, all saw it or at least you discussed it
13 when it was being created.
14 And I wonder if you could tell us in your own words
15 how you see the problem that is represented by the note that
16 you sent to us.
17 A JUROR: Okay. Well, we will be discussing a point
18 and then all of a sudden she will ask a question that is not
19 even related to what we are discussing. She will be on a
20 different count when we are actually on another one.
21 And then a lot of times we will ask her -- ask her a
22 question because she will -- well, from the questions she's
23 asked, then everybody stops and everybody says, "Well, which
24 one are you looking at?" And then she will tell us. And we
25 will say, "Well, we are not on that one, we are on this one."
41
1 And she will say, "Well, I know, but I'm looking at
2 this one because I have a question."
3 And we will say, "But we are supposed to be
4 following what we're doing."
5 And she says, "Well, I am." And that kind of throws
6 everybody off.
7 THE COURT: You have -- are there any other specific
8 examples that you --
9 A JUROR: Well, and also and it's been -- it
10 started about a couple of days after we were discussing and we
11 keep asking her, "Are you following us?" And she will say
12 yes, but she's still reading her notes from another one. And
13 she's been doing this all along. That's why we keep
14 wondering, is she actually understanding the point we are at.
15 And a lot of times when we are actually discussing
16 some of the points or the elements, she will say, "Well, what
17 element are you at?"
18 And we will say, "Well, aren't you following what
19 we're saying?" And she will -- and then she will go off on
20 another tangent, completely different from the one we are
21 discussing.
22 THE COURT: Do you think that it's an issue of her
23 willingness to deliberate, or is it more her ability to
24 deliberate effectively, or do you have -- is that a fair
25 question to ask?
42
1 A JUROR: Yes, because I've actually been -- since
2 so many of us have been paying more attention to this now
3 since we've been hearing her with some of our discussions,
4 I've been listening more to what she's been talking about when
5 the whole group is discussing something and I'm listening to
6 her. She's keeps mumbling something else. And then she just
7 goes off on her own. And a lot of times we will ask her
8 directly, she will say, "Well, I am, I am."
9 And then sometimes we'll nudge her on the arm and
10 say, "Are you listening to what we are discussing?"
11 And she will say, "Yes, yes, yes." And then I'm
12 trying to tell you, so not to tell you where we're at.
13 THE COURT: Do you think she can -- do you think
14 there's anything that I can do by way of any other
15 instructions or anything to assist in the -- in the
16 situation, or what is your --
17 A JUROR: When we discuss the actual instructions,
18 some of the times when she -- she reads the instructions as
19 she's reading the instructions that we point out or she --
20 when we ask her a question, she goes through the instructions
21 and then she starts talking about the instructions. And then
22 she starts relating other things like to me that are way
23 outside of the case. Like it would have happened to me
24 because I know her a little bit now. It's like if she's
25 talking about something that happened before this case. And
43
1 it seems like she's bringing things that she knows of that
2 she's not keeping everything -- all the evidence that we have
3 seen, she's not keeping just to that evidence that's in the
4 case itself.
5 I don't know if I'm expressing myself correctly
6 or --
7 THE COURT: No, that's fine. Anything else you
8 think we ought to know about the situation that could help?
9 A JUROR: Just like we put in the letter, a lot of
10 times when we are agreeing to say -- to vote on an issue or
11 whatever and she will look at us and then say, "What issue was
12 that?" Or, "What document are you looking at?"
13 And we are saying, "Well, we just finished
14 discussing it two minutes ago."
15 THE COURT: Anything further?
16 MR. DOWD: No, Your Honor.
17 A JUROR: At one time --
18 THE COURT: Thank you for helping us in this
19 regard. We are going to touch base briefly with each of you
20 because it's a matter that you all really brought to our
21 attention so we want to speak with all of you.
22 A JUROR: Yeah, because like we don't want to say,
23 okay, we finished. At one point we finished voting on some
24 issues and then she came back and put all her papers down and
25 says, "Well, I don't agree with anything."
44
1 And we said, "But you voted."
2 She says, "Well, I don't agree with anything
3 anymore."
4 And so to us, you know, is she going to change her
5 mind afterwards either way? And that's what worries
6 everybody, is after the fact is she going to turn around,
7 whichever way she agreed and dismiss everything that she's
8 agreed to before.
9 MR. SCHINDLER: Your Honor, if the Court could ask,
10 does she even remember what had gone on before that she is
11 disagreeing with? The note suggests -- there are some places
12 in the note that suggest she doesn't even remember what had
13 been discussed previously. And if the Court could just ask if
14 the juror read the note and the issues described in the note.
15 THE COURT: Yes, looking at the note, is there
16 anything with respect to the reasons that are set forth there
17 that you would choose to comment on, I mean that you haven't
18 already?
19 A JUROR: Well, the inability to recall topics under
20 discussion, that's the -- that has some of the worry is that
21 like I just said, we will be talking about it and she will say
22 two minutes later, "What were you discussing?" And she will
23 remember some of the things we discussed last week, but she's
24 not concentrating or remembering what we are discussing right
25 now.
45
1 But then, you know, she will just, like I said, she
2 put her paper down and said, "I'm not talking about it anymore
3 and I'm not discussing it with you." And that's what worried
4 is when she said, "I'm not discussing it."
5 "Why is that your point of view? Can you let us
6 know, you know, because that's the way we understood we are
7 supposed to discuss. And if it's your point of view, let
8 everybody know your point of view." But she won't discuss
9 it.
10 THE COURT: In other words, she -- she is not
11 sharing with you her ideas on the --
12 A JUROR: And even when she is asked point blank,
13 you know, we -- if you give us an example why you think this
14 way, maybe, you know, we will discuss it and we just would
15 like to know your point of view, but she won't discuss her
16 point of view. She just tells us -- like she will just go
17 like I said, she will start discussing something and it's like
18 she's way in the past. And then we will say, "But that's not
19 relevant to what we are discussing."
20 And she says, "Yes, it is."
21 THE COURT: Anything further?
22 MR. DOWD: No, Your Honor.
23 MR. SCHINDLER: No, Your Honor.
24 THE COURT: Thank you very much for your help in
25 this regard.
46
1 (Juror's name) exited chambers.)
2 THE COURT: Who's next, Grace?
3 THE CLERK: I gave my listing to Cheryl. Maybe I'll
4 go get a second sheet for us.
5 (Juror's name) entered chambers.)
6 THE COURT: Good afternoon. Please come on in and
7 join us here and grab a seat there, if you would, (juror's
8 name).
9 As you know, of course, we are here because all of
10 you sent us a communication through your presiding juror. And
11 we would like to just follow up with you on that a little bit
12 and get your thoughts on it.
13 And could you tell us what your understanding really
14 is of the -- of the problems that prompted the note that you
15 sent to us?
16 And Merilyn's got a copy of it there if you just
17 want to review it. But more or less in your own words, what
18 do you see the difficulty being?
19 A JUROR: Well, I guess we all pretty much got
20 somewhat flustrated (sic) throughout the process. We were
21 following the directions.
22 THE COURT: And one thing I forgot to mention.
23 While you're discussing these things with us, be sure you
24 don't tell us anything about how you stand --
25 A JUROR: Yes, sir.
47
1 THE COURT: -- on any of the substantive issues or
2 how any of you stand on any of the substantive issues. We are
3 just trying to find out how the process is working or --
4 A JUROR: Yes, sir.
5 THE COURT: That's the subject.
6 A JUROR: Well, like I said, we kind of get very
7 flustrated because we were trying to follow the process
8 through the deliberation -- of the deliberation. And we
9 pretty much would cover all of the facts, the evidence, and
10 everything, and then we would come to a point where we would
11 want to make a decision one way or the other. And which we
12 would try to make a vote or we would make a vote of the five
13 elements. And she would stick on two of the elements every
14 time, because she didn't -- she just kept getting stuck on
15 two elements because that's how she felt and she wouldn't
16 really explain to us her rationale of her way she wanted to
17 vote.
18 THE COURT: As you -- as you look at the reasons
19 stated by the writer of this note, can you sort of comment as
20 you go along on those reasons? Are those factors that you
21 noticed or not?
22 A JUROR: Yeah, and I made a point one time that I
23 was very uncomfortable with what was happening, and that was
24 once we brought all of our evidence and we decided that we
25 were going to vote on this particular document and we were all
48
1 ready to vote, she would -- she would ask, "Which document is
2 that going to be now? Where did this document come in play?"
3 Lots of questions.
4 So I called it a side-bar meeting was being taken
5 place between her and another juror who was explaining to her
6 everything that we had previously covered. It may have been
7 for a day. She would whisper to her information.
8 So I was very uncomfortable that we were having,
9 after we had collectively decided to vote, she had a lot of
10 questions and we had to refresh her memory. It was one person
11 describing to her everything that we've covered. And I didn't
12 feel comfortable with it because I thought she was being given
13 an opinion from one person and not all of us and making -- in
14 trying to get her to vote on the elements.
15 Then she would vote. But she -- she would do that
16 (indicating) and when we were all done she would say "I voted,
17 but I was bullied into my vote. I was persuaded. It was not
18 my personal feeling or my personal vote," she would say.
19 THE COURT: When she would say something like that,
20 would she explain to you why it wasn't her vote and would she
21 say, Can we revote on this, or let me explain my viewpoint?
22 A JUROR: At one time she told us that her mind was
23 made up. She knew how she was going to vote. Her decision
24 was made. She was more than happy to go through the evidence,
25 but her mind was made up. We weren't going to convince her
49
1 one way or the other.
2 THE COURT: Was that at a point in the process where
3 you had all reviewed all of the evidence or when -- when in
4 the process would that have occurred, if you recall?
5 A JUROR: Well, it's happened more than once where
6 she's changed her mind. It's happened typically after we get
7 done with one count and the five elements. It's happened more
8 than one time.
9 THE COURT: When you're saying that to us that she
10 would say her mind was made up, are you talking about on one
11 small point that was under discussion, is that your
12 understanding of it or --
13 A JUROR: On one element. One element, I don't know
14 if I can say which number it is. Can I?
15 THE COURT: No. No, that's not --
16 A JUROR: There's one element that she felt very
17 strongly about.
18 THE COURT: But when you say that she said her mind
19 was made up, "I don't mind going through this, but my mind is
20 made up," are you saying that she said that with respect to an
21 element or a fact or about a broader range of things than
22 that, if that's a fair question for you?
23 A JUROR: She's said it on certain counts. And
24 she's also said it on every count that when we -- when we get
25 all done with covering all of the counts and the elements, we
50
1 were going to make a final vote one way or the other. And she
2 says, that's -- she's going to stick to -- well --
3 MR. SCHINDLER: Your Honor, if the Court could
4 inquire, it sounds like she's both saying -- if the Court
5 could ask is she saying simultaneously sometimes she's saying,
6 "I made my vote, I'm going to stick to it," and then at some
7 points switching her mind?
8 A JUROR: She does that.
9 MR. SCHINDLER: So that it isn't just a situation
10 where she's made up her mind and is sticking to that, but
11 rather is doing both?
12 A JUROR: She does both. Like I said, and she
13 will -- she will vote like this (indicating) and go along
14 with the vote. And then later on the next morning, when we
15 come in, she will say, "I've changed my mind." It's been
16 going on for a few days. A few weeks.
17 THE COURT: When she says something like that, "I've
18 changed my mind," does she try to set forth for you the
19 specific issue that she's changed her mind on and why she has
20 changed her mind on it in an effort to try, perhaps, to
21 persuade others to her view, or not?
22 A JUROR: She does not try to persuade us or give us
23 any rationale from why she's changing her vote or why she
24 voted that way. She did say one day that, I think it was the
25 first day or something where she was changing her mind, the
51
1 next day she came in, she said that that was the best night of
2 sleep she's ever had since the trial had started and she feels
3 that she's at peace with herself now, if that makes sense.
4 THE COURT: Looking down the list there, are there
5 any other comments that you think are important for us to
6 consider about this matter or anything that you don't agree
7 with that's on the list?
8 A JUROR: No. We all pretty much agreed, you know,
9 we don't feel she's been able to maintain focus of the
10 discussion and that's basically because when it's over with,
11 we have the little so-called side bar with her.
12 THE COURT: Is that always with the same person?
13 A JUROR: Yes.
14 THE COURT: Pardon?
15 A JUROR: Yes. I'm not sure of her name. She was
16 just in here prior to me.
17 THE COURT: But it is always the same person?
18 A JUROR: Same person. As a matter of fact, when we
19 first started, I was sitting next to her. And everybody voted
20 to move me from my chair to her chair and put her over next to
21 her so she can consult with her and keep bringing her up to
22 speed, let her know what -- what direction we are heading and
23 stuff like that.
24 MR. SCHINDLER: Does she not appear to know what
25 you're doing when the group is deliberating?
52
1 A JUROR: She does until we get ready to vote. I
2 feel she's very intelligent. She knows what's happening.
3 It's just I feel she just does not want to listen to the facts
4 and make a decision based on the facts. Her mind is made up.
5 And that's creating a problem with us because we feel the
6 flustration -- the word I use flustration, is we go through
7 the motions knowing what the results are going to be.
8 THE COURT: Any other questions for --
9 MR. DOWD: Should we inquire as to anything you can
10 do, Your Honor?
11 THE COURT: Do you think there is anything that the
12 Court can do to help alleviate this difficulty?
13 A JUROR: Well, I said there's probably the only
14 things we can do and that would be completely go through the
15 process like you instructed us to, but I do know what the
16 outcome is going to be, other than a few items that we -- we
17 do mutually agree upon. And that would be an undecided vote,
18 a hung jury or I don't know if you -- if there was a
19 replacement person that can come in, I don't know the process
20 of how that works.
21 THE COURT: All right.
22 MR. SCHINDLER: Your Honor, can the Court simply
23 inquire of the jury, are these reasons, do you agree with the
24 reasons that are set forth on this letter that was sent? That
25 this is an accurate description from your perspective?
53
1 A JUROR: Yes, I do.
2 MR. SCHINDLER: Thank you.
3 THE COURT: Anything else at this point?
4 MR. DOWD: No, Your Honor, thank you.
5 MR. SCHINDLER: No, Your Honor.
6 THE COURT: Thank you, (juror's name), if you will
7 rejoin your group. I appreciate it. Because of the nature of
8 this, we are just going to touch base briefly with all of
9 you.
10 A JUROR: Yes, sir.
11 (Juror's name) exited chambers.)
12 THE COURT: Who do you have next, Grace?
13 THE CLERK: Number (juror's number).
14 THE COURT: (Juror's name).
15 LAW CLERK THOMAS: Excuse me, Judge, may we take the
16 rest of the jurors on a break?
17 THE COURT: Well, not all of them. I mean just keep
18 one or two so we can keep this process going forward, if you
19 would.
20 LAW CLERK THOMAS: Okay.
21 (Juror's name) entered chambers.)
22 THE COURT: Would you come on in and join us,
23 please.
24 (Juror's name), I think you've met -- you certainly
25 know everybody here.
54
1 A JUROR: Uh-huh.
2 THE COURT: You have sent a message to us through
3 your presiding juror and, of course that's the reason we
4 wanted to take a moment to speak to each of you.
5 And let me ask Merilyn to just hand you a copy of it
6 so that you can refresh your memory of what was presented to
7 us. And then let me ask you, if you can, to just tell us, in
8 your own words, the problem as you see it. Is it accurately
9 described in the memorandum --
10 A JUROR: Yes.
11 THE COURT: -- in your judgment?
12 And is there anything else that you would add to
13 it?
14 A JUROR: No, not really. I think this has started
15 from day one of our deliberations. And we really have tried
16 very hard to go through and do what we are supposed to do and
17 she just seems like she's not listening. She's not paying
18 attention. And she will wander off and she will be looking
19 for exhibits or testimony from somebody that doesn't even have
20 anything to do with the count that we are deliberating on.
21 And this morning we had taken a preliminary poll on
22 one of the counts --
23 THE COURT: Oh, you know, I keep forgetting to tell
24 people. One thing I want to make sure you don't do is talk to
25 us at all about any substantive aspects of the case, how any
55
1 of you stand on any issue.
2 A JUROR: Right. I won't. I will just say that we
3 had taken a preliminary poll and (juror's name) said, "Is this
4 everybody's feelings?" And she didn't answer. And I said,
5 "Do you understand what we just did?"
6 "Yes."
7 "Can you tell me what we just voted on?"
8 "No." And it just makes it almost impossible for
9 us to go on deliberating when it doesn't appear that she
10 really understands what we are doing.
11 THE COURT: Do you think it's an issue of
12 willingness to deliberate or --
13 A JUROR: At times.
14 THE COURT: -- or ability to deliberate?
15 A JUROR: I personally feel it's her ability to
16 deliberate. And she has stated that she has an opinion and
17 this is her opinion and this is the way she's going to vote
18 and we can go ahead and do what we want to do, but this is the
19 way that she's going to vote.
20 THE COURT: Any -- any questions that you would
21 like the Court to pose? Anything you think the Court could do
22 to alleviate the difficulty?
23 A JUROR: The only thing I can see if there's some
24 way that we could get an alternate in here even if we have to
25 go back and start all over again, I think it would be fairer
56
1 to everybody involved if we had people who really understood
2 what they were doing.
3 And I like her. She's a terrific little lady, but I
4 don't think she understands what the jurors' responsibilities
5 are. And she may have been inhibited because she had a broken
6 arm and couldn't take good notes for a while. But her recall
7 isn't there. And she -- she doesn't even seem to understand
8 what we are doing.
9 THE COURT: Anything further?
10 MR. SCHINDLER: No, Your Honor. Thank you.
11 MR. DOWD: No, Your Honor.
12 THE COURT: Thank you very much for helping us.
13 (Juror's name) exited chambers and (juror's name)
14 entered chambers.)
15 THE COURT: Yes, sir, please come join us.
16 THE CLERK: Juror (juror's number), (juror's name).
17 THE COURT: Good afternoon, sir.
18 A JUROR: Good afternoon, Your Honor.
19 THE COURT: You, through your presiding juror, of
20 course, sent us a note and we were concerned, of course, about
21 that and wanted to speak with each of you briefly about that.
22 And let me ask Merilyn to give you a copy of the note just so
23 that you have it and can refresh your memory of how it is
24 expressed to us.
25 Maybe you could tell us your understanding of the
57
1 problem and/or whether or not you agree with the letter in all
2 respects as it's presented to us, the note, I should say.
3 A JUROR: She does seem to have a problem saying on
4 the topic. We would be talking about things like signing a
5 personal note --
6 THE COURT: Oh, one thing. Again, please, I should
7 have told you this at the very beginning. Don't tell us at
8 all anything about how you or any of the other jurors stand on
9 any of the issues in the case. All we want to talk with you
10 about is the procedure that all of you are engaged in and
11 whether it's working or not.
12 A JUROR: Okay. She would wander off the topic that
13 we are talking about. She will allude to things that have
14 absolutely nothing to do even with the count that we are
15 talking about. There is a juror that tries to explain things
16 to her. And after we've gone through it and we've all
17 discussed the evidence that we are looking at, she has to be
18 shown it again and have somebody go over it again, which, you
19 know, is slowing us down.
20 And then she doesn't really, I don't know, I hate to
21 say, she doesn't seem to comprehend it. At times she seems an
22 extremely intelligent woman. I'm sorry. I shouldn't have
23 said that much.
24 MR. DOWD: That's all right.
25 THE COURT: It's fine.
58
1 MR. SCHINDLER: We know it's a woman.
2 THE COURT: That's fine.
3 A JUROR: But then she seems to drift off. I don't
4 know other than that to explain. I'm not, you know, trained
5 in psychology or anything like that, or I've had experiences
6 with my mother-in-law, who was an elderly lady when she passed
7 away and she would have a tendency to kind of drift off, too.
8 And but all in all -- and she does refuse to
9 discuss her views. That part is true. She just seems to have
10 her mind set. She says she doesn't have to explain herself to
11 anybody. I'm trying to remember some of her phrases.
12 She just seems stubborn about certain things.
13 MR. DOWD: Is there anything the Court can do to
14 assist to resolve this problem?
15 A JUROR: I really don't know. I've never been
16 involved in anything this complex. So I really don't know
17 what the steps are.
18 MR. SCHINDLER: But the letter is accurate, the
19 summary of what's going on?
20 Does she forget what's just been voted on?
21 A JUROR: It would appear that way. It would
22 certainly appear that way because she -- she will ask a
23 question. When we were discussing one thing, she was asking a
24 question of what count we were on and we weren't. We were
25 discussing this particular problem. So I don't know if she
59
1 has a hearing impairment or just doesn't concentrate. I mean
2 everybody can drift off and think about something else once in
3 a while. But this was time after time after time. It's
4 really disconcerting and it's frustrating to us.
5 THE COURT: Well, thank you very much for assisting
6 us. We appreciate it.
7 THE COURT: Grace, who was that?
8 (Juror's name) exited chambers.)
9 (A discussion was held between the courtroom deputy
10 and the Court and not reported.)
11 THE CLERK: Now we are on (juror's number), (juror's
12 name). Just so you know, (juror's number) and (juror's
13 number), those are alternates coming up.
14 THE COURT: What do you mean they are alternates
15 coming up?
16 THE CLERK: On the seating chart.
17 THE COURT: I don't know what that even means. Just
18 tell me who's coming in, that's all.
19 THE CLERK: (Juror's number).
20 THE COURT: So we have (juror's number), which is
21 (juror's name).
22 MR. DOWD: Your Honor, would you mind, I don't know
23 quite how you do it. The only thing that's troubling me is
24 the jurors were talking about having a view because they
25 disagreed with her. And that's --
60
1 THE COURT: Sure. I mean that's certainly
2 appropriate to have a disagreement.
3 MR. DOWD: I mean and I don't -- I mean I don't
4 want to know what their view is or opinion.
5 THE COURT: No, I understand that. Well --
6 MR. DOWD: I mean are they upset because she's dug
7 in her heels and taking a position?
8 THE COURT: I'll see.
9 MR. DOWD: That's what I'm a little worried about.
10 THE COURT: I understand.
11 (Juror's name) entered chambers.)
12 THE COURT: Good afternoon. Sir, why don't you come
13 on up and take a seat here, if you could.
14 (Juror's name), you know all the folks who are
15 here. Please grab a seat.
16 We asked you to join us because of the note that you
17 sent to us through your presiding juror. And at the outset,
18 let me make it clear that we want you to be very careful not
19 to tell us anything about how you or any of your colleagues
20 feel about any substantive issue in the case. And all we are
21 here to talk about is just procedure and whether it's working
22 or not working the way it ought to.
23 And so in that respect, let me ask you to take a
24 look at the note that your colleagues sent and tell us if you
25 think that fairly presents the issues or if there are any
61
1 other ways you would characterize it, or any other comments
2 that you think we should have in mind as we are discussing
3 this issue.
4 A JUROR: It seems to be fairly accurate. Her
5 refusal to discuss the views with other jurors, she just
6 doesn't seem to be able to put in words her views. That seems
7 to be about the only thing that I can see.
8 THE COURT: You might just sort of go down that list
9 and if you have any comment on any or all of those, either
10 examples or whether you think that's a fair way to present it
11 or --
12 A JUROR: Well, her inability to maintain focus on
13 the subject of discussion. We will be discussing one count
14 and she will be looking through her notes and then she will
15 ask me, since I'm sitting next to her, about a different count
16 or a different topic trying to clarify her notes.
17 Inability to recall topics under discussion, there
18 was a point where other jurors asked her what are we on and
19 she would say either the count number or something but she
20 wouldn't be able to recall the actual document we just looked
21 over.
22 And that's one of the reasons why many of the jurors
23 feel that she has an inability to comprehend what we are
24 doing.
25 MR. DOWD: When there's a question when they are on
62
1 one count and she asks about another, is that under the same
2 charge? Because I mean there are a number of counts that are
3 under the same charge and I'm just wondering if it would be
4 the same elements, but it might be a different count.
5 THE COURT: Is it something that relates to the
6 subject under discussion?
7 A JUROR: On many it's a different series of counts
8 altogether.
9 MR. SCHINDLER: What about number four, the
10 suggestion that she doesn't recall what was just voted on? Is
11 that something that you observed?
12 A JUROR: Yeah. That was something that they --
13 they would ask her what document did we just look at and she
14 would be unable to recall that. She would say the count
15 number. But she would be unable to, plus they were kind of
16 grilling her, too, so --.
17 THE COURT: Is there anything that you think the
18 Court can do to alleviate this situation?
19 A JUROR: Not that I could recommend.
20 MR. DOWD: Does the -- does the -- do the
21 questions from other jurors stem from the position that she's
22 taken on a particular count or series of counts?
23 A JUROR: Well, she's kind of said that she's taken
24 a blanket position and that's where the main point of
25 contention is. Since we haven't gone through all the counts
63
1 and she doesn't -- there really -- they are trying to say we
2 need to go through them all before you make your decision on
3 them all. And she's just kind of blanketly said that she's
4 taken her position.
5 MR. SCHINDLER: Does she change her mind at all?
6 A JUROR: Not that I recall.
7 THE COURT: Anything further?
8 MR. DOWD: No, thank you, Your Honor.
9 THE COURT: Thank you very much. We appreciate your
10 helping us with this issue.
11 A JUROR: Thank you.
12 (Juror's name) exited chambers.)
13 THE CLERK: The next juror will be (juror's number),
14 (juror's name).
15 (Juror's name) entered chambers.)
16 THE COURT: Good afternoon, (juror's name), please
17 come join us here.
18 A JUROR: Right here?
19 THE COURT: Yes, sir. You certainly know all of the
20 group here.
21 We are visiting with you, of course, because of the
22 note that your colleague, the presiding juror, sent to us.
23 And let me ask Merilyn to hand you a copy of it just so that
24 you have it in mind.
25 As we discuss these matters, let me first say to not
64
1 tell us, whatever else you do, to not tell us how you or your
2 colleagues stand on any of the issues. We just want to talk
3 with you a little bit about the process and what is raised in
4 the note here.
5 A JUROR: All right.
6 THE COURT: With that in mind, if you could tell us
7 the dif- -- the issue as you see it with respect to your
8 colleague and whether or not you think this fairly summarizes
9 the problems.
10 A JUROR: I do.
11 THE COURT: And if there's anything that you would
12 like to add as you go down that list.
13 A JUROR: The main thing is when we are going over a
14 subject, it just seems that they are not attentive to it.
15 They can't seem to discuss it with us. When we ask them
16 questions, they are not able to really talk about the
17 subject.
18 THE COURT: Now you say "they." Are you talking
19 about somebody -- just the one?
20 MR. SCHINDLER: We know it's a she, so you can --
21 A JUROR: Yeah. Just the one.
22 THE COURT: Just the one juror. And tell us again
23 what you're saying?
24 A JUROR: Just the comprehension of the subject that
25 we are talking about. She will come back with something else
65
1 that to me has no meaning to the subject that we are talking
2 about. And it seems like she's just not comprehending what we
3 are -- what we are talking about and what we are doing.
4 THE COURT: Anything --
5 MR. DOWD: Is there anything the Court could do,
6 (juror's name)?
7 A JUROR: What's that?
8 MR. DOWD: Is there anything the Court could do to
9 assist in resolving it?
10 A JUROR: Well, we've been working hard --
11 MR. DOWD: I'm sure you have.
12 A JUROR: -- to try to get her to participate. And,
13 you know, it's just -- she doesn't seem to be able to join in
14 the discussion and help us along, you know. So it's a
15 problem. We just -- everything we do, we have to explain it
16 three or four times and still then we will ask a question.
17 It's not answered.
18 THE COURT: Well, I thank you very much for helping
19 us with that.
20 Anything further?
21 MR. DOWD: I don't, Your Honor.
22 THE COURT: Thank you.
23 (Juror's name) exited chambers.)
24 THE CLERK: This is Juror (juror's number), (juror's
25 name).
66
1 (Juror's name) entered chambers.)
2 THE COURT: Good afternoon, sir, please come and
3 have a seat right here, if you would, (juror's name).
4 We obviously have asked you to come and join us
5 because of the note that you sent to us through your presiding
6 juror.
7 A JUROR: Yes.
8 THE COURT: At the outset, let me make sure to
9 emphasize that we ask you to be very careful not to tell us
10 anything about how you or any of your colleagues stand on the
11 substantive issues. We just want to talk about the process
12 and the procedure that's raised in the note.
13 Let me ask Merilyn to give you a copy of what your
14 presiding juror sent to us. And let me just ask you to take a
15 look at that and see if in your judgment that fairly sets
16 forth the -- your position or if you have any slightly
17 differing views or largely differing views. Certainly please
18 let us know what those might be.
19 A JUROR: No. I'm well aware of what's in here and
20 I concur completely with what it says here.
21 THE COURT: Could you give us an example of the kind
22 of problem that seems to be the problem that you face?
23 A JUROR: As I see it, I think that she's -- she's
24 unable to comprehend. She doesn't follow along with the rest
25 of us. And our deliberation, she is just unable to -- to --
67
1 when she does speak about something, it has nothing whatsoever
2 to do with the subject matter that we are involved with. And
3 it's kind of flustrating (sic) because we do go in a lot of
4 detail in looking at the documents, discussing them. And she
5 just does not seem to know, have any idea of what we are
6 doing. That's my opinion.
7 THE COURT: Anyone have any -- is there anything
8 you think the Court can do to help alleviate this?
9 A JUROR: Well, I think we've tried in there just
10 to -- just to help her and take -- take the extra time, you
11 know, and go through this again just with her individually in
12 detail. And it just doesn't seem that we are making any
13 progress with her getting involved. She's just come to the
14 conclusion -- well, she just does not want to participate.
15 That's the way I look at it.
16 MR. DOWD: Does that resolve from her position on
17 the issues, Your Honor?
18 THE COURT: Yeah, my question was going to be, is
19 that because you think she has reviewed all the evidence and
20 thought things through and come to a decision?
21 A JUROR: Not at all. No. No, that isn't the case
22 at all. That's my opinion. She just -- she certainly has
23 not reviewed all the evidence.
24 THE COURT: Anything else?
25 MR. DOWD: No, Your Honor.
68
1 MR. SCHINDLER: No, Your Honor. Thank you.
2 THE COURT: Well, we thank you for helping us with
3 this.
4 (Juror's name) exited chambers.)
5 THE COURT: Now which --
6 THE CLERK: Juror (juror's number), (juror's name).
7 (Juror's name) entered chambers.)
8 THE COURT: Good afternoon. Please grab a seat. We
9 are speaking with each of you because of a note that your
10 presiding juror sent to us, of course.
11 And at the outset, let me just emphasize that we
12 want you to be very careful not to mention anything to us
13 about how you stand or how any of your colleagues stand on any
14 of the substantive issues in the case. But we are concerned
15 about the process and the procedure.
16 Let me ask Merilyn to give you a copy of the note
17 your presiding juror sent to us. And let me just ask you in
18 your own words to tell us what the difficulty is, if it is a
19 difficulty, as you see it, and as it is set forth in the
20 reasons here, or would you have any differing way to describe
21 it, or what would you say?
22 A JUROR: I think the note was pretty accurate. We
23 are just finding it difficult because we will discuss
24 something and she doesn't know what we are discussing. And
25 then we will go over it two or three more times and then we'll
69
1 say, "Okay, now what did we just discuss?" And she can't tell
2 us.
3 As a matter of fact, she did not even know the
4 difference between the Indictment and the instructions in the
5 very beginning.
6 THE COURT: Is it your view that her situation is
7 one -- is it a matter of willingness to deliberate, or is it
8 a matter of ability to deliberate, would you say, or
9 comprehension?
10 A JUROR: I think she's not comprehending
11 everything. But she will also say she made a decision but she
12 won't give us any reasoning or she won't share with us, you
13 know, the background of how she came up to that decision so
14 that we could all share in and all talk about it.
15 THE COURT: Any other examples or anything of that
16 sort that you think --
17 A JUROR: Just the stuff that was really scary was
18 when we had gone over something several times and we said,
19 "What did we just vote on?" And she could not pull out what
20 we just voted on.
21 And we just wanted to be fair to Mr. Symington that
22 everybody understands what's going on.
23 THE COURT: Do you think there's anything that the
24 Court can do at all to assist in this problem?
25 A JUROR: I don't know. I don't have any experience
70
1 in this so I don't know what you guys do.
2 MR. DOWD: We don't either.
3 THE COURT: All right. Anything -- anything else?
4 MR. DOWD: No, Your Honor.
5 THE COURT: Thank you very much for helping us.
6 (Juror's name) exited chambers and (juror's name)
7 entered chambers.)
8 THE CLERK: Juror (juror's number), (juror's name).
9 THE COURT: Good afternoon. Would you come and grab
10 a seat here, please.
11 A JUROR: Good afternoon.
12 THE COURT: Good afternoon.
13 A JUROR: Thank you.
14 THE COURT: You know everyone here, of course.
15 A JUROR: Very well.
16 THE COURT: We are here because of the note that
17 your presiding juror sent to us, of course. And at the
18 outset, let me just make sure that it's clear that as we talk
19 about the note and this matter, please be careful not to tell
20 us anything about how you or any of your colleagues stand on
21 any of the substantive issues. We just want to talk about the
22 procedure and what prompted the note and how -- and how that
23 matter should be handled.
24 Let me ask Merilyn to give you a copy.
25 A JUROR: I didn't bring my glasses, but I know what
71
1 it says.
2 THE COURT: I'm sure that's correct. But I just
3 wanted you to have it. And just to ask you if you could tell
4 us in your own words how you see the issue and difficulty and
5 whether you feel the note fairly describes the problems that
6 are being experienced and examples or anything other than that
7 that you think we ought to know about with respect to this.
8 A JUROR: Thank you. I agree with what's in the
9 note. I think we could have expounded more. But I don't
10 think any of us want to point a finger wrongly.
11 I feel that what I have seen, the juror does not
12 concentrate on the issues. The juror is not aware of what
13 count we are considering. Some have even asked, "Do you know
14 what we just voted on?" She cannot even tell us the one that
15 we've done.
16 She will be asking to another juror, generally one
17 sitting next to her, well, did this have anything to do with a
18 company or something. And he will say, "That has nothing to
19 do with the count we are on." And she goes to look through
20 notes.
21 And I realize this woman was at a disadvantage with
22 a broken arm, she could not write, but she took document
23 numbers. I think our notes have been very helpful. But she's
24 not asking for all of these documents. And when we pass them
25 around, I feel like she's just not understanding.
72
1 Plus the lady is not participating. She's of a
2 certain opinion. It's very frustrating to all of us trying to
3 go over this mound of material. And we feel that we have to
4 discuss it. If you have a question, then that's the time it
5 should be presented. We don't want to have to go back. We
6 don't. Because of the time the documents are out, that's the
7 time to ask the questions.
8 She's even voted preliminarily on something on the
9 requirements to the law and then the next morning says, "I
10 changed my mind. I slept well last night. I have an
11 opinion. I'm not going to vote."
12 She's not consistent.
13 THE COURT: Not what did you say?
14 A JUROR: Not consistent.
15 THE COURT: Do you see anything at all that the
16 Court can do to help in this problem?
17 A JUROR: Unfortunately, no. And we don't want to
18 have a jury working this hard, as many months as we've all put
19 on this, or many years, in your case. We would like to come
20 to a conclusion. But when you have a juror who says, "Okay,
21 I'll raise my hand on this, but it's not set in stone, I'm
22 going to maybe change it tomorrow," we can't have her do
23 that. And I really feel the woman is not comprehending what's
24 happening.
25 THE COURT: We appreciate your assistance with this
73
1 issue this afternoon.
2 A JUROR: Thank you.
3 (Juror's name) exited chambers.)
4 THE CLERK: The last juror will be (juror's number),
5 (juror's name).
6 THE COURT: I'm sorry, what?
7 THE CLERK: (Juror's number).
8 THE COURT SECRETARY: Mr. Bodney was hanging around
9 in the hallway and asked if there was any chance that they
10 would have their motion heard today?
11 THE COURT: I don't think so. I think tomorrow is
12 probably when we ought to do that. What's tomorrow's
13 schedule?
14 THE COURT SECRETARY: We have a 9:00, a 9:30 and now
15 a 10:30 that we have set. Our 3:00 o'clock we set for 10:30.
16 THE COURT: Shall we make it 11:00 o'clock?
17 MR. SCHINDLER: We are around, Your Honor.
18 THE COURT: Well, but I want you to look at that
19 and --
20 THE COURT SECRETARY: Or afternoon.
21 THE COURT: We will talk about it at the close of
22 the proceeding here. 1:30 does that work?
23 THE COURT SECRETARY: Yes.
24 THE COURT: Why don't we do that then, 1:30.
25 THE COURT: 1:30.
74
1 THE COURT SECRETARY: I'll let them know that.
2 (Juror's name) entered chambers.)
3 THE COURT: Good afternoon, sir. Please come and
4 join us and take the seat right here. You know everyone well
5 by now, although you may not have spoken with any of them.
6 A JUROR: Yes, sir.
7 THE COURT: We are here, of course, because of the
8 note that your presiding juror sent to us. And at the outset,
9 let me just make sure that in our discussions you don't tell
10 us anything about how you or any of your colleagues stand on
11 any substantive issue. I just want to talk with you about the
12 procedure and about the note that was sent to us. Fair
13 enough?
14 A JUROR: Sure.
15 THE COURT: Let me ask Merilyn to give you a copy of
16 the note just so you've got it before you. And let me ask you
17 to just tell us in your own words how you see the problem that
18 led to sending this note to us and whether there's anything
19 you would add to it or whether there's anything that you would
20 change in it or disagree with. Just tell us in your own words
21 how you see the issue that is before us.
22 A JUROR: Well, I think we started out pretty good,
23 pretty well. And we started going through some things,
24 discussions. And it seemed apparent after a while that it was
25 getting more difficult to reach conclusions or to take an
75
1 opinion poll or anything and get some input. And basically we
2 wanted to deliberate and discuss from both sides, pros and
3 cons. And we wouldn't be getting any answers. It would just
4 be "no" or "yes." And that's it. "But why? Can you -- can
5 you help us explain why so we can understand? Maybe we could
6 talk about it."
7 "No. That's the way I feel."
8 So it was kind of cut and dry without any input.
9 And it's kind of hard to discuss matters and to deliberate in
10 an honest way to be fair without any input or discussion or a
11 reason why. And it just seemed to get worse and worse. And
12 then personal conflicts come up where the juror in question
13 might think that we were picking on that particular juror,
14 which we really weren't. We were just trying to get some
15 facts from her, maybe to convince us of why certain things
16 should be or shouldn't be.
17 So I found it myself frustrating to say, you know,
18 it's -- we are at an impasse, can't continue because it's kind
19 of ridiculous to do it this way. I'm trying to hold back
20 anything that would indicate any bias any which way.
21 But anyway, it's a little bit difficult to not have
22 input and not have a good one. And then when we go through
23 documents or things or discussions and we kind of all seem to
24 get together, then it reverses. And it's like -- it mixes us
25 up. And we say, "Well, we all discussed it."
76
1 "But I want to see this." Okay. Then we have to
2 go over it again for another hour or so to convince or try to
3 get some input to convince us to -- as why.
4 And then there's tangents off line, what were we
5 talking about? What count? What this? What that? And then
6 there's philosophies that go straight out somewhere out in
7 left field. And we are not here to change laws and stuff.
8 I mean it's like -- I'm getting mixed up. So I get
9 mixed up with myself and I'm saying, I don't know if you
10 really know what's going on. And it's like frustrating to a
11 point of saying to chuck it. I mean what are we going to do
12 here?
13 It's very frustrating not -- to have a person not
14 willing to or understanding what's going on or willing to go
15 ahead and put input into the discussion as to reasons why or
16 why not, because I would love to have that input to help me
17 make up my mind. I mean we are all supposed to be in there
18 discussing this thing and looking at things and documents and
19 not saying, "Now, what did this say again?" And that's
20 reasonable to a point of going back and doublechecking things
21 to make sure and there's questions and that's fine. And we
22 all agree on it. We do it. I did it myself. But to come off
23 the wall with certain things, it just don't seem to me like
24 that certain particular juror is really following guidelines
25 as to even the purpose.
77
1 And it's -- it's very hard for us to -- to say
2 things like this and to do things like that, because that
3 juror has an opinion and with respect to the opinion and we
4 give that person any benefit of the doubt. And it just seems
5 back to the same thing again, we are blocked and blocked and
6 blocked and blocked. And I don't want to be blocked anymore.
7 I want to continue and discuss things openly and be fair. And
8 if someone could convince me like when we had the
9 questionnaire that you asked me about, and before we got to
10 trial, I was open and you talked to me. I talked to you and
11 you said this and I said in that case I agree with you. And
12 that's deliberations. But not to just have a closed mind like
13 a horse with blinders on and just say, "No, and I'm not going
14 to tell you why." Or, "Yes, and I'm not going to tell you
15 why. And I don't have to do that. And I don't have to be
16 here to do this and I'm not here to do that."
17 Well, you are here to do that. And we don't want to
18 get into any personal arguments or fights. It's just let's be
19 honest and open and opinionated and say what you have to say.
20 And if that's really your opinion, that's your opinion.
21 The other thing is if we take a poll or a vote on
22 something, then stick to it. Don't say that we made you do
23 that or that you were coerced into that or that you did it
24 just to satisfy our whims, because there's 11 against one. I
25 mean, if you give an opinion or a poll or you give a vote or
78
1 whatever it is, be honest about it, because I would rather
2 have an honest vote or opinion than to say that, well, I just
3 said that because of this. I don't want to hear that. I
4 don't want to hear, "I just said this because you guys made me
5 do this or you guys made me do that." I want you to honestly
6 do what you want to do and have your own mind to say it and
7 not to be -- to have us force you into anything, not to have
8 us badger you, not to have us be mad at you, not to argue with
9 you, and not for you to get mad at us. It's just an honest
10 opinion and discussion and know what's going on. Sometimes
11 you don't even know what count we are on.
12 MR. SCHINDLER: There's an entry -- one of the
13 things in the note that you sent out that said sometimes she
14 would be unable to say what you just voted on. Is that --
15 A JUROR: That's true. "What did we vote on?"
16 Then the juror would say, you know, "What did we
17 vote on? What count are we on? What page? What did we vote
18 on?" And, "I didn't vote that way."
19 "Well, you did."
20 And then it seems to me like she's trying to change
21 the system instead of concentrating on the case. And that
22 confuses me, because we are not here for that. We are not
23 here to change precedents or set a precedent. We are here to
24 determine what's the facts and true of the evidence and
25 everything and not to go ahead and decide law all over again
79
1 or retry the case.
2 And basically it's -- it's frustrating to keep on
3 going on like that when we wind up we will say, Well, let's go
4 home. Let's sleep on it. Let's give everybody a rest. Let's
5 come back in the morning and discuss it with everybody with a
6 new frame of mind, and you wind up in the same place again.
7 It's like let's go around and around and around.
8 And then there's pressures with other people that,
9 you know, there's work. It's a long trial, it's frustrating,
10 you know. We don't want to push anything. We don't want to
11 hurry anything. We want to just move along in an orderly way
12 and whatever we discuss and agree on and vote on it and come
13 to a good conclusion and not -- and not be bothered with all
14 of this petty stuff back and forth about stupid points and
15 stuff that don't make sense. I mean, you know, you vote on
16 one thing that means this thing and that thing and all of a
17 sudden you change it.
18 THE COURT: Is there anything you think the Court
19 can do to assist in the problem?
20 A JUROR: Well, I could make some suggestions. I
21 don't know whether, you know, it's -- I feel bad about it, but
22 I don't know how the Court rules. Can you remove a juror and
23 continue with 11? I don't know what people agree on.
24 Sometimes they might say, well, we will take nine jurors if we
25 lose three. Do you bring in an alternate and say okay, we
80
1 will replace that juror and bring an alternate in, and does
2 that alternate have to start from the beginning all the way up
3 to the end where we caught up to, or can it be a refresher
4 course finally and bring them up to date.
5 I think any one of the jurors that are alternates
6 would be adequately brought up to date in a pretty quick
7 manner, because I think the rest of them that I've seen, and
8 known for so long, would have that much capability or
9 knowledge to look at things and not only our way, their own
10 way and go ahead and get caught up in a pretty fashionable
11 manner or simple manner, not drag this thing on with
12 problems. Because everything seems to be like a problem. And
13 personally I think everybody like (noise), let's move on, we
14 can't. Why? Because we want to do that. We can't do that.
15 Let's do it this way, let's do it that way. I don't want to
16 do this this way. I want to do it that way.
17 Most of us in majority can agree except for the one
18 juror in question. And that seems to be that she -- that
19 juror, I'm sorry, that juror doesn't comprehend sometimes,
20 doesn't know where we are sometimes. We discussed the
21 evidence for hours and then finally says, "What document is
22 that? Where did you see that?" And we have to start all over
23 again.
24 So my recommendation is either, number one, remove
25 the juror and continue, or, number two, get an alternate, or,
81
1 whatever you decide on.
2 THE COURT: I appreciate very much your help.
3 Anything further?
4 MR. DOWD: Your Honor, I just want to know if this
5 results from the disagreement, are they deadlocked 11 to 1?
6 THE COURT: Well, that we certainly don't want to
7 inquire into. The only -- I mean, obviously every juror is
8 entitled to their own view as to the weight and effect of the
9 evidence so long as they deliberate in accordance with the
10 Court's instructions by reviewing --
11 A JUROR: Right.
12 THE COURT: -- the evidence and discussing it with
13 their fellow jurors. And I suppose it would be fair to ask
14 you that.
15 In your judgment, is she willing to review all of
16 the evidence and discuss it with you fairly to arrive at her
17 decision, or is it something other than that?
18 A JUROR: In my opinion, no. In my opinion, I think
19 she's willing to listen. She will -- the juror will stay
20 there and say, "I'll listen." Well, discuss it, too. I mean
21 I think part of the instructions were to discuss and to listen
22 and to review all the evidence, not just to stay there and
23 listen and "I have my mind made up and that's it. And you
24 can't change my mind. I don't know what's in my mind. I
25 don't know what's in your mind."
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1 And, you know, basically what it said on the
2 previous letter we sent you was the same problem, coming to
3 conclusions before you even discuss or deliberate anything or
4 stop deliberating or -- I would just appreciate some input on
5 that person, because it depends on a lot of things. One
6 person really depends on a lot of things, in my opinion. It's
7 a very serious matter. It's a very serious case. I put a lot
8 of weight to it. And I respect all of the jurors and all of
9 their opinions. And when it comes down to where you can't
10 trust one opinion or one input because they might change it,
11 or might say, "I didn't say that," or not interpret it
12 correctly, that's where we have the problem. You have to
13 understand it in order to vote.
14 THE COURT: Thank you very much, thank you.
15 (Juror's name) exited chambers.)
16 THE COURT: The issue is what to do with the juror
17 who's the subject of the communications we have received from
18 the presiding juror. And the choices that the Court has
19 essentially are to keep the jury intact as it is now composed
20 with directions to follow all the Court's instructions and
21 return to their deliberations or alternatively to excuse this
22 juror for the reasons set forth in the communication to the
23 Court.
24 And what are the respective positions of counsel?
25 MR. SCHINDLER: Well, Your Honor, from the
83
1 government's perspective, we would respectfully ask that you
2 excuse the juror. There's been a parade of her fellow jurors
3 who have all said the same thing, namely that she is unable to
4 comprehend. They've all affirmed that what's set forth in the
5 letter is accurate. They've all affirmed that this isn't a
6 situation where there's a juror with an honestly-held belief
7 who is simply digging their heels in. In fact, a number of
8 them have indicated that she has flip-flopped and doesn't
9 recall what she voted or votes and then switches her mind.
10 But I think what's most troubling is the consistent
11 description of a person who doesn't seem, as one of the jurors
12 said, to quite get it. And each of the jurors has said that
13 there have been a number of instances where she seems not to
14 know what exactly they are discussing. And it seems to be
15 substantially impairing the ability of the jurors to carry out
16 their function.
17 I think based on the record the Court now has, there
18 is more than sufficient cause to excuse her. And as to
19 whether to proceed with 11 or bring in an alternate, we would
20 respectfully request that that's really up to the defendant to
21 decide what you would prefer to do.
22 MR. DOWD: Your Honor, I would like to consult with
23 Mr. Symington if the Court would permit me.
24 THE COURT: Yes.
25 MR. DOWD: I told him that we were coming here. But
84
1 he does not know why we are here. And given the nature of the
2 issue, I think it's only appropriate that I talk to him.
3 THE COURT: It is certainly appropriate.
4 MR. DOWD: And I would like to report back to you
5 after I do that if I could have a place to make a telephone
6 call.
7 THE COURT: You certainly may. And I will ask
8 Cheryl to take you to a private office so that you can confer
9 with your client.
10 MR. DOWD: May I borrow this and return it, this
11 note?
12 THE COURT: You bet. Absolutely. Why don't we take
13 about a ten-minute recess here.
14 MR. DOWD: Thank you, Your Honor.
15 (A recess was taken.)
16 THE COURT: The record may reflect the presence of
17 counsel, the absence of the defendant, the absence of the jury
18 in this closed proceeding.
19 When we adjourned, counsel for the defendant sought
20 the opportunity to confer with his client and has had the
21 opportunity to do so. And at this point does the defense wish
22 to be heard on the options that are available to the Court?
23 MR. DOWD: Yes, Your Honor. Thank you very much for
24 the opportunity to. I did speak with Mr. Symington and
25 reported to him what had taken place and discussed with him
85
1 how we -- what we were going to report to the Court.
2 Your Honor, I, after listening and consulting with
3 my colleagues, Mr. Lynam and Mr. Mejia, I don't agree with the
4 recommendation of the United States and on the following
5 basis: One, I think the juror in question has evidenced, from
6 her own statements before us, that she is lucid and coherent
7 and can engage in counterdiscussion. I think what we have on
8 our hands here is a classic disagreement where a juror has
9 reached a conclusion, and the number of jurors or majority of
10 jurors don't like it, and they disagree with her. And I think
11 this is an attempt to roll her off the jury. And we object to
12 that.
13 I think there are other remedies to it. I think
14 that she does listen to what is said. The fact that she wants
15 to see another document and it's the opinion of another juror
16 that that doesn't have anything to do with it cuts right
17 against the grain on the instruction on page 68 that a juror
18 is instructed to make up their own mind. And if that juror
19 thinks that something else is relevant to her decision, then I
20 think it is.
21 I think the suggestion by the United States that she
22 doesn't comprehend, there is no basis in the record
23 whatsoever. I think she does comprehend. Perhaps she
24 comprehends quicker than other jurors, which she is entitled
25 to do. And she's entitled to do it under the instructions of
86
1 this Court.
2 And the fact that she has a lot of questions, that
3 she is a pain in the neck, she's entitled to be a pain in the
4 neck. She's entitled to ask questions. She's entitled to
5 insist on it. And once someone said, you know, she was
6 challenged to prove something. Well, she doesn't have to
7 prove anything. That's not part of the instructions of this
8 Court. She has no obligation to instruct.
9 So I think that -- I don't think there's any juror
10 misconduct here. Just because someone is difficult,
11 irascible, in fact the instructions let people be difficult
12 and irascible if they want to be.
13 I think what I would like to suggest that the Court
14 do is that the Court admonish the juror to participate in
15 the -- in the proceedings and that -- and give the
16 admonition to the rest of the jury that they are all to work
17 together. I don't think there's anything on the record that
18 justifies the removal of this juror.
19 And then let's see what happens. But these people
20 have worked together for a long time. And it's only been in
21 recent days that people have become irritated. And that
22 happens when people disagree. And believe me, there could be
23 a lot to disagree about in this case. After all, we disagreed
24 for five years and we disagreed for 12 weeks. So merely
25 because they disagree for four or five days in the jury room
87
1 is just not an unusual occurrence and something that has to be
2 elevated to removal of a juror.
3 After all, the lady did sit there for 12 weeks and
4 work hard with a broken arm. I don't think you just take her
5 out because a group of jurors sort of ganged up on her and she
6 can't answer any question that they have. She's not obligated
7 to answer any question that they have.
8 So that's our position. And we would suggest the
9 Court, you know, talk to her individually and perhaps the rest
10 of the jury, if you think it's warranted, for her to
11 participate in the -- and follow the instructions of the
12 Court.
13 THE COURT: The Court has received a communication
14 from the presiding juror advising that a juror who has been
15 determined to be Juror No. 161 "cannot properly participate in
16 the discussion with us." The note goes on to cite five
17 reasons: Inability to maintain focus on the subject of
18 discussions; inability to recall topics on discussion; refusal
19 to discuss views with other jurors; all information must be
20 repeated two or three times to be understood, discussed, or
21 voted on; immediately following a vote, the juror cannot tell
22 us what was voted.
23 The Court and counsel inquired of the presiding
24 juror concerning the note and he elaborated on the note by
25 giving examples to illustrate the reasons that were set
88
1 forth. The Court then with counsel inquired of the juror, No.
2 161, and she is certainly an intelligent person. The inquiry,
3 however, demonstrates that a number of her responses to the
4 Court's questions were not truly responsive to the question
5 asked, which in some respects corroborated some of the
6 comments of the presiding juror.
7 The Court with counsel then inquired of all of the
8 remaining jurors and without exception, the jurors concurred
9 in the note sent by the presiding juror.
10 It is a matter of the most serious consequence to
11 discharge a juror. However, the Court will do so finding that
12 Juror 161 is either unwilling or unable to deliberate with her
13 colleagues. More specifically, the facts upon which the Court
14 makes that finding are the comments of the other 11 jurors,
15 none of whom report any acrimony or personal difficulties with
16 Juror 161, but all of whom confirm what appears to them to be
17 either an unwillingness or an inability to join with them in
18 deliberations in accordance with the Court's instructions,
19 specifically that is to jointly review the evidence and to
20 confer with colleagues concerning the evidence in an effort to
21 reach their decisions.
22 It is, of course, the very essence of the jury
23 process that jurors not only may hold differing views, but are
24 instructed to form their views and opinions and to not waiver
25 from them if they are held after engaging in thoughtful
89
1 deliberation.
2 It is indeed the safeguard of the jury system that
3 there are 12 independent views. And the instructions direct
4 and, of course, it is fundamental that no juror should yield a
5 thoughtfully-held position simply to arrive at a verdict. But
6 there has been nothing stated by any of the jurors that would
7 indicate that that is the situation here.
8 The Court and counsel were mindful of that problem
9 and I hope were -- I hope the Court was appropriate in trying
10 to assure that was not that Juror 161 had a differing view
11 that was her opinion after considering the evidence and that
12 she was, as instructed, simply not yielding that view. But
13 when inquiry went to that subject, it was the report of her
14 fellow jurors that that was not the issue, but that instead,
15 she would not participate in the process.
16 Beyond that which would tend to indicate an
17 unwillingness to deliberate, and the Court does not make that
18 finding. As indicated earlier, it's either an unwillingness
19 or an inability to deliberate. And it's unclear to the Court
20 as to what that cause might be. But virtually without
21 exception, the other jurors reported that she was unable to
22 follow the discussions, was apparently having an inability to
23 comprehend the topic then under discussion, was not
24 participating in the discussion process, was lacking in
25 concentration and awareness, was apparently unable to follow
90
1 the discussion, would raise matters that by their subject
2 matter appeared to not relate to the topic under discussion.
3 It is not lightly that the Court comes to this
4 conclusion, but it comes to it because it believes that the
5 evidence is clear in directing the finding that it has made.
6 Accordingly, the Court will excuse Juror No. 161 for cause for
7 being -- for just cause for being either unwilling or unable
8 to participate in the deliberative process in accordance with
9 the instructions of the Court. And the case may proceed with
10 the 11 remaining jurors.
11 MR. DOWD: Well, Your Honor, we object to 11 jurors.
12 THE COURT: Pardon?
13 MR. DOWD: We object to it going to 11 jurors. I
14 think we are entitled to 12.
15 THE COURT: I am not aware of any procedure that
16 permits that.
17 MR. DOWD: I thought that's why we held the
18 alternates.
19 THE COURT: Well, the only thing the rule says is
20 about proceeding with 11 when you lose one for cause. And if
21 we were to lose another, conceivably we could call in an
22 alternate. But I believe that to be the law. And I don't
23 know of anything that could -- that would be other than
24 that.
25 The jury is still here, I assume?
91
1 LAW CLERK THOMAS: Yes, they are.
2 THE COURT: In a moment, I will speak with that
3 juror and excuse her.
4 We need to take a moment to talk about the issue
5 tomorrow.
6 I don't know what your views are as to this, whether
7 it's a matter that obviously the jury is aware of it so it's
8 not a question of it affecting the jury. The question, I
9 guess, is jury privacy. I don't know what you think ought to
10 be done with respect to this inquiry of the media to have
11 access to the closed proceeding we had the other day and the
12 proceeding we have today. And maybe the thing to do is just
13 think about it and put together --
14 MR. DOWD: I haven't even thought about it so --
15 THE COURT: Pardon?
16 MR. DOWD: I haven't even read the paper. I don't
17 know anything about it.
18 THE COURT: Do you have a copy of the paper?
19 MR. DOWD: We received it, but I haven't read it.
20 THE COURT: I haven't either. That's set for when?
21 MR. SCHINDLER: 1:30, Your Honor.
22 THE COURT: 1:30 tomorrow.
23 MR. CARDONA: Now, Your Honor, are you going to
24 simply issue an order, publicly filed order excusing Juror 161
25 or are you going to hold that as well just so we know?
92
1 THE COURT: Well, I guess we have to --
2 MR. DOWD: It's got to be made public.
3 THE COURT: Pardon?
4 MR. DOWD: There's only 11 jurors.
5 THE COURT: I don't see any reason not to.
6 MR. DOWD: It's not a secret proceeding. It's a
7 public proceeding.
8 MR. CARDONA: I guess our concern is, I think in the
9 order I think we agreed. Order has to be published, the order
10 dismissing her. But I don't think it's necessary to go into
11 the reasons in the order that's going to be publicly filed.
12 MR. DOWD: Why not?
13 MR. CARDONA: I think that's the subject of the
14 hearings tomorrow, that is the reasons, the discussions we
15 have had here should be made public. And I think that's what
16 we need to think about overnight, just as you do.
17 MR. DOWD: I don't think you can do half a loaf, my
18 friend.
19 MR. CARDONA: Well, I think you can. I think that's
20 what we need to do. We should think about the reasons that
21 the discussion we have had here today should be kept sealed or
22 whether they should be made public.
23 THE COURT: I think that's what we need to think
24 about overnight and we will let you know tomorrow what our
25 position is.
93
1 MR. SCHINDLER: There may also be, for example, the
2 factual findings the Court has made now which do not include
3 the colloquy between the Court and the individual jurors, for
4 example, might be something that could be released as opposed
5 to the communications with the jurors, but that's something we
6 would like to think about so that we can give you meaningful
7 response tomorrow at 1:30 with the Court's permission.
8 MR. LYNAM: The other issue, Your Honor, is the
9 names of jurors are all in the record, now, too.
10 MR. SCHINDLER: Right.
11 MR. LYNAM: So that would be -- if it's released,
12 that would be part of the record, too. And it defeats the
13 whole purpose of having their numbers at the trial.
14 MR. CARDONA: I think the final issue is the timing,
15 even if the Court is going to unseal it, whether it should be
16 now or at the conclusion of the case, at least the proceedings
17 today as opposed to the order. And that's all stuff we need
18 to kind of think about.
19 THE COURT: The minute entry that now may be simply
20 made public tonight is for legal cause shown, Juror 161 is
21 excused from further deliberation in the case.
22 MR. SCHINDLER: Your Honor, do you want the note
23 back?
24 THE COURT: You can just put it --
25 MR. SCHINDLER: Okay.
94
1 THE COURT: Well, we will see you all at 1:30
2 tomorrow.
3 MR. DOWD: Thank you, Your Honor.
4 LAW CLERK GILES: Excuse me, Judge. Having the
5 jurors leave tonight --
6 THE COURT: Pardon?
7 LAW CLERK GILES: Do you want anything said to the
8 jurors when we sent them home tonight, and do you want to
9 speak with Juror 161 right now?
10 THE COURT: I do. Yes. But I want -- I'll speak
11 with her.
12 LAW CLERK GILES: And the remaining jurors?
13 THE COURT: We could bring the jurors into court and
14 I could just simply say for cause shown, the Court will excuse
15 Juror 161 from further participation in the case and then --
16 and then I could -- actually I can just thank her there for
17 her service right then and there and maybe that's the easier
18 way. And if for that matter if there are any media around,
19 they can come in and hear that. Why don't we do that.
20 MR. SCHINDLER: That's fine, Your Honor. But could
21 you also allow her the opportunity to have one of the marshals
22 escort her?
23 THE COURT: That's a good idea.
24 LAW CLERK GILES: We already have that in process.
25 MR. LYNAM: Your Honor, will she be advised that
95
1 she's not released from the admonitions the Court has
2 previously given since the rest of the jury is currently
3 deliberating?
4 MR. CARDONA: We agree that would be appropriate at
5 this time.
6 MR. DOWD: She's not on hold, she's gone.
7 THE COURT: Well, I don't know what -- I mean she's
8 in a different -- the reason the alternates have not been
9 released is because they conceivably could be called back. I
10 mean what can she -- she's one of their -- anyone have a
11 view on that?
12 MR. DOWD: I think she's excused. She can do
13 whatever she wants to do.
14 THE COURT: She's no longer a part of the process.
15 MR. CARDONA: Well, I think our concern is -- I
16 mean --
17 MR. DOWD: I disagree.
18 MR. CARDONA: She comments or was questioned by the
19 press and talks to them about the deliberative process and
20 that gets reported on, there's a possibility that might,
21 despite the Court's admonition, come back. On the other hand,
22 if the Court just wants to repeat again the admonition about
23 not reading media reports.
24 THE COURT: I think that's probably the better thing
25 to do. And because I think she's just released at this
96
1 point.
2 MR. DOWD: She's released.
3 THE COURT: She's a private citizen under no order
4 of the Court.
5 MR. CARDONA: Well, that wouldn't preclude the Court
6 from issuing an order to her.
7 THE COURT: I'm not sure.
8 MR. DOWD: We would object to such an order.
9 THE COURT: Pardon me?
10 MR. DOWD: I would object to such an order. She's
11 free to do what she wants to do. She's been excused.
12 THE COURT: I don't see any reason for it at this
13 point.
14 MR. CARDONA: That's fine.
15 THE COURT: I do see a reason for counsel not
16 talking with her about it, however, and would so admonish
17 counsel not to.
18 MR. DOWD: We understand the rule, Your Honor.
19 THE COURT: Okay, shall we go into court for a
20 moment?
21 (The following proceedings were held in open court.)
22 THE COURT: Good afternoon, ladies and gentlemen.
23 Please be seated.
24 The record may reflect the presence of the jury with
25 roll call waived, presence of counsel, the absence of the
97
1 defendant.
2 Ladies and gentlemen, for good and sufficient legal
3 cause, the Court is excusing Juror No. 161 from further
4 service on the jury. And I wanted to do so here in open court
5 so that I could express to Juror 161 the thanks of the Court
6 and the parties and the attorneys for remarkable service on
7 this jury, well over three months of time committed to the
8 case, an intrusion upon one's private life that is remarkably
9 significant in every way. A willingness to come forward and
10 take on the responsibilities of a case such as this is a
11 response to civic call and civic duty that is really unmatched
12 in our community. And we all thank Juror 161 for her service
13 on the case.
14 At this time you are released from your admonitions,
15 that is you are free to speak with anyone about any aspect of
16 the case as fully as you may wish, but certainly in similar
17 fashion, it is your right not to do so should that be your
18 desire.
19 There are, in cases such as this, always at least
20 two groups who are very anxious to talk to jurors. And they
21 are lawyers and representatives of the media.
22 The lawyers, under our rules of court, however, are
23 precluded from approaching jurors to discuss the case. And
24 that is simply to give jurors a level of comfort so they need
25 not be concerned about the possibility of lawyers coming and
98
1 questioning them about any aspect of the case.
2 But, of course, you, as I say, are free to speak to
3 anyone who you wish to.
4 With respect to the media, certainly they not only
5 are anxious to speak with jurors, but their function and
6 responsibility as news gatherers and news reporters makes it
7 indeed their responsibility to do that. So naturally they
8 will be anxious to speak with any and every juror when it
9 becomes appropriate for them.
10 But just as I said, you are free to speak about the
11 case, but you certainly are free not to speak about the case
12 as well. And that is something for you to decide. And if you
13 tell a representative of the media that you do not wish to
14 discuss the case and do so in unequivocal terms, any
15 responsible journalist will accept and honor your decision in
16 that regard and will not bother you further.
17 Of course, if you -- if it's your desire to speak
18 with representatives from the media, that's certainly your --
19 your right as well. And in that regard, I suppose the only
20 caution any juror might want to have in mind is just to give
21 such degree of confidentiality and accord to your own
22 deliberative process as you feel that process deserves and as
23 you feel your colleagues might request of you or think --
24 deem appropriate of you. But that decision ultimately is
25 entirely up to you.
99
1 The most important thing I want to, however, to
2 leave you with is the thanks of the Court and the parties and
3 the attorneys for remarkable service upon this jury.
4 At this time we will be in recess. And the
5 remaining jurors will return to their deliberations at 9:00
6 o'clock tomorrow morning.
7 Anything further?
8 MR. DOWD: May I take up a matter with the Court
9 after the jury departs, Your Honor?
10 THE COURT: Anything further with respect to matters
11 at this time?
12 MR. SCHINDLER: Your Honor, simply the Court was
13 going to repeat the admonition to the balance.
14 THE COURT: Yes, I would just remind all of the
15 jurors to be very mindful of all of the admonitions not to
16 expose yourself to any media coverage of any aspect of the
17 proceedings that might take place during the remaining portion
18 of the trial. It is obviously a very important part of your
19 responsibilities and I ask you just to mentally review each of
20 those admonitions.
21 We will be in recess then before the jury at this
22 time. And then I'll be with counsel for just a few moments.
23 (A recess was taken.)
24 THE COURT: The record may reflect the absence of
25 the jury, the presence of counsel.
100
1 You may proceed.
2 MR. DOWD: Thank you, Your Honor. I would ask leave
3 of the Court overnight if we could do some research on the
4 issue of proceeding with 11 jurors as opposed to 12, and if we
5 could report to the Court tomorrow, would you allow us --
6 THE COURT: Yes.
7 MR. DOWD: -- overnight to take a look at that
8 issue? It's not something I have in my back pocket.
9 THE COURT: Certainly the Court would and we can --
10 do we want to set a time to -- I guess we should first thing
11 in the morning.
12 MR. DOWD: Well, we have something at 1:30, Your
13 Honor. But I'll report to the Court in the morning if I
14 could.
15 MR. SCHINDLER: May I suggest, Your Honor, if we --
16 I know the Court has something set at 9:00. Perhaps if we
17 could convene at 8:45, because if in fact Mr. Dowd has
18 something that requires us to proceed.
19 MR. DOWD: That would be fine, Your Honor.
20 THE COURT: Let's do that, meet at 8:45 tomorrow
21 morning.
22 MR. DOWD: Certainly. Thank you, Your Honor.
23 MR. SCHINDLER: Thank you, Your Honor.
24 THE COURT: Thank you. Court will be in recess.
25 (The court stood at recess.)
101
1
2
3
4 C E R T I F I C A T E
5
6
7
8
9 I, MERILYN A. SANCHEZ, do hereby certify that I am duly
10 appointed and qualified to act as Official Court Reporter for
11 the United States District Court for the District of Arizona.
12 I FURTHER CERTIFY that the foregoing pages constitute a
13 full, true, and accurate transcript of all of that portion of
14 the proceedings contained herein, had in the above-entitled
15 cause on the date specified therein, and that said transcript
16 was prepared under my direction and control.
17
18
19 DATED at Phoenix, Arizona, this 19th day of August,
20 1997.
21
22
23
24 MERILYN A. SANCHEZ, CRR
25
http://www.azcentral.com/news/symington/scripts/0819trans2.shtml
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Day by day
7/23/99 - PROSECUTOR
SEEKS REVIEW: The prosecutor in the 1997 case against former Gov. Fife Symington is
asking the Justice Department for permission to seek a review of last month's court ruling
overturning Symington's conviction. David Schindler, an assistant U.S. attorney in Los
Angeles, wants further review by another panel of the 9th Circuit Court of Appeals in San
Francisco. Symington's attorney, John Dowd, said Thursday that the court is likely to turn
down any petition from Schindler. The prosecutor faces an August deadline to make his
request.
6/27/99 - SYMINGTON
STILL GUILTY IN SURVEY: Despite last week's reversal of Fife Symington's conviction,
two-thirds of Arizonans think the former governor is guilty of bank fraud, according to a
new Arizona Republic Poll. The poll, based on telephone interviews with 406 adults
statewide, also indicates Symington's political appeal is at its lowest point since 1995,
with three out of four people saying they would not vote for him again if he ran for
public office.
6/24/99 - SYMINGTON
REVERSAL LIKELY TO HOLD FAST: The odds will be heavily stacked against prosecutors if
they ask a group of federal Appeals Court judges to consider reinstating former Gov. Fife
Symington's conviction.
6/23/99 - SYMINGTON
CONVICTION OVERTURNED: Bank and wire fraud convictions that pushed Gov. Fife Symington
from office nearly two years ago were tossed out Tuesday by federal judges who said a
troublesome juror shouldn't have been dismissed while the jury was deciding the verdict.
The 9th U.S. Circuit Court of Appeals ruled that juror Mary Jane Cotey, now 76, should not
have been replaced, although her fellow jurors said she was too befuddled and obstinate to
do her job. Symington, 53, who was sentenced to 2 1/2 years in prison, has been free on
appeal.
The following is previous trial coverage
from 'The Arizona Republic.'
Full transcripts included with each trial day
9/3/97 - GUILTY; PRISON TIME LIKELY WITH CONVICTION ON 7 FELONY COUNTS: Arizona
Gov. J. Fife Symington III resigned in disgrace Wednesday after a federal jury found him
guilty of seven felony counts of bank and wire fraud. He will officially leave office at 5
p.m. Friday, and Secretary of State Jane Dee Hull will become Arizona's 20th governor. An
hour after the verdicts were announced, Symington gave an eloquent farewell speech that
put an end to the 17-week trial, which grew out of an FBI investigation into his business
affairs that began six years ago this month.
8/27/97 - JUDGE
DENIES MISTRIAL: Gov. Fife Symington strikes out in his third bid for a mistrial when
U.S. District Judge Roger Strand rejects defense assertions that an elderly juror was
improperly dismissed.
8/25/97 - JUDGE
HEARS MISTRIAL ARGUMENTS: A decision on whether to declare a mistrial over the
dismissal of a 74-year-old juror in Gov. Fife Symington's bank fraud case rests now with
U.S. District Judge Roger Strand. Jurors, meanwhile, ended their twelfth day of
deliberations without a verdict. It was their fourth day since starting over with a new
juror.
8/24/97 - HULL
QUIETLY PREPARES TO TAKE OVER: Meeting in small groups and getting constant updates on
key issues, Secretary of State Jane Dee Hull is quietly preparing to take over as
governor. One close adviser said that she has kept all her meetings to three or fewer
people so she cannot be accused of having a "kitchen Cabinet" of advisers or of
thirsting for a conviction of Gov. Fife Symington.
8/22/97 - JUDGE,
COUNSEL HUDDLE OVER 'SECURITY ISSUES':A bizarre week in Gov. Fife Symington's criminal
trial ended Friday with Symington's defense team huddling with a federal judge behind
closed doors for more than three hours to confer on "security issues."
8/21/97 - DEFENSE
ATTORNEY AGAIN SEEKS MISTRIAL: In the continuing fallout from the dismissal of a
juror, Gov. Fife Symington's attorney ask for a mistrial, declaring that the governor's
right to an impartial jury has been denied. The mistrial motion, defense attorney John
Dowd's third in the trial, was filed by a paralegal minutes before the court clerk's
office closed at 5 p.m.
8/20/97 - EXCUSED
JUROR 'RAMBLING', FORGETFUL, JURRORS SAY: An elderly juror dismissed from Gov. Fife
Symington's trial was described by her colleagues as forgetful and inattentive, incapable
of focusing on the issues in the case, a transcript of court deliberations revealed. One
court official even said 74-year-old Mary Jane Cotey had difficulty completing such simple
tasks as filling out her lunch requests, the transcripts, released Wednesday, show. The
release of the transcripts of a closed-door hearing Tuesday capped an unusual day in what
has become a highly unpredictable trial. On Wednesday, an alternate juror was added to the
jury to bring its number back to 12, and two media organizations were chided by U.S.
District Judge Roger Strand for interfering with deliberations.
8/19/97 - JUDGE
DISMISSES JUROR: Gov. Fife Symington's federal fraud trial takes an unexpected twist
when a 74-year-old female juror is excused for an undisclosed reason, forcing the jury to
push ahead with only 11 members.
8/16/97 - LEGAL
TEAMS, JUDGE CONFER; COURT ORDER SEALS DISCUSSION: Gov. Fife Symington's defense team
and federal prosecutors met behind closed doors with U.S. District Judge Roger Strand for
nearly an hour Friday, but the subject is to be kept secret by court order. "It's
under seal," John Dowd, Symington's lead attorney, told reporters as he left the
courthouse shortly after noon. "I can't discuss it. I'm not going to jail for you
guys." About the time the lawyers' meeting broke up, the jury was led out of the
deliberation room and escorted by court officials to two waiting vans that drove away
without explanation, causing a ruckus among representatives of the news media who were
awaiting a verdict.
8/13/97 - JUDGE'S
INSTRUCTIONS A GUIDE TO JURY DELIBERATIONS: As the jury in Gov. Fife Symington's
federal bank fraud case enters its fourth day of deliberations today, it likely finds
itself considering more than just a complex set of facts. The jury also must apply a
detailed, 72-page set of legal instructions from U.S. District Judge Roger Strand to the
facts of Symington's case. The instructions, which Strand delivered last week before
deliberations began, were finalized after proposals were submitted by both sides. A
mixture of federal statutes, case law and Strand's own pretrial rulings forms the basis
for the version that were given to jurors. What, precisely, do they say? First, they offer
practical advice.
8/12/97 - RELAY
TEAM WILL GET VERDICT ON THE AIR: U.S. District Judge Roger Strand has steadfastly
refused to accommodate the broadcast news media in the federal trial of Arizona Gov. Fife
Symington. With no news cameras allowed in the courtroom -- without even an audio feed to
tap -- TV and radio stations have cobbled together an odd relay system to get the trial's
verdicts to the public as soon as they're announced.The newshounds of the airwaves who've
concocted the pool plan say it's an improvement over the crude flash-card code that TV
networks used to report the verdicts in O.J. Simpson's civil case.
8/8/97 - FIFE'S
FATE TO BE RESOLVED AS JURY DELIBERATIONS BEGIN: Gov. Fife Symington's fate is now in
the hands of twelve men and women who will decide not only whether he is guilty of bank
fraud but whether he will continue to serve as the governor of Ariznona. After a trial
that has lasted more than 100 days, the last arguments jurors heard were from federal
prosecutor David Schindler, who told them that Symington had lied systematically to his
lenders in a search for "prestige and power" as a businessman and politician.
Shortly after Schindler's final argument ended, U.S. District Judge Roger Strand read
detailed legal instructions to the jury, and four of them -- three women and one man --
were released as alternates after a random drawing of names. The remaining 12 jurors --
five women and seven men -- were sent to the jury room to begin their difficult task of
deciding whether to acquit Symington or to convict him and thereby unseat him as governor.
8/7/97 - DOWD:
ROUTINE BLUNDERS DON'T EQUAL CRIMINAL ACTS: In a melodramatic closing argument that
brought his client to tears, defense attorney John Dowd accused federal prosecutors of
distorting Gov. Fife Symington's routine blunders in their "desperate'' effort to
convict an honest man. Dowd, sounding like a country preacher, sometimes bellowed and
sometimes whispered to jurors to conjure sympathy for a man Dowd asserted had been
seriously wronged - first by a plunging real-estate market, then by government
investigators who wanted to exploit his financial downfall. By the end of his 4 1/2-hour
appeal to jurors, Dowd choked with emotion as he said in a trailing voice: "The
stakes here are very high. Mr. Symington is not guilty of any of these charges.'' Minutes
after Dowd's arguments ended, prosecutor David Schindler began his own final discussion
with the jury in a rebuttal to Dowd's closing that will continue this morning.
8/6/97 - PROSECUTOR
SAYS FIFE DELIBERATELY MISLED LENDERS: A federal prosecutor on Wednesday urged jurors
in Gov. Fife Symington's criminal trial not to allow Symington deceive them as he had
deceived his lenders. "Don't be fooled," George Cardona said at the end of his
closing argument in the 13-week-old trial, which reached its climax last week with
Symington's testimony that he had never intended to mislead lenders with financial
statements even though he acknowledged that they were riddled with "errors and
omissions". "He told you what he thought he needed to tell you to try and get
you to do what he wanted you to do," Cardona said at the end of his summary. When the
trial resumes today, defense attorney John Dowd will present his closing argument,
offering jurors a host of alternative explanations for the inaccuracies Symington
submitted to his lenders.
8/5/97 - WITH
ONE CHARGE DISMISSED, CASE TO JURY THURSDAY: Gov. Fife Symington won a major victory
Tuesday when U.S. District Judge Roger Strand dismissed a charge accusing Symington of
lying to a Maryland bank to obtain a $300,000 letter of credit. Strand dismissed the
charge late Tuesday without comment. Prosecutors told Strand they planned to consult U.S.
Justice Department officials in Los Angeles about their next move. Count 12, which Strand
rejected, accused Symington of submitting an erroneous year-end 1989 financial statement
to Mercantile Safe Deposit and Trust Co. of Baltimore in October 1990. The statement
indicated Symington had an $11.9 million net worth. The dismissal capped seven days of
Symington testimony from the stand in which the governor emphatically -- and ocassionally
dramatically -- insisted he had not misled lenders as his development business crumbled
between 1986 and 1991.
8/4/97 - SYMINGTON
FATE NEARER JURY'S HANDS: Gov. Fife Symington's fate could be in the hands of jurors
by noon Thursday under a tentative schedule adopted by U.S. District Judge Roger Strand.
Symington, the last of five defense witnesses to take the stand in his federal bank-fraud
case, is expected to complete his testimony when the trial resumes Tuesday. Chief defense
attorney John Dowd said Symington will testify for no more than an additional two hours.
Afterward, prosecutors will present one or two witnesses to rebut testimony presented by
the defense. Prosecutor David Schindler said his rebuttal should be completed by
midafternoon Tuesday, giving both sides time afterward to present Strand with arguments on
how to craft instructions to the jury before deliberations begin. The trial is entering
its 13th week.
8/1/97 - EXTORTION
CHARGE DENIED BY DEFIANT GOVERNOR: In a grueling day of combative questions and
defiant responses, Gov. Fife Symington on Friday tangled with a federal prosecutor,
heatedly denying that he had attempted to use his office to extort concessions from a
lender. "I never said that!" Symington responded repeatedly as prosecutor David
Schindler read from notes taken by pension-fund manager Donald Eaton at at a July 1991
meeting in the Governor's Office where the reputed extortion attempt occurred. Symington
said he met with Eaton and fellow fund manager Mark Taylor in an attempt to persuade them
to ease off a threat to declare him in default on a $10 million loan that financed the
downtown Phoenix Mercado. Schindler produced the notes as well as a related memorandum as
evidence that Symington had threatened to pull the plug on the lease of the Mercado's
largest tenant, Arizona State University.
7/31/97 - SCHINDLER:
FIFE MISLED BANK ON TRUST FUND'S LIQUIDITY: Gov. Fife Symington and chief prosecutor
David Schindler sparred Thursday over whether the governor had leveled with a lender about
terms of a family trust fund. In Symington's fifth day on the stand, Schindler also
quizzed the governor about two issues that U.S. District Judge Roger Strand had previously
restricted, prompting a protest by chief defense lawyer John Dowd, who said the prosecutor
was "cheating." Strand later indicated that Schindler had not acted improperly.
Symington maintained his relatively cool demeanor during most of the day's back-and-forth
with Schindler, but he stumbled at one point when Schindler was pressing him to discuss
his contention that he hadn't been prepared for an interview with federal prosecutors in
1993.
7/30/97 - LETTER
CONTRADICTS DEFENSE CONTENTION: A letter introduced in the trial of Gov. Fife
Symington Wednesday showed that as early as 1986 he was worried that lenders could be
frightened away if his financial statements showed a heavy debt load. The letter, written
in 1986 by a lawyer for Symington, contradicts a defense that Symington has raised
repeatedly in his 12-week-old federal trial on criminal charges of bank fraud, attempted
extortion and perjury. He has maintained that his financial statements were immaterial to
lenders because they relied on Symington's track record and the quality of his projects
rather than the detailed report of his assets and debts in his financial statements.
7/29/97 - DEFENSE
MISTRIAL MOTION NIXED: Gov. Fife Symington's defense team moved for a mistrial today
after prosecutors told jurors that two debts Symington failed to report to lenders in 1986
formed the basis for tax write-offs allowing him to avoid paying income taxes that year.
The mistrial motion, made just after the lunch-hour, was immediately denied by U.S.
District Judge Roger Strand.
7/25/97 - PROSECUTORS
QUESTION FIFE OVER INFLATED SALARY, LOANS: Gov. Fife Symington conceded under
cross-examination Friday that he paid himself roughly $2.3 million in salary and profits
from The Symington Co. at a time when his development partnerships were scraping to repay
millions of dollars in loans. Symington's cross-examination by prosecutor David Schindler
began late Friday and is expected to last into the middle of next week. Earlier Friday,
Symington strenuously denied under direct examination that he had tried to use the power
of his office to extort concessions from a lender on his controversial downtown Mercado
project.
7/24/97 - GOVERNOR
TAKES STAND, DENIES COMMITTING CRIMES: In perhaps the most important public appearance
he will ever make, Gov. Fife Symington climbed onto the witness stand Thursday and swore
under oath to a federal jury that he never committed the crimes alleged by federal
prosecutors. His voice at first strained before he settled into an earnest, poised
delivery, Symington responded to a staccato series of questions from defense attorney John
Dowd. He said he did not lie to a U.S. Bankruptcy Court, did not threaten lenders for the
Phoenix Mercado, and did not defraud his bankers or falsify financial information.
7/23/97 - SYMINGTON
TO TESTIFY IN FRAUD TRIAL TODAY: Gov. Fife Symington will take the stand on his own
behalf today in U.S. District Court to explain to Arizonans how inaccuracies amounting to
millions of dollars wound up in his personal financial statements. Lead defense lawyer
John Dowd said the governor, the final witness in an exceptionally brief defense, will
testify about "whatever it takes to lay it (his story) out" for jurors in his
11-week federal bank-fraud trial.
7/22/97 - EXPERT
CLAIMS ACCOUNTANTS PRODUCED FLAWED FINANCIALS: An expert witness on Tuesday accused
the accounting firm of Coopers & Lybrand of doing shoddy work for Gov. Fife Symington,
laying the groundwork for a defense that blames Symington's accountants for inaccurate
information that went to his lenders. Although federal prosecutors assert in Symington's
22-count indictment that it was the governor who intentionally falsified his personal
financial statements to lenders, Symington's defense team fought successfully Tuesday to
introduce testimony and evidence putting the onus on Coopers and Lybrand. The defense is
relying on expert Lawrence Field, a certified public accountant, to deliver its firepower
in this battle over whom to blame for Symington's erroneous personal financial statements.
Field is the fourth and perhaps most important defense witness to take the stand since the
defense began arguing its case last week. Symington's bank-fraud trial is now in its
eleventh week.
7/18/97 - LENDER
IS BLAMED FOR MERCADO'S FALL: Gov. Fife Symington's one-time business deputy went to
bat for his ex-boss Friday, pitching the downtown Mercado as a classy development that was
turned into a loser by a lender who now blames Symington. Randy Todd, who briefly ran the
Symington Co. after Symington was elected governor in 1991, on Friday blamed McMorgan
& Co. for rejecting potential tenants who could have saved the Mercado from eventual
default on a $10 million loan. Todd testified that McMorgan, which managed a group of
union pension funds that made the Mercado loan, repeatedly rejected leases that would have
filled the troubled retail and office center, allowing it to earn money to repay the loan.
7/17/97 - WITNESS
TEARFULLY RECOUNTS FIFE'S 'APPRECIATIVE' LETTER: A federal case built on numbers
entered a more human dimension Thursday as the prosecution's final witness, reading aloud
to jurors a letter from Fife Symington, choked back tears over praise for her as "the
best partner anyone could have." Jean Wong's emotional testimony blew up in the face
of defense lawyer John Dowd, who had scoffed at Wong's claim under oath that Symington had
made her a 49 percent partner in his real-estate company.
7/16/97 - FINAL
PROSECUTION WITNESS: FIFE ASTUTE BUSINESSMAN: A former employee and partner in Gov.
Fife Symington's real-estate ventures helped prosecutors conclude their case Wednesday by
knocking down defense claims that Symington was such a visionary that he couldn't be
bothered with the details of his financial statements. "He was very handy with a
calculator," said Jean Wong, recalling that Symington could quickly work out a
project's market value on his Hewlett-Packard by applying a formula to its projected
income. "Fife is very smart," she said. "He is very good at making you a
believer. He's very convincing. He's a risk-taker. He's a fighter. He's someone who needs
to be in control."
7/15/97 - MERCADO
LENDERS TESTIFY ABOUT EXTORTION ATTEMPT: Gov. Fife Symington threatened to jeopardize
a lucrative lease, file for bankruptcy and publicize potentially illegal conduct if the
loan for his downtown Mercado project was foreclosed, a lender testified Tuesday. Daniel
O'Donnell, senior vice president for real estate at McMorgan & Co., which now manages
the union pension funds, testified that he did not notify law-enforcement officials about
the alleged threats in 1991 because "my single focus in this was to get the
pensioners' money back" from a failing $10 million loan to Symington's Mercado
partnership.
7/11/97 - FIFE
DANGLED POLITICAL CLOUT AS WAY TO FEED MERCADO: In an afternoon of testy courtroom
exchanges, a lender on Friday accused Gov. Fife Symington of trying to use political
muscle for his own business ends. In one of the most animated days of testimony since the
governor's trial began in mid-May, former McMorgan & Co. Vice President Donald Eaton
told jurors in Symington's fraud trial that he felt Symington would try to use the power
of his governorship to hurt McMorgan's business interests if the firm foreclosed on a $10
million loan that Symington guaranteed in 1990.
7/10/97 - FAULTY
FINANCIAL RECORDS SUBMITTED FOR MERCADO LOAN: The man who OK'd a $10 million
pension-fund loan for Gov. Fife Symington's downtown Mercado development said Thursday
that he based his approval on a 1989 Symington financial statement that prosecutors now
allege was shot through with misrepresentations. Donald Eaton, a former vice president at
McMorgan & Co., which managed the pension funds that made the Mercado loan, told the
jury in Symington's federal bank-fraud case that he had never before had anyone
"misrepresent" their net worth on a financial statement.
7/9/97 - FIFE
THREATENED LEGAL ACTION IF BANK REFUSED CONCESSIONS: Five months after taking office,
Gov. Fife Symington demanded concessions from a lender by threatening legal action and
warning that "he would cease to be cooperative and fight, if backed into a
corner," according to a memo revealed at his trial Wednesday. The confidential Valley
National Bank memorandum summarized an Aug. 1, 1991, meeting that Symington had with three
officials at the bank, which was trying to collect more than $1.5 million on three loans.
7/8/97 - EX
BANK VP: FAULTY LOAN INFO SUPPLIED BY FIFE: A banker testified Tuesday that Gov. Fife
Symington told her he had guaranteed no long-term loans when he had already guaranteed
more than $11 million in such loans to his development partnerships. Former Valley
National Bank vice president Jane Proctor, who took the stand to discuss details of three
separate Symington loans and lines of credit fromValley National, said Symington told her
in late 1989 that that he had guaranteed only short-term construction loans on his
projects.
7/3/97 - FORMER
BANK OFFICIAL DOUBTS FIFE'S HONESTY: A former Valley National Bank credit officer
challenged Gov. Fife Symington's honesty and character Thursday, prompting a defense
attorney to call him "a stooge for the government." Kendall Milhon, now chief
financial officer for a food manufacturer, triggered the harsh defense response after his
morning of testimony about Symington's financial dealings with Valley National between
1987 and 1989. Milhon told the jury that he was unaware of discrepancies between
Symington's December 1987 personal financial statement sent to Valley National and another
December 1987 statement that was sent to other lenders.
7/2/97 - RELUCTANT
TO SUE FIFE, MOTHER EXCUSED DEBTS: A day after Gov. Fife Symington received a $300,000
loan from his mother, she ordered that her will be amended to forgive his debts to her on
her death, her attorney testified Wednesday. "I think she knew that if she didn't
forgive them, I would probably have to sue her son" to recover the 1989 loan and
other debts, said Thomas Washburne, the Baltimore attorney who represents the estate of
the late Martha Frick Symington, who died last year.
7/1/97 - FIFE
WILLFULLY MISLED FIRM, EX-ACCOUNTANT TESTIFIES: Gov. Fife Symington's former
accountant testified Tuesday that her firm was "misled in some way" when it
worked with Symington on financial reports in the late 1980s. Prosecutor David Schindler
asked Katherine Wrigley, a former Coopers & Lybrand employee, whether she believed
Symington had been "entirely forthright" with her when she reviewed the
methodology of his 1987, 1988 and 1989 financial statements and wrote reports to accompany
those statements when they were sent to lenders. After a long pause, Wrigley responded:
"Based on what I know today, I think Mr. Symington must have known that we'd been
misled in some way."
6/27/97 - DEFENSE
GRILLS WITNESS OVER LAX ACCOUNTING: Fife Symington's defense began building its case
Friday that Symington made honest mistakes on his financial statements and then was
tripped up by accountants who should have caught the errors. Katherine Wrigley, a former
partner at Coopers & Lybrand, conceded that it was Symington himself who had supplied
information that led her to discover the discrepancies between his current (in 1991) and
previous financial reports.
6/26/97 - MULTITUDE
OF DISCREPANCIES EXPOSED IN '91 FINANCIALS:An accountant who worked on Gov. Fife
Symington's financial statements for Coopers & Lybrand said her last job for him
exposed many major discrepancies in the way he was reporting his net worth to lenders.
Accountant Katherine Wrigley, a former partner at Coopers, took the stand Thursday in Gov.
Fife Symington's trial and said how her audit division was asked in 1991 to prepare a
report for Symington's May 1991 personal financial statement. Wrigley said she was told
her report would "help establish that Mr. Symington didn't have the net worth to
honor these guarantees," apparent reference to the governor's desire to get out of
the loan agreements.
6/25/97 - BANK
SHUNNED FORECLOSURE; FEARED ANTAGONIZING FIFE:Officials of Citicorp Real Estate Inc.
knew by 1991 that Gov. Fife Symington was broke, but they decided against foreclosing on
his $10.5 million loan in part because they feared that antagonizing the governor could
affect their business in Arizona, a witness testified Wednesday. David Feingold, an
executive for Citicorp Real Estate Inc, the commercial-property arm of Citibank, said his
company even had a private investigator look into Symington's affairs because the lender
suspected that the governor was hiding assets.
6/24/97 - FINANCIAL
STATEMENTS VITAL TO LOAN APPROVALS:Gov. Fife Symington's personal financial statements
were essential to First Interstate Bank's decision to loan him money, a former bank
officer testified Tuesday. Debra Livermore, responding to prosecutor David Schindler's
project-by-project questioning about financial statements Symington submitted to the bank,
said she would have wanted to know that Symington repeatedly overstated the market value
of his offices and shopping centers and understated the loans that financed them.
6/20/97 - LENDER
CONFIRMS REPORTS LACKED DATA: In a dramatic hour of testimony that cut to the heart of
prosecutors' case, a real estate lender said Friday that a 1989 financial statement
submitted by Gov. Fife Symington omitted crucial information about what he owed and what
he owned. The testimony by David Feingold, a managing director for Citicorp Real Estate
Inc., also established that in 1990, Symington tried to stall a routine review of his
credit by the Citicorp subsidiary because it could turn up bad news that would affect his
race for governor.
6/19/97 - EX-CEO
BLAMES SELF: Gov. Fife Symington's former chief financial officer blamed himself for
not warning Symington that he might be violating the terms of a loan that built the swank
Camelback Esplanade.
6/18/97 - FIFE
PREFERRED HARD HAT OVER CRUNCHING NUMBERS:When Gov. Fife Symington was a developer of
shopping centers and office complexes, he was too busy building and promoting his projects
to concern himself with their bookkeeping details, the former top accountant at his real
estate company testified Wednesday. "He definitely was the big-picture person in the
company," said James Cockerham, who left the Symington Co. in 1991. "He placed
his reliance on me."
6/17/97 - 'MOTHBALLING'
ESPLANADE CONSIDERED IN '90 SLUMP:One of the two towers at the Camelback Esplanade was
renting so poorly in 1990 that Symington's key partner in the deal considered
"mothballing" it for two years to wait out a real-estate slump, a former
Symington employee testified Tuesday. James Cockerham, formerly the Symington Co.'s top
financial officer, said Tuesday that while the mothballing idea ultimately was rejected, a
slump in Phoenix real estate caused persistent operating deficits at the swank office,
retail and hotel complex at 24th Street and Camelback Road.
6/13/97 - LAWYERS
CLASH OVER JAPANESE BANKER STATEMENTS:While prosecutors continued their methodical
assault on Gov. Fife Symington's financial statements Friday, his defense team pleaded for
permission to introduce the contention of a Japanese banker they believe will undercut
charges that he defrauded lenders. Outside the presence of the jury, opposing lawyers
clashed over the significance of Makio Shimomura's statement that Symington's financial
statement had not been a key factor in a Japanese bank's decision to lend $127 million to
build Symington's landmark project, the Camelback Esplanade.
6/12/97 - PROJECT
VALUES QUESTIONED; TRIAL DELAYED: Government prosecutors continued to grind away
Wednesday at the reputed values of Gov. Fife Symington's development projects between 1986
and 1991, focusing on four money-losing East Phoenix buildings whose values they assert
Symington inflated on certain financial statements. At the end of the day Wednesday, U.S.
District Judge Roger Strand ordered the trial halted for at least one day to allow a juror
to seek medical attention.
6/10/97 - BELEAGUERED
BUILDING DEEPENED DEBT: A few miles west of downtown Phoenix, on an industrial stretch
of West Van Buren Street, sits a office-warehouse building that in the 1980s dragged
Arizona Gov. Fife Symington and his partners steadily deeper into debt. On Tuesday, the
jury in Symington's federal criminal trial learned how the Van Buren Industrial Center
bedeviled the Symington-led partnership with unproductive rents, a mortgage that was never
paid, and a proposed sale that fell through in 1988.
6/6/97 - CONTROLLER
BARRED FROM RECORDS:Gov. Fife Symington was so guarded about his personal financial
statements in the mid-1980s that the controller of The Symington Co., James Cockerham, was
not permitted to see them. Cockerham also testified Friday that Symington understood the
terms of his financial statements and the details of his many projects, including the
financially troubled Missouri Court buildings.
6/5/97 - PROPERTY
WORTH 'ZERO': While Gov. Symington was reporting to lenders that he owned a $2 million
share of the Camelback Esplanade, he was warning others through his lawyer that the
property's actual value was "zero or minute," a witness testifies.
6/4/97 - SYMINGTON
'HONEST': Former Southwest Savings & Loan executive Donald Lewis tells reporters
outside U.S. District Court that he thinks Gov. Fife Symington is innocent.
6/3/97 - FORMER
PRESIDENT CLAIMS ESPLANADE SUNK S&L: The Camelback Esplanade, Gov. Fife
Symington's most glamorous development, dragged Southwest Savings and Loan into an
ever-deepening swamp of debt in the mid-1980s, according to testimony Tuesday from the
former president of the failed thrift.
5/30/97 - FORMER
BUSINESS PARTNER CALLED TO WITNESS STAND: Timothy Boyce, a former business partner of
Gov. Fife Symington in Scottsdale Centre, was worried that throwing the troubled project
into bankruptcy right before the 1990 gubernatorial election might hurt Symington's
chances.
5/29/97 - DEFENSE
CROSS-EXAMINES WARY WITNESS: Banker Noel Thompson was cautious but poised in the face
of cross-examination by defense attorney John Dowd, who at one point grilled him about an
inconsistency between his statements to a grand jury in 1994 and his responses to a
prosecutor on Tuesday.
5/28/97 - PROSECUTORS
ACCUSE WITNESS: Federal prosecutors accuse Gov. Fife Symington's former secretary of
misleading a federal grand jury, and also disclose to jurors that Joyce Riebel was granted
criminal immunity in return for testifying in the case.
5/25/97 - WILL
HE TAKE THE STAND?: When federal prosecutors complete their phase of the criminal case
against Arizona Gov. Fife Symington, defense attorneys will be faced with perhaps one of
the trial's most critical decisions: Should the governor take the witness stand?
5/23/97 - FIFE-RIEBEL
PACT REVEALED: The fourth day of testimony by Gov. Fife Symington's former secretary
ended with fireworks Friday as prosecutors pointed out that Joyce Riebel once had a joint
criminal defense agreement with Symington.
5/22/97 - FLAWS
UNINTENTIONAL: If there were flaws in Gov. Fife Symington's financial statements to
lenders, they were the unintentional result of careless typing or errors by his
accountants, Symington's former secretary Joyce Riebel testifies under cross-examination.
5/21/97 - OVERSTATED
ASSETS: Joyce Riebel, testifying for a second day, says Symington continued to send
financial statements to lenders showing an $11.9 million net worth even after he had
admitted to one bank that his assets were "materially and dramatically
overstated."
5/20/97 - EX-SECRETARY
TESTIFIES: Joyce Riebel, former secretary to Fife Symington, is the first witness
called in Symington's trial. She tells jurors that she helped prepare financial statements
that offered Symington's many lenders vastly different views of his wealth.
5/19/97 - LAWYERS
TO CALL WITNESSES: The prosecution in Gov. Fife Symington's trial is ready to call its
first witness. You'll also find a summary of the charges against Symington, courtroom
highlights, and a seating chart.
5/17/97 - OPENING
STATEMENTS: Prosecution and defense attorneys present their opening arguments to the
jury, and depending on who you believe, the governor either 'told lies' or is 'completely
innocent.'
5/16/97 - WHO
IS SITTING WHERE: Illustration gives an inside view of the courtroom.
5/15/97 - JURORS
SELECTED: Seventeen jurors - nine men and eight women - are picked in the trial of
Gov. Fife Symington.
5/14/97 - JURY
SELECTION CONTINUES: Gov. Fife Symington's criminal fraud trial completed its second
day of jury selection with the questioning of more prospective jurors, six of whom were
dismissed for holding potentially prejudicial views of the case. Thirteen other
prospective jurors took their place in the final jury pool, bringing the total number to
29.
5/14/97
- SELECTION PROCESS: Diagram explains how jury is picked.
5/13/97 - FIFE'S
DAY IN COURT ARRIVES: Sometime late this week, after a jury has been selected in the
case of United States vs. John Fife Symington III, a downtown Phoenix courtroom will be
the setting for two very different stories about the fortunes of the Harvard-educated
developer who became governor of Arizona.
5/11/97 - ANN
STANDS BY HER MAN: She wed a warrior, which means she too must face war. Ann Symington
stands by her man as the trial of their lives approaches less than 72 hours away.
http://www.azcentral.com/news/symington/trial/trialmain.shtml
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
Nos. 98-10070
98-10071
98-10143
D.C. No.
CR-96-00250-RGS
UNITED STATES OF AMERICA,
Plaintiff-Appellee
Cross-Appellant,
v.
JOHN FIFE SYMINGTON, III,
Defendant-Appellant
Cross-Appellee.
Appeal from the United States District Court
for the District of Arizona
Roger G. Strand, District Judge, Presiding
Argued and Submitted
November 4, 1998--San Francisco, California
Filed June 22, 1999
Before: Betty B. Fletcher and A. Wallace Tashima, Circuit Judges, and
James M. Fitzgerald,* District Judge.
Opinion by Judge B. Fletcher; Partial Concurrence and Partial Dissent by
Judge Fitzgerald
COUNSEL
Terence J. Lynam, Akin, Gump, Strauss, Hauer & Feld, Washington, D.C., for the
defendant-appellant-cross-appellee.
George S. Cardona and David J. Schindler, Assistant United States Attorneys, Los
Angeles, California, for the plaintiff appellee-cross-appellant.
OPINION
B. FLETCHER, Circuit Judge:
John Fife Symington, III appeals from his conviction and 30-month prison sentence on
five counts of making false statements to financial institutions in violation of 18 U.S.C.
§ 1014 and one count of wire fraud in violation of 18 U.S.C. § 3231. Principal among the
issues on appeal is Symington's claim that his Sixth Amendment right to an impartial jury
was violated when the district court dismissed a juror on the eighth day of deliberations.
Symington also appeals from the district court's denial of his post-verdict motion for
judgment of acquittal on three of the § 1014 counts. The government cross-appeals,
challenging the district court's post-verdict dismissal of one § 1014 count for
insufficient evidence, and its dismissal, several months after trial, of 11 unresolved
counts for violation of the Speedy Trial Act. We have jurisdiction under 28 U.S.C. § 1291
and 18 U.S.C. §§ 3731 & 3742. We reverse Symington's conviction, but affirm the
district court's treatment of the evidentiary sufficiency and Speedy Trial Act issues.
I.
Prior to being elected Governor of Arizona in 1991, Symington was a commercial real
estate developer in Phoenix. Between 1986 and 1992, Symington and his whollyowned company
obtained several construction and permanent loans from various lenders to support his real
estate projects. In order to obtain many of these loans, Symington agreed to guarantee
full or partial repayment of the loans himself. In support of those guarantees, Symington
was required to submit personal financial statements detailing his financial position.
Symington prepared those statements himself. The indictment charged that many of the
statements were materially false in that they overstated the value of Symington's assets,
understated or failed to disclose his liabilities, and overstated the value of his
interest in the real estate projects he was developing. Symington was also alleged to have
submitted contradictory versions of statements bearing the same "as of" date.
A 23-count superseding indictment was returned against Symington on January 9, 1997.
Prior to trial, the district court granted Symington's motion to dismiss one count as
unconstitutionally vague. Trial by jury on the remaining 22 counts began on May 13, 1997,
and lasted through the first week of August, 1997. At the end of the trial, the district
court granted Symington's motion for judgment of acquittal on one count, but denied the
motion as to all other counts. The remaining 21 counts were submitted to the jury on
August 8, 1997.
On August 15, 1997, the jury sent a note to the district court judge stating,
"Your Honor, we respectfully request direction. One juror has stated their final
opinion prior to review of all counts." The judge discussed the matter with counsel
for both sides and then wrote back to the jurors reminding them of their duty to
participate in deliberations with each other, but emphasizing also that each juror should
make up his or her own mind on the charges. On August 19, the jury sent the judge another,
more detailed note. The note read, in pertinent part:
We have earnestly attempted to follow your last directive to continue with our
deliberations. How ever, the majority of the jurors sincerely feel that the juror in
question cannot properly participate in the discussion with us.
Reasons:
Inability to maintain a focus on the subject of discussion.
Inability to recall topics under discussion.
Refusal to discuss views with other jurors.
All information must be repeated two to three times to be understood, discussed, or
voted on. Immediately following a vote, the juror cannot tell us what was voted.
We question the ability to comprehend and focus on the information discussed.
This is the same juror of concern in our last communication.
The juror in question was Juror Cotey, a woman apparently in her mid-70s.
After discussing the matter with counsel for both sides, the judge separately
questioned each member of the jury to determine the nature of the problem. Counsel
participated in the questioning. During the questioning, each of the jurors (other than
Cotey) agreed that the note accurately described their concerns. The jurors suggested that
the best solution would be for the judge to dismiss Juror Cotey. They all stated that
Cotey appeared confused and unfocused during deliberations. Presiding Juror Carlson, for
example, stated that
[a]t first we almost felt it was someone that had their mind made up, which we were
trying to work with and around. Everyone is certainly entitled to their opinion. That's
what this is about. But as it progressed and we tried to press for that opinion, because
maybe it would affect ours and we wanted that input to add to ours and share, we got such
rambling answers that we were all looking at each other around the circle like, my gosh,
this answer's so off the wall it is not connected to the discussion in any way.
At other times, the jurors seemed less concerned about Cotey's ability to deliberate
than about her apparent unwillingness to explain her thinking about the case. Although
Juror Witter described Cotey as "very intelligent," Juror Seaman stated that
Cotey "refuse[s] to discuss her views. . . . She just seems to have her mind set. She
says she doesn't have to explain herself to anybody."
The statements of some jurors indicated that their frustration with Cotey may have
derived more from their disagreement with her on the merits of the case, or at least from
their dissatisfaction with her defense of her views. Juror Witter stated that
"[t]here's one element that [Cotey] felt strongly about," and that Cotey
"would stick on two of the elements every time, because she didn't -- she just kept
getting stuck on two elements because that's how she felt and she wouldn't really explain
to us her rationale of her way she wanted to vote." Juror Bamond saw Cotey as an
obstacle to reaching a verdict: "[W]e are blocked and blocked and blocked. And I
don't want to be blocked any more. . . . It's a long trial, it's frustrating, you
know."
When the judge questioned Cotey, she stated that she was prepared to continue
deliberating. She noted that the other jurors' frustration with her might be because
"I can't agree with the majority all the time, at least temporarily. And I'm still
researching and looking for more in the case. " Cotey also complained of pressure
from the other jurors: "I found myself backed up against the wall for a vote every
time, an objection to my vote on a specific count or an element of the count." Cotey
stated, however, that she was prepared to stand by her position even though she was
clearly in the minority: "I realized that I was the one isolated. But I also realized
I told [another juror] I was a separate juror and had a right and I didn't like being
bullied down on a point." Cotey claimed that she was willing to discuss elements of
the case with the other jurors, but that she became intimidated when everyone talked at
once and demanded that she justify her views as soon as she stated them.
The judge decided to dismiss Cotey because she was "either unwilling or unable to
deliberate with her colleagues." The judge acknowledged that "no juror should
yield a thoughtfully-held position simply to arrive at a verdict," but found that
"there has been nothing stated by any of the jurors that would indicate that that is
the situation here. " Accordingly, the judge excused Cotey "for just cause for
being either unwilling or unable to participate in the deliberative process in accordance
with the instructions of the Court. " On August 20, at Symington's request, the judge
seated one of the alternate jurors in Cotey's place and instructed the jury to begin its
deliberations anew. The next day, Symington moved for a mistrial. He argued that the
disagreement between Cotey and the other jurors was rooted in the merits of the case, and
that dismissing Cotey prejudiced her view of the case. The district court denied the
motion. Symington renewed the claim in a post-trial motion for a new trial, and the
district court again denied it.
On September 3, 1997, the jury returned verdicts convicting Symington on seven counts
(counts 10 and 11 and 13 to 16, involving submitting false statements to financial
institutions, and count 21 involving wire fraud) and acquitting him on three counts. The
jury was unable to reach a verdict on the remaining 11 counts, and the district court
declared a mistrial as to those counts. On January 20, 1998, the district court granted
Symington's motion for acquittal on count 11 but denied the motion in all other respects.
On February 2, 1998, the district court sentenced Symington to a prison term of 30 months.
On March 10, 1998, the district court dismissed the 11 mistried counts without prejudice,
for violation of the Speedy Trial Act.
Symington timely appealed from his conviction and sentence, and the government timely
cross-appealed.
II.
Symington argues that the district court committed reversible error when it dismissed
Juror Cotey on the eighth day of deliberations after finding that she was "either
unwilling or unable to deliberate." Symington contends that the other jurors'
complaints about Cotey were -- or at least very possibly may have been -- rooted in
substantive disagreements about the merits of the case, and that dismissing Cotey on
account of those disagreements violated his Sixth Amendment right to an impartial jury.
See U.S. CONST. amend VI ("In all criminal prosecutions, the accused shall enjoy the
right to a speedy and public trial, by an impartial jury. . ."). The government
responds that Juror Cotey was in fact either unable or unwilling to deliberate properly,
and that her dismissal was warranted under Rule 23(b) of the Federal Rules of Criminal
Procedure.
Rule 23(b) provides that "if the [district] court finds it necessary to excuse a
juror for just cause after the jury has retired to consider its verdict, in the discretion
of the court a valid verdict may be returned by the remaining 11 jurors."1
We review a district court's dismissal of a juror during deliberations for abuse of
discretion. See United States v. Beard, 161 F.3d 1190, 1193 (9th Cir. 1998); United States
v. McFarland, 34 F.3d 1508, 1512 (9th Cir. 1994). We do so because as a general matter,
"the district court[is] in the best position to evaluate the jury's ability to
deliberate." Beard, 161 F.3d at 1194 (internal quotation marks omitted). Thus,
although "just cause" for dismissal under Rule 23(b) generally pertains to
physical incapacity or absence due to religious observance, this and other courts have
upheld the dismissal of a juror when the district court determined that the juror was
unable to deliberate impartially. See id. at 1193-94 (dismissal of two jurors proper after
they became involved in an ongoing, bitter argument leaving them emotionally unstable and
unable to deliberate); United States v. Egbuniwe , 969 F.2d 757, 760-61 (9th Cir. 1992)
(dismissal proper where juror's impartiality in doubt after juror's girlfriend was
arrested by police); United States v. Walsh, 75 F.3d 1, 4-5 (1st Cir. 1996) (dismissal
proper where juror was mentally unstable and unable to engage in rational discussion);
United States v. Huntress, 956 F.2d 1309, 1312 (5th Cir. 1992) (dismissal proper where
juror diagnosed by doctor as suicidal and paranoid).
The district court's discretion in this area is not unbounded, however. Indeed, "a
court may not dismiss a juror during deliberations if the request for discharge stems from
doubts the juror harbors about the sufficiency of the evidence." United States v.
Brown, 823 F.2d 591, 596 (D.C. Cir. 1987); see United States v. Ross, 886 F.2d 264, 267
(9th Cir. 1989) (citing Brown as describing a limit on district court discretion). The
reason for this prohibition is clear: "To remove a juror because he is unpersuaded by
the Government's case is to deny the defendant his right to a unanimous verdict."
United States v. Thomas, 116 F.3d 606, 621 (2d Cir. 1997); see Brown, 823 F.2d at 596
("If a court could discharge a juror on the basis of such a request, then the right
to a unanimous verdict would be illusory.").2
Symington argues that the other jurors sought Cotey's removal because they disagreed
with her on the merits of the case. It is undisputed that if this is true -- if the other
jurors did seek to remove Cotey because they disagreed with her views on the merits --
then dismissal of Cotey was improper. "[W]hen a request for dismissal stems from the
juror's view of the sufficiency of the evidence . . ., a judge may not discharge the
juror: the judge must either declare a mistrial or send the juror back to deliberations
with instructions that the jury continue to attempt to reach agreement." Brown, 823
F.2d at 596. The question here is what evidentiary standard the district court ought to
employ in making that determination. Specifically, how likely must it be that a juror's
views on the merits underlies the request for her removal, before the district court is
precluded from removing the juror? We have not previously answered this question in the
federal criminal context.3
A trial judge faces special challenges when attempting to determine whether a problem
between or among deliberating jurors stems from disagreement on the merits of the case.
"[A] court may not delve deeply into a juror's motivations because it may not intrude
on the secrecy of the jury's deliberations." Brown, 823 F.2d at 596; see Thomas, 116
F.3d at 619. There are important reasons why a trial judge must not compromise the secrecy
of jury deliberations. First, if trial judges were permitted to inquire into the reasoning
behind jurors' views of pending cases, "it would invite trial judges to second-guess
and influence the work of the jury." Thomas , 116 F.3d at 620. Second, a trial
judge's examination of juror deliberations risks exposing those deliberations to public
scrutiny. Such exposure, in turn, would jeopardize the integrity of the deliberative
process. See id. at 618-19. As Justice Cardozo put it, "Freedom of debate might be
stifled and independence of thought checked if jurors were made to feel that their
arguments and ballots were to be freely published to the world." Clark v. United
States, 289 U.S. 1, 13 (1933); see Frank A. Bacelli, Note, United States v. Thomas: When
the Preservation of Juror Secrecy During Deliberations Outweighs the Ability to Dismiss a
Juror for Nullification, 48 Cath. U.L. Rev. 125, 153 n.215 (1998) ("Commentators long
have feared that the disclosure of deliberations to the general public could affect a
juror's decisionmaking process during trial and could potentially undermine the public's
confidence in the jury system."); Benjamin S. DuVal, Jr., The Occasions of Secrecy,
47 U. Pitt. L. Rev. 579, 646 (1986) ("The secrecy of the jury room, like that of the
Supreme Court conference, is designed to promote the free and candid interchange of
views."); Note, Public Disclosures of Jury Deliberations, 96 H ARV. L. REV. 886, 889
(1983) ("Juror privacy is a prerequisite of free debate, without which the
decisionmaking process would be crippled.").4
In refraining from exposing the content of jury deliberations, however, a trial judge
may not be able to determine conclusively whether or not a juror's alleged inability or
unwillingness to deliberate is simply a reflection of the juror's opinion on the merits of
the case, an opinion that may be at odds with those of her fellow jurors. Thus, in the
rare case where a request for juror dismissal focuses on the quality of the juror's
thoughts about the case and her ability to communicate those thoughts to the rest of the
jury, "the court will likely prove unable to establish conclusively the reasons
underlying" the request for dismissal. Brown , 823 F.2d at 596. In such cases a trial
court lacks the investigative power that, in the typical case, puts it in the "best
position to evaluate the jury's ability to deliberate." Beard, 161 F.3d at 1194.
The Second and D.C. Circuits have recognized this dilemma. See Thomas, 116 F.3d at
620-23; Brown, 823 F.2d at 595-97. Those cases both involved allegations that a juror was
unwilling or unable to apply the law as instructed by the judge. In Brown a juror informed
the judge that he was "unable to discharge [his] duties as a member of th[e]
jury." 823 F.2d at 594. In Thomas, the jury complained that one juror had a
"predisposed disposition" and that he was unwilling to decide the case under the
law as instructed by the judge. 116 F.3d at 611. The Second and D.C. Circuits recognized
that the trial judges in those cases could not have plumbed the depths of the problem
without delving into the juror's views on the merits of the case. Thus, those courts held
that "if the record evidence discloses any possibility that the request to discharge
stems from the juror's view of the sufficiency of the government's evidence, the court
must deny the request." Brown, 823 F.2d at 596; Thomas, 116 F.3d at 621-22 (quoting
Brown).
We hold that if the record evidence discloses any reasonable possibility that
the impetus for a juror's dismissal stems from the juror's views on the merits of the
case, the court must not dismiss the juror.5 Under such circumstances, the trial
judge has only two options: send the jury back to continue deliberating or declare a
mistrial. See Brown, 823 F.2d at 596. This rule is attentive to the twin imperatives of
preserving jury secrecy and safeguarding the defendant's right to a unanimous verdict from
an impartial jury. We are confident that "[g]iven the necessary limitations on a
court's investigatory authority in cases involving a juror's alleged refusal [or
inability] to follow the law, a lower evidentiary standard could lead to the removal of
jurors on the basis of their view of the sufficiency of the prosecution's evidence. "
Thomas, 116 F.3d at 622.6
Here, there was a reasonable possibility that Juror Cotey's views on the merits of the
case provided the impetus for her removal.7 While there may have been some reason
to doubt Cotey's abilities as a juror, there was also considerable evidence to suggest
that the other jurors' frustrations with her derived primarily from the fact that she held
a position opposite to theirs on the merits of the case. Juror Witter asked the district
judge to dismiss Cotey because otherwise the result would be "an undecided vote, a
hung jury." Juror Bamond complained that because of Cotey, "we are blocked and
blocked and blocked. And I don't want to be blocked any more." Cotey herself stated
that she felt the other jurors were frustrated with her because "I can't agree with
the majority all the time, at least temporarily." While the other jurors may not have
thought their difficulties with Cotey stemmed from her position on the merits, such
difficulties can certainly manifest themselves in concerns about a juror's reasonableness
or general capacity as a juror. See Thomas, 116 F.3d at 622.8
We hold that because it was reasonably possible that the impetus for Juror Cotey's
dismissal came from her position on the merits of the case, it was error to dismiss her.9
Accordingly, we reverse Symington's conviction and vacate his sentence.
III.
A.
Symington separately contends that the evidence was insufficient to convict him on
counts 13 to 15 of the indictment. We must reach this claim even though we reverse his
conviction. See United States v. Aguilar, 80 F.3d 329, 334 (9th Cir. 1996) (en banc).
"Because an appellate reversal of a conviction on the basis of insufficiency has the
same effect as a judgment of acquittal, the Double Jeopardy Clause would preclude
retrial" on counts 13 to 15 if we found the evidence insufficient to convict
Symington on those counts. United States v. McKoy, 771 F.2d 1207, 1215 (9th Cir. 1985). We
review the sufficiency of the evidence supporting a conviction to determine whether,
viewing the evidence in the light most favorable to the government, any rational trier of
fact could have found the essential elements of the crime beyond a reasonable doubt. See
United States v. Ross, 123 F.3d 1181, 1184 (9th Cir. 1997), cert. denied, 118 S. Ct. 733
(1998).
Counts 13 to 15 alleged that Symington violated 18 U.S.C. § 1014 by submitting
materially false requests for disbursements on loans from Dai Ichi Kangyo Bank (DKB). 18
U.S.C. § 1014 subjects to criminal penalty anyone who "knowingly makes any false
statement or report, or willfully overvalues any land, property, or security, for the
purpose of influencing in any way" a federally insured financial institution.
Symington contends that the government's evidence showed only that he submitted false
statements to DKB, and that it was insufficient to support a conclusion that he did so
knowingly or that he intended to influence DKB with those statements.
In 1987 and 1988, DKB loaned Symington and his affiliates a total of $127,000,000 for
the development of two real estate projects. As part of the loan agreements, Symington
personally guaranteed payment of up to $9,000,000, and promised to maintain a net personal
worth of $4,000,000. Symington further agreed that his failure to maintain that net worth
would put the loans into default. In order to obtain a loan disbursement, Symington was
required to prepare and submit a "borrower's affidavit." One of the
representations reaffirmed in each affidavit was Symington's promise to continue to
maintain a net worth of $4,000,000.
Counts 13 to 15 relate to borrower's affidavits submitted by Symington when his net
worth was less than $4,000,000. It is undisputed that Symington did submit affidavits
reaffirming his agreement to maintain a net worth of at least $4,000,000 even after his
net worth had sunk below that level. Symington testified at trial that the net worth
requirement "never even crossed [his] mind" when he signed the draw requests.
Nevertheless, we hold that the jury could rationally have chosen to disbelieve Symington's
testimony. At trial, evidence from Symington's own handwritten notes showed that he had
shielded his financial statements from a full-fledged audit, so that no accountant could
conclude that his net worth was less than $4,000,000. A rational juror could have inferred
from this evidence that Symington was aware of the $4,000,000 requirement, and knew he did
not meet it when he filed the false affidavits.
As to Symington's intent to influence DKB, the government introduced the evidence of
Seiichi Chiba, the DKB loan officer responsible for the relevant loans. Chiba testified
that DKB looked to the borrower's affidavits to ensure that there was no default under the
terms of the loan. Chiba further testified that DKB relied on the veracity of the
borrower's affidavits, that the net worth requirement was important to DKB, and that as
soon as he learned Symington was in default under that requirement, he had to obtain
special permission to continue the loan. Based on this evidence of the importance of the
$4,000,000 requirement to DKB, a rational juror could have concluded that by submitting
borrower's affidavits claiming to have met the requirement, Symington intended to
influence DKB not to declare the loan in default. Indeed, Symington submitted the
borrower's affidavits for the purpose of influencing DKB to continue to disburse funds.
We find, therefore, that there was sufficient evidence to convict Symington on counts
13 to 15.
B.
In its cross-appeal, the government contends that the district court erred in granting
Symington a post-verdict judgment of acquittal on count 11. Like counts 13 to 15, that
count also charged Symington with violation of 18 U.S.C.§ 1014. Count 11 charged that in
a loan extension agreement with Valley National Bank (VNB) dated June 24, 1991, Symington
knowingly represented that his personal financial statement of December 31, 1990 was true
and accurate, even though he knew that the statement was false. The jury voted to convict
Symington on count 11, but the district court found insufficient evidence to support the
conviction. Our mode of review here is the same as for counts 13 to 15: reviewing the
evidence in the light most favorable to the government, we ask whether any rational trier
of fact could have found Symington guilty on count 11 beyond a reasonable doubt.
In November, 1989 Symington signed a loan agreement with VNB for a loan of just under
$900,000, to be repaid by May 30, 1991. In the agreement Symington attested that "the
financial statement delivered to Bank by Borrower[Symington] is true, complete and correct
in all respects and fairly presents the financial condition of Borrower as of the date
hereof, and from the date of such financial statement until the date hereof, there has
been no material change in the financial condition of the subject thereof." The loan
agreement did not specify a date for the "financial statement delivered to Bank by
Borrower," but the last financial statement delivered to VNB was Symington's December
31, 1988 financial statement (the 1988 statement). The loan agreement elsewhere provided
that Symington would provide VNB with annual financial statements, and that he would
maintain a net worth of not less than $4,000,000. Thus on May 8, 1990 Symington provided
VNB with his December 31, 1989 financial statement (the 1989 statement), and on May 14,
1991 he submitted his December 31, 1990 statement (the 1990 statement). It was proved at
trial that the 1990 statement was materially false, and that Symington falsely represented
its accuracy to VNB when he submitted it.10
VNB granted Symington a short extension of the 1989 loan in June, 1991. Paragraph 5 of
the extension agreement provided that Symington "hereby reaffirms to Bank the
accuracy, as of the date hereof, of all of the respective representations and warranties
made by him in the Note and Loan Agreement." Count 11 charged that in signing the
extension agreement, Symington falsely represented the accuracy of his 1990 statement.
However, the 1990 statement was not a "representation . . . made by [Symington] in
the Note and Loan Agreement." The original loan agreement referred to a
"financial statement delivered to Bank." Since that agreement was signed on
November 21, 1989, by its terms it cannot have referred to Symington's 1990 statement,
since it did not yet exist. Thus, the loan extension agreement made no reference to the
veracity of the 1990 statement. It merely reaffirmed Symington's representation that the
statements made in the original loan agreement, including the 1988 statement submitted in
conjunction with its signing, were accurate, as of the time they were made. Because a
rational juror could not have found that the extension agreement referred to the 1990
statement, we affirm the district court's grant of judgment of acquittal on count 11.
Symington may not be retried on that count.
IV.
The government also appeals from the district court's dismissal of 11 mistried counts
for violation of the Speedy Trial Act, 18 U.S.C. §§ 3161-74. On September 13, 1997, the
jury returned its verdict and announced that it was deadlocked on 11 counts. The district
court declared a mistrial as to those counts (the mistried counts). Neither party acted
further on the mistried counts until Symington's sentencing on February 2, 1998, when
Symington moved for dismissal under the Speedy Trial Act. The district court granted the
motion and dismissed the mistried counts without prejudice. We review questions of law
under the Speedy Trial Act de novo. See United States v. George, 85 F.3d 1433, 1436 (9th
Cir. 1996).
The Speedy Trial Act provides that "if the defendant is to be tried again
following a declaration by the trial judge of a mistrial . . . the trial shall commence
within seventy days from the date the action occasioning the retrial becomes final."
18 U.S.C. § 3161(e). Time began to run under this provision on September 3, 1997. Thus,
since more than 70 days elapsed between September 3, 1997 and February 2, 1998 when
Symington moved to dismiss the mistried counts, dismissal was required unless the Speedy
Trial Act should have been tolled for some or all of that interval. As to such tolling, §
3161(h) provides, in pertinent part:
The following periods of delay shall be excluded in computing the time within which . .
. the trial . . . must commence:
- Any period of delay resulting from other proceedings concerning the defendant, including
but not limited to -
. . .
(F) delay resulting from any pretrial motion, from the filing of the motion through the
conclusion of the hearing on, or other prompt disposition of, such motion;
. . .
(J) delay reasonably attributable to any period, not to exceed thirty days, during
which any proceeding concerning the defendant is actually under advisement by the court.
18 U.S.C. § 3161(h).
When the jury announced its verdict on September 3, 1997, Symington moved for an
extension of time (the extension motion) in which to file a post-trial motion for judgment
of acquittal or new trial as to the counts on which the jury voted to convict. The
district court took that motion under advisement and granted it on September 5, 1997. The
two days from September 3 to September 5 were excludable from Speedy Trial Act
calculations under § 3161(h)(1)(J) as time during which a "proceeding concerning the
defendant[was] actually under advisement by the court." Symington filed his
post-trial motion for judgment of acquittal (the post-trial motion) on October 10, 1997.
The district court heard argument on the motion on December 1, 1997, and took the matter
under advisement until issuing an order resolving it on January 20, 1998. Even excluding
the time from September 3 to 5, the Speedy Trial Act's 70-day period had passed well
before the district court took the post-trial motion under advisement on December 1, 1997.
The government argues, however, that the entire period from September 3, 1997 (when
Symington filed his extension motion) to January 20, 1998 (when the court rule on
Symington's post-trial motion) should be excluded because it was a "period of delay
resulting from other proceedings concerning the defendant." 18 U.S.C. § 3161(h)(1).
The government correctly notes that "other proceedings" is not limited to those
expressly listed in § 3161(h)(1). See United States v. LopezEspindola, 632 F.2d 107, 110
(9th Cir. 1980) ("the 'including but not limited to' language makes it clear that
Congress did not intend to restrict the meaning of 'other proceedings' to those
specifically ventured."). Accordingly, the government maintains that Symington's
post-trial motion was an unenumerated "proceeding[ ] concerning defendant" under
§ 3161(h)(1), and that the entire pendency of the motion should be excluded from Speedy
Trial Act calculations.
The government's argument is foreclosed by our decision in United States v. Tertrou,
742 F.2d 538 (9th Cir. 1984).
In Tertrou, we distinguished between pre-trial and post-trial motions:
Under section 3161(h)(1)(F), any period of delay resulting from a pre-trial motion is
excluded from the time of the filing of the motion through its disposition. Other types of
proceedings not enumerated, such as post-trial motions, are cause for exclusion of the
time that the matter is under advisement. See 18 U.S.C. § 3161(h)(1)(J).
Id. at 539. In Tertrou, a mistrial was first declared on all counts. The defendant
subsequently filed a motion for judgment of acquittal on the mistried counts. The motion
was still pending 70 days later, when the government initiated retrial proceedings. The
district court allowed the retrial, treating defendant's post-trial motion as a pre-trial
motion for Speedy Trial Act purposes and excluding the entire period during which the
motion was pending. We reversed, holding that post-trial motions are covered only by §
3161(h)(1)(J). Accordingly, "only the period that [a post-trial] motion is under
advisement is excluded." Id. at 539.
Tertrou controls our treatment of the issue here.11 Under Tertrou, the pendency
of Symington's post-trial motion was not excludable under § 3161(h)(1), and the district
court properly dismissed the mistried counts.
V.
Because the record evidence discloses a reasonable possibility that the impetus for
Juror Cotey's dismissal was her position on the merits of the case, we hold that her
dismissal was improper. Accordingly, we REVERSE Symington's conviction and VACATE his
sentence.12 We AFFIRM the district court on the other issues reached herein. Counts
13 to 15 may be among the counts on which Symington is retried; count 11 may not. The
mistried counts were properly dismissed without prejudice for violation of the Speedy
Trial Act.
FOOTNOTES
* The Honorable James M. Fitzgerald, Senior United States District Judge for the
District of Alaska, sitting by designation.
1 Once the district court decided to dismiss Juror Cotey, Symington requested that
the court substitute an alternate juror instead of proceeding with 11 jurors as prescribed
by the letter of Rule 23(b). Such substitution is permissible where the defendant
expressly waives his right to proceed with 11 jurors. See United States v. McFarland , 34
F.3d 1508, 1511 (9th Cir. 1994).
2 It is undisputed that Symington, as a federal criminal defendant, has a
constitutional right to a unanimous verdict. See United States v. Ullah, 976 F.2d 509, 513
n.13 (9th Cir. 1992).
3 In Perez v. Marshall, 119 F.3d 1422 (9th Cir. 1997), we faced a related question
in the context of federal habeas review of a state conviction. We noted that "a trial
court's findings regarding juror fitness are entitled to special deference" on habeas
review. Id. at 1426. The difference in procedural posture between direct federal review
and habeas-based review makes Perez inapposite to this case.
4 The district judge in this case is to be commended for scrupulously avoiding any
discussion of jurors' views on the merits when he questioned them about Juror Cotey.
5 We emphasize that the standard is any reasonable possibility, not any
possibility whatever. It may be that "[a]nything is possible in a world of quantum
mechanics." United States v. Watkins , 983 F.2d 1413, 1424 (7th Cir. 1993)
(Easterbrook, J., dissenting). Indeed, as an early scholar of the law of evidence
observed, "[E]ven the most direct evidence can produce nothing more than such a high
degree of probability as amounts to moral certainty." T. STARKIE, LAW OF EVIDENCE 478
(2d ed. 1833). Thus, to prohibit juror dismissal unless there is no possibility at all
that the juror was dismissed because of her position on the merits may be to prohibit
dismissal in all cases. We believe that the standard of "reasonable possibility"
in this context, like the standard of "reasonable doubt" in the criminal law
generally, is a threshold at once appropriately high and conceivably attainable.
All members of the panel agree that "reasonable possibility" is the
appropriate standard. The dissent, however, appears to define that standard rather
differently. Analogizing from the Ninth Circuit Model Criminal Jury Instruction concerning
"reasonable doubt, " the dissent contends that a "reasonable
possibility" is a possibility that leaves one " 'firmly convinced' that the
impetus for [a juror's dismissal] was her position on the merits." Dissent at 6655
(quoting 9TH CIR. CRIM. JURY INSTR. 3.3 (1997)). As the dissent would have it, something
is only reasonably possible if we are firmly convinced that it is true. This formulation
is based on a misunderstanding of our Model Jury Instructions. Model Instruction 3.3
provides that "[p]roof beyond a reasonable doubt is proof that leaves you
firmly convinced that the defendant is guilty." 9TH CIR. CRIM.JURY INSTR. 3.3 (1997)
(emphasis added). Properly analogized to the "reasonable possibility" context,
the standard states that unless the available evidence is sufficient to leave one firmly
convinced that the impetus for a juror's dismissal is unrelated to her position on the
merits, the dismissal is improper.
6 Cases subject to this rule, we emphasize, are infrequent. In general, questions
of juror bias or competence focus on "some event, or . . . relationship between a
juror and a party, that is both easily identifiable and subject to investigation and
findings without intrusion into the deliberative process." Thomas, 116 F.3d at 621.
In those cases, "the presiding judge can make appropriate findings and establish
whether a juror is biased or otherwise unable to serve without delving into the reasons
underlying the juror's views on the merits of the case." Id. Since the district
court's investigative authority is not constrained by the same jury secrecy concerns in
those cases, the rule we announce here is not triggered. In cases where the allegations go
to the quality and coherence of the juror's views on the merits, however, a trial judge
may not be able to assess the juror's competence without exposing the content of the
juror's views. The rule we announce today applies only to those cases.
7 In several places, the dissent characterizes our decision as holding that
"Cotey's views on the merits of the case provided the impetus for her
removal." Dissent at 6634. We reach no such conclusion. Rather, we hold that the
evidence before the district court disclosed a reasonable possibility that Cotey's
views on the merits provided the impetus for her removal. Because the issue involves the
quality and coherence of Cotey's deliberations, and because the district court properly
avoided compromising the secrecy of the jury's deliberations, the evidence available to
the district court was necessarily limited. The district court had to evaluate the issue
on the basis of that limited information, information insufficient to support any high
degree of certainty as to the underlying motive for the attempt to have Cotey dismissed.
In light of that limited evidence, we conclude that the district court could not have been
"firmly convinced" that the impetus for Cotey's dismissal was unrelated to her
position on the merits of the case. See supra n.5.
8 Indeed, it appears that it was only because of their disagreement with Cotey on
the merits that the other jurors had occasion to question her ability to deliberate. Juror
Bamond suggested as much when he stated that keeping Cotey in the case would probably
result in "an undecided vote, a hung jury" except for the "few items
that we -- we do mutually agree upon." (emphasis added). Had Cotey tended to
agree with the other jurors on all points, they probably would never have noticed her
alleged inability to defend or explain her views.
9 We express no opinion on whether Cotey was in fact capable of continuing with the
deliberations. It may have been that she was not, and that mistrial was the only viable
option. But because it was reasonably possible that the problems all stemmed from the
other jurors' disagreement with her position on the merits, it was error to continue the
case without her. There are, of course, other means by which a district court can ensure
that the seated jurors are capable of participating effectively in deliberations. Voir
dire is the primary mechanism. See Dyer v. Calderon, 151 F.3d 970, 973 (9th Cir. 1998) (en
banc).
10 Symington was charged and convicted on a separate § 1014 count for submitting
his false 1990 statement.
11 We reject the government's attempt to distinguish Tertrou on the grounds that
the post-trial motion in that case involved mistried counts, whereas Symington's
post-trial motion related to counts on which he had been convicted. We find no indication
in Tertrou that its holding ought to be so limited. Moreover, if the factual distinction
between Tertrou and this case is of any consequence, it supports Symington's position.
Tertrou held that even though the post-trial motion involved the same claims to which the
Speedy Trial Act applied, the pendency of the motion did not toll the 70-day clock except
as provided in § 3161(h)(1)(J). Here, the relationship between Symington's post-trial
motion and the mistried counts is more attenuated, since the post-trial motion did not
involve the mistried counts. If the pendency of a motion involving the very claims to
which the Speedy Trial Act applies cannot toll the 70-day clock, there is no justification
for tolling the clock while a less closely related motion is pending.
12 Because we reverse Symington's conviction and vacate his sentence on this
ground, we do not reach the other issues raised by Symington and the government on appeal.
FITZGERALD, Senior District Judge, Concurring in part, dissenting in part.
I respectfully dissent with respect to Part II of the majority opinion.
The opinion holds that "if the record evidence discloses any reasonable
possibility that the impetus for a juror's dismissal stems from the juror's views
on the merits of the case, the court must not dismiss the juror." (second emphasis
added). The opinion then rejects the trial judge's findings respecting Juror Cotey,
focuses on two isolated comments from the jurors, speculates as to their meaning, and
concludes that Juror Cotey's views on the merits of the case provided the impetus
for her removal. Although I agree with the standard the opinion has established, in my
view, the record does not support the opinion's conclusion with respect to that standard.
The record reveals that on August 19, 1997, the trial court convened a meeting in
chambers with Mr. Schindler and Mr. Dowd, the attorneys for the government and defendant,
to discuss a note from the jury, which read:
We, the jury, respectfully request that this information be kept confidential.
We have earnestly attempted to follow your last directive to continue with our
deliberations. How ever, the majority of the jurors sincerely feel that the juror in
question cannot properly participate in the discussion with us.1
Reasons: Inability to maintain a focus on the sub ject of discussion.
Refusal to discuss views with other jurors.
All information must be repeated two to three times to be understood, discussed, or
voted on. Immediately following a vote, the juror cannot tell us what was voted.
We question the ability to comprehend and focus on the information discussed.
This is the same juror of our last communication.2
We have carefully read the instructions from the Court and we feel that page 68,
paragraph 3, addresses our concerns.3
Bill Carlson, foreperson.
The jury note indicated that the jury had earnestly attempted to continue deliberations
in accordance with the trial court's instructions in response to the previous note.
However, the majority of the jurors now were of the opinion that one of their members
could not properly participate in deliberations.
The trial court and attorneys agreed that it was necessary for the court to make a
determination on whether Juror Cotey was incompetent or simply refused to deliberate
according to the court's jury instructions. Accordingly, Presiding Juror Carlson, was
summoned to chambers. Prior to questioning Juror Carlson, the trial court carefully
stated:
[A]t the outset, let me make one thing clear. As we discuss whatever we discuss, one
thing we don't want to know is anything about how the jury stands on any of the
substantive issues that are presented to you. So it's important that you not discuss in
any sense or reveal in any way to us how the jury is pro ceeding substantively with the
issues that are before you for your consideration. But we, of course, need to discuss with
you the matters that you raised in your communication.
Juror Carlson was then asked if Juror Cotey was unable or unwilling to
accomplish her responsibilities as a juror, and he responded that Juror Cotey's ability,
not willingness, was the problem. Juror Carlson stated further that Juror Cotey never
seemed to pay attention and that fellow jurors were suspicious of her problems with
concentration, memory, and other abilities. Juror Carlson explained that Juror Cotey would
enter into rambling discourses, was unable to remember what had just been discussed, and
would give answers unrelated to questions asked of her. Juror Carlson also stated that the
problems happened repeatedly, despite the jurors' efforts to explain to Juror Cotey
exactly what they were discussing.
When asked by defense counsel Dowd if the problems occurred because Juror Cotey had
rendered final opinion and was not going to cooperate anymore, Juror Carlson responded
that it was "hard to say" but that the jury had tried to share information
openly and Juror Cotey's statements "made no sense." Juror Carlson added that
the jury tried to focus on deliberating, but it wasn't "functioning that way "
and that he wondered if Juror Cotey wasn't "too old to keep up."
Government counsel Schindler then stated: "Just so it's clear, the answers that
you got back seemed to not make sense even to the question or what was going on in this
note?" Juror Carlson responded: "Correct. And that was our concern." The
court then asked: "Your perception of the reason is not that [Juror Cotey] has made
up . . . her mind and just doesn't want to talk about it further, but is something else,
would you say?" Juror Carlson responded: "Yes," and then again described
Juror Cotey's rambling, "off the wall," participation in discussions.
Juror Carlson was excused and the trial court and attorneys discussed whether they
should speak with Juror Cotey. Mr. Dowd stated that she appeared cogent and coherent
during voir dire. The judge's law clerks then informed the judge that Juror Cotey needed
assistance from another juror when asked to return a copy of an exhibit, was confused as
to whether she was an alternate or regular juror, and needed help completing the lunch
menu. After further discussion, the trial court elected to speak with Juror Cotey.
Juror Cotey was then brought into the judge's chambers and questioned. The governments'
attorney found her answers non sequiturs and suggested that she be excused. Defense
counsel, however, disagreed, saying that Juror Cotey answered the questions well. The
court then agreed to question the remaining jurors.4
Juror Tejada stated that Juror Cotey would ask questions unrelated to the discussion,
would be uncertain about which count they were discussing, would go off on tangents
unrelated to the discussion, and would mumble about "something else" and go
"off on her own." Juror Tejada also explained that Juror Cotey displayed an
inability to recall topics currently under discussion, but would remember topics discussed
the previous week.
Juror Witter stated that one juror began to explain to Juror Cotey everything that was
happening, that Juror Cotey had a lot of questions, and that the jurors had to refresh her
memory. Juror Witter stated further that after Juror Cotey would vote on an issue she
would say she was "bullied " and it wasn't her vote and that although Juror
Cotey said that "her mind was made up," she often changed her mind after voting.
The trial judge asked Juror Witter if there was anything the court might do to help
alleviate this difficulty. Juror Witter responded:
Well, I said there's probably the only things we can do and that would be completely go
through the process like you instructed us to, but I do know what the outcome is going to
be, other than a few items that we -- we do mutually agree upon. And that would be an
undecided vote, a hung jury or I don't know -- if there was a replacement person that can
come in, I don't know the process of how that works.
Government counsel Schindler suggested that the trial court might inquire if Juror
Witter agreed with the note and if the note was an accurate description from Juror
Witter's perspective. Juror Witter responded: "Yes, I do."
Juror Smith testified that Juror Cotey wandered off looking for exhibits or testimony
from someone that was unrelated to the count under discussion. Juror Smith stated that
after one vote had been taken, Juror Cotey was asked if she understood what had just
occurred, and Juror Cotey said "yes." She was then asked if she knew what she
had voted on, and said "no." Juror Smith stated several times that Juror Cotey
did not understand what the jury was doing. When asked by the judge if it was an issue of
Juror Cotey's ability or willingness to deliberate, Juror Smith stated that it involved
her ability.
Juror Seaman testified that Juror Cotey would wander off the topic and alluded to
things that had nothing to do with the discussion. Juror Seaman stated that Juror Cotey
did not understand the evidence and needed to have another juror explain things to her
after an issue had already been discussed. Juror Seaman stated that Juror Cotey would
frequently "drift off" and would refuse to discuss her views.
Juror Streeter testified that Juror Cotey refused to discuss her views and was unable
to put her views into words. Juror Streeter also testified that Juror Cotey could not
focus on the subject under discussion, could not recall the topic under discussion, and
would ask questions about different topics than the one under discussion. Juror Streeter
stated that many of the jurors felt that Juror Cotey was unable to comprehend what they
were doing. Juror Streeter stated further that Juror Cotey had taken a position on the
counts before they had been discussed.
Juror Thompson stated that Juror Cotey was not attentive and could not really talk
about the subject at issue. Juror Thompson stated further that Juror Cotey would say
things that had no meaning to the subject they were discussing and that it seemed like she
was not comprehending what the jury was talking about or doing. Juror Thompson also stated
that everything needed to be explained to Juror Cotey three or four times.
Juror Robinson stated that Juror Cotey was unable to comprehend, could not follow
along, and her comments had "nothing whatsoever" to do with the subject matter
under discussion. Juror Robinson stated further that Juror Cotey didn't seem to have any
idea of what the jury was doing. Juror Robinson also stated that they tried to help Juror
Cotey "individually in detail" and that Juror Cotey did not want to participate.
When asked if Juror Cotey behaved in the described manner because she had reviewed all the
evidence and come to a decision, Juror Robinson stated "No, that isn't the case at
all . . . she certainly has not reviewed all the evidence."
Juror Pettes stated that the jury note in question was "pretty accurate"
because Juror Cotey didn't know what was being discussed even if it was explained two or
three times. Juror Pettes stated further that in the beginning, Juror Cotey did not know
the difference between the indictment and the instructions. When asked if Juror Cotey's
problems involved a willingness to deliberate or ability to deliberate, Juror Pettes
stated that Juror Cotey was not comprehending everything and made decisions without
reasons to support them. Juror Pettes said it was "scary" when, after going over
something several times and voting, Juror Cotey could not say what they had just voted on.
Juror Hartle stated that he agreed with what was in the note. Juror Hartle stated
further that Juror Cotey did not concentrate on the issues, was not aware of what count
was under consideration, and could not say what issue had just been voted on. Juror Hartle
felt that Juror Cotey wasn't consistent, changed her mind, and did not comprehend what was
happening.
Juror Bamond stated that Juror Cotey had "tangents off line," asked what the
jury was talking about after a discussion was completed, and expressed "philosophies
that go straight out somewhere in left field." Juror Bamond stated further that Juror
Cotey was unsure of what had been voted on and what count was being discussed. Juror
Bamond also intimated that after a vote Juror Cotey would say "I didn't vote that
way." Juror Bamond thought Juror Cotey was trying to "change the system,"
and that Juror Cotey, bothered the jury with "stupid points that don't make any
sense." Juror Bamond stated that Juror Cotey "doesn't comprehend sometimes,
doesn't know where we are sometimes." Juror Bamond stated that after discussing
evidence for hours, Juror Cotey would say,"What document is that? Where did you see
that?," and the discussion would start all over.
After the final juror appeared, the trial judge heard arguments by the attorneys. Mr.
Schindler argued that Juror Cotey's fellow jurors all said that Juror Cotey was unable to
comprehend and affirmed that the contents of the note were accurate. He argued that Juror
Cotey did not have an honestly-held belief; rather, she "flip-flopped and doesn't
recall what she voted or votes and then switches her mind." Finally, he argued that
jurors consistently described Juror Cotey as a person who doesn't "quite get
it."
Mr. Dowd argued that Juror Cotey was a lucid and coherent juror who had reached a
conclusion that the other jurors didn't like. Mr. Dowd also argued that Juror Cotey did
comprehend and perhaps comprehended more quickly than the other jurors. Mr. Dowd argued
further that Juror Cotey may have been a "pain in the neck" but that she was
entitled to ask questions.
The trial court then made findings, and in so doing, noted that Juror Cotey's responses
to the court's questions "were not truly responsive to the question asked, which in
some respects corroborated some of the comments of the presiding juror." The court
observed that all jurors concurred in the note sent by the presiding judge. The trial
judge found that:
Juror [Cotey] is either unwilling or unable to deliberate with her colleagues. More
specifically, the facts upon which the Court makes that finding are the comments of the
other 11 jurors, none of whom report any acrimony or personal difficulties with Juror
[Cotey], but all of whom confirm what appears to them to be either an unwillingness or an
inability to join with them in deliberations in accordance with the Court's instructions,
specifically that is to jointly review the evidence and to confer with colleagues
concerning the evidence in an effort to reach their decisions.
It is, or course, the very essence of the jury process that jurors not only may hold
differing views, but are instructed to form their views and opinions and to not waiver
from them if they are held after engaging in thoughtful deliberation.
It is indeed the safeguard of the jury system that there are 12 independent views. And
the instructions direct and, of course, it is fundamental that no juror should yield a
thoughtfully-held position simply to arrive at a verdict. But there has been nothing
stated by any of the jurors that would indicate that that is the situation here.
The Court and counsel were mindful of that problem and I hope were -- I hope the Court
was appropriate in trying to assure that was not that Juror [Cotey] had a differing view
that was her opinion after considering the evidence and that she was, as instructed,
simply not yielding that view. But when inquiry went to that subject, it was the report of
her fellow jurors that that was not the issue, but that instead, she would not participate
in the process.
Beyond that which would tend to indicate an unwillingness to deliberate, and the Court
does not make that finding. As indicated earlier, it's either an unwillingness or an
inability to deliberate. And it's unclear to the Court as to what that cause might be. But
virtually without exception, the other jurors reported that she was unable to follow the
discus sions, was apparently having an inability to comprehend the topic then under
discussion, was not participating in the discussion process, was lacking in concentration
and awareness, was apparently unable to follow the discussion, would raise matters that by
their subject matter appeared to not relate to the topic under discussion.
It is not lightly that the Court comes to this conclusion, but it comes to it because
it believes that the evidence is clear in directing the finding that it has made.
Accordingly, the court will excuse Juror [Cotey] . . . for just cause for being either
unwilling or unable to participate in the deliberative process in accordance with the
instructions of the court.
The trial court's findings focus exclusively on Juror Cotey's ability to function as a
juror, and several times the trial court specifically states the Juror Cotey's dismissal
is not based on her position on the merits. In fact, nothing in the findings
alludes to Juror Cotey's position on the merits of the case, and nothing in the findings
suggests that the impetus for Juror Cotey's removal came from her position on the
merits. The trial court's findings are fully supported by the record made with the jurors'
interviews.
Nevertheless, the opinion finds that "there was considerable evidence to suggest
that the other jurors' frustration with [Juror Cotey] derived primarily from the fact that
she held a position opposite to theirs on the merits of the case." If such
"considerable evidence" exists, the opinion fails to disclose it. Rather, from
the one hundred one pages of transcripts on the issue, the opinion cites two partial
sentences from two of the jurors. The opinion states that Juror Witter "asked the
district judge to dismiss [Juror] Cotey" to avoid a hung jury, but a fair reading of
the transcripts, which I quoted above, reveals that Juror Witter made no such specific
request. The opinion has taken Juror Witter's comment out of context, and ignored the bulk
of Witter's testimony which supports the trial judge's ultimate decision. The opinion also
references Juror Bamond's comment that because of Juror Cotey, the jury was "blocked
and blocked and blocked." Juror Bamond's partial statement, however, is subject to
various interpretations, such as the jury was blocked from deliberating, or blocked from
considering other counts, or blocked from voting on counts. It is pure conjecture to
suggest that the statement means that the jury wanted Juror Cotey dismissed because of her
position on the merits. In view of the extensive record and the trial judge's findings,
these isolated statements simply fail to establish any reasonable possibility that the
impetus for Juror Cotey's dismissal stemmed from her views on the merits of the case.
Rather, to reach such a conclusion requires speculation.
The opinion also refers to a statement by Juror Cotey that she "can't agree with
the majority all the time, at least temporarily." Whatever that statement means, it
could not have been relied upon by the trial judge, unless he considered it as evidence of
Juror Cotey's inability to express her views. In short, the three partial statements do
not amount to "considerable evidence" that the jurors' frustration with Juror
Cotey derived from her position on the merits.
The trial judge, based upon the jurors' interviews and his own observations, found that
Juror Cotey could not comprehend the issues, lacked concentration and awareness, was
unable to follow discussions, and discussed unrelated issues. In contrast, the opinion,
rather than addressing the bulk of the jurors' testimony, simply disregards it, and
concludes without support from the record that even though each of the jurors may have thought
their difficulties did not stem from Juror Cotey's position on the merits, they
actually did. I suggest that the opinion's reasoning rests on speculation and ignores
the fact that the trial judge "is in the best position to evaluate the jury's ability
to deliberate." Beard, 161 F.3d at 1194 (internal quotation marks omitted).
The opinion engages in further speculation when it suggests in footnote 7 that if Juror
Cotey had agreed with the other jurors on all points, they would never have noticed her
inability to explain her views. This bit of conjecture ignores the jurors' testimony that
at times Juror Cotey did agree with them, but then changed her mind and couldn't explain
why. The other jurors' frustration with Juror Cotey would have arisen regardless, because
the difficulties stemmed from Juror Cotey's need to have issues explained repeatedly,
asking questions unrelated to the topic, asking to review issues repeatedly, and inability
to focus on the topic at issue. As the jurors testified and the trial judge found, these
problems arose solely from Juror Cotey's inability to comprehend the topics at issue and
are completely unrelated to her position on the merits.
The opinion also states in footnote 8 that "because it was reasonably possible
that the problems all stemmed from the other jurors' disagreement with [Juror Cotey's ]
position on the merits, it was error to continue the case without her." Again, this
statement ignores the clear weight of the evidence and ignores the trial judge's findings.
The statement also ignores the judge's admonition to each juror that they were not to
discuss the merits of the case during the interviews. The opinion does, in fact, commend
the trial judge for scrupulously avoiding any discussion of the jurors' views on the
merits when he interviewed them, but then finds a reasonable possibility that the
impetus for dismissing Juror Cotey stemmed from her views on the merits. Only by second
guessing the trial judge and by ignoring his opportunity to evaluate Juror Cotey's ability
to deliberate, can the opinion conclude that the impetus for dismissing her stemmed
from her position on the merits.
The opinion suggests in footnote 5 that "reasonable possibility" may be
likened to the standard of "reasonable doubt." Reasonable doubt, as defined in
Ninth Circuit Manual of Model Criminal Jury Instruction No. 3.3, is doubt that leaves one
"firmly convinced that the defendant is guilty." Thus we must be "firmly
convinced" that the impetus for dismissing Juror Cotey was her position on the
merits. "Reasonable possibility" then, like "reasonable doubt," must
be "based upon reason and common sense and is not based purely on speculation. It may
arise from a careful and impartial consideration of all the evidence, or from lack of
evidence." Id. Here, a careful consideration of "all of the evidence,"
coupled with the fact that the trial judge is in the best position to evaluate the jury's
ability to deliberate, cannot leave one "firmly convinced" that the
impetus for dismissing Juror Cotey was her position on the merits. Rather, it is only
through speculation, based on a limited portion of the evidence taken out of context, that
the opinion reaches its conclusion.
On my review of the record, I conclude that the evidence fails to support the opinion's
conclusion that the impetus for removing Juror Cotey was her position on the
merits. The record is clear and speculation is unnecessary. In light of the overwhelming
evidence, the trial judge could not have abused his discretion in dismissing Juror Cotey.
See Beard, 161 F.3d at 1193.
For these reasons, I respectfully dissent with respect to Part II of the majority
opinion.
FOOTNOTES
1 Although Juror Cotey was not identified as the "juror in question," her
identity is obvious at this point in the proceedings.
2 The jury had previously sent a note to the trial judge stating: "Your Honor,
we respectfully request direction. One juror has stated their final opinion prior to
review of all counts." The trial court, after consultation with the attorneys,
reminded the jury of its duty to deliberate. The wording of the trial judge's response to
the jury is nearly identical to instruction 7.1 of the Ninth Circuit Manual of Model
Criminal Jury Instructions. The instruction was also found at page 68 of the jury
instructions given in this case.
3 An objective and careful analysis of the August 19 note discloses that the jury
was concerned with the ability of Juror Cotey to comprehend and focus on the issues before
the jury. The concern with Juror Cotey's ability arose from her conduct in the course of
deliberations. The case now before us may be distinguished from United States v. Brown,
823 F.2d 591 (D.C. Cir. 1987). In Brown, the court received a note from a juror in which
the juror indicated he could not discharge his duties as a juror. Upon inquiry by the
court, the juror disclosed that he could not agree with the way the RICO conspiracy act
reads. The court discharged the juror on finding that he could not follow the law and thus
could not discharge his duty as a juror. On appeal, the D.C. Circuit concluded that
dismissal of the juror stemmed from the juror's view on the sufficiency of the evidence
offered by the government at trial and the juror should not have been dismissed. In the
present case, the trial judge acknowledged that no juror should yield a thoughtfully held
position simply to arrive at a verdict, but dismissed Juror Cotey because she was
unwilling or unable to deliberate with her colleagues. In other words, Juror Cotey was not
dismissed because of her views about the evidence, but because she was unwilling or unable
to participate in deliberations.
4 Each juror, including Juror Cotey, was carefully admonished not to discuss the
merits of the case nor any of the juror's positions on the case, but to confine their
comments to issues raised in the note.
Copyright © 1998 by The Bureau of National Affairs, Inc., Washington
D.C.
http://lw.bna.com/lw/19990713/10070.htm
|
 February 2,
1998 Symington Gets Slammer
J. Fife Symington III was sentenced today to two-and-a-half years in prison and five
years' probation for his crimes of bank and wire fraud.
U.S. District Court Judge Roger Strand sentenced the former governor on six counts of
deceiving lenders with false financial statements. Strand also fined Symington $60,000.
The judge left to a federal bankruptcy court the question of Symington's restitution for
the losses caused by his actions.
Strand said Symington "demonstrated a pattern of unlawful conduct over a long
period of time."
Strand departed from presentencing guidelines which recommended a jail term of
six-and-a-half to eight-and-a-half years. Prosecutors had asked for 10 years, while
Symington's defense attorneys had asked for probation.
"I've never been one to
linger."
-- J. Fife Symington III, on his resignation from office |
"I've had better days in my life, that's for sure," Symington told a crowd
assembled outside the federal courthouse following the sentencing.
Even as Symington apologized for any errors he made, he maintained he'd done nothing
wrong.
"I made mistakes and I admitted those mistakes," he said. "I never
intended to defraud anybody."
Symington argued that his prosecution was "politically motivated from the
beginning."
Prosector David Schindler rejected that contention, saying Symington was treated no
differently than any other defendant.
"If not this case, then which case should be prosecuted?" Schindler asked.
"The sentence today is a just sentence. It sends a message that white-collar crime
will not be tolerated."
Symington was convicted by a federal jury last September of seven counts of wire and
bank fraud. He resigned from office after remaining in the governor's chair for the
duration of the trial. Strand later dismissed one count of fraud against Symington.
Symington's defense attorney, John Dowd, said that he will file a motion for Symington
to remain free on bail pending appeal of the verdicts to the Ninth Circuit Court of
Appeals.
As part of Symington's probation, he is restricted from all real estate activities,
cannot make any major purchases without the approval of a probation officer and must
perform 500 hours of community service.
Symington told reporters he was not surprised by the sentence, despite asking the judge
for probation. "Frankly, I expected something like this," he said. "I
missed [the sentence] by about six months." -- Chris Farnsworth  |
I expected to find standing room only, but there are plenty of empty seats. It's the
day after the trials officially start, but in reality nothing much will happen for a few
days. The jury is still being selected. But when the man in the chair is the governor,
it's still worth going to see. Watching your favorite crook at the start of his trial is
kind of like watching your favorite band sound-checking before the show; it's not the real
performance, but there will be moments that mesmerize.
On this day, the courthouse is offering a double bill. As well as being the start of
the Symington show, it's the last day of the trial of his accomplice, George Leckie, who's
in purgatory in an upstairs courtroom. Most people wander between the two, and I'm no
exception. But I start with the governor.
Governor J. Fife Symington III is a piece of sleaze, a man without any discernible
values, an inveterate liar and con artist who swindled his own mother. The list of his
crimes is like an avalanche--reading it exhausts and finally overwhelms you. So, as he
sits in court accused of 22 felonies, how can he still hold office?
The answer to that question becomes clear if you just watch him for a few minutes. Some
people have style and some don't. Some animals have it and some don't. Dogs don't. Joe
Arpaio doesn't. Cats do. And Symington has more style than you ever expect to see outside
of a Parisian fashion show. He's bankrupt. He's facing decades in jail. But when you look
at him sitting there with his attorney John Dowd, you'd think Dowd was the accused
criminal and Symington the hotshot lawyer from a John Grisham novel. He lounges in his
thousand-dollar suit, perfectly coifed hair gleaming gold under the lights.
Both of his women are present--his wife, Ann, looking tired and distraught, and the
woman rumored to be his mistress, Annette Alvarez, looking sullenly sexy. Far from seeming
trapped or awkward, Symington deports himself as though he's at a gathering in his honor.
I can't say whether he's brave or just sociopathic, but if style was admissible as an
extenuating factor in criminal trials, the governor would walk out of the courtroom
without a conviction to his name.
That might happen anyway, if the judge's attitude is any indicator.
Here's how jury selection is done: The potential juror is asked some questions by the
judge, after which both defense and prosecution can ask questions or request that the
person be barred from serving on the jury. When I wander into the courtroom, the woman
being questioned is a middle-aged, power-dressed, big-haired member of the Christian
Coalition. She has the mean, pinched, arrogant face of a God-fearing Republican. She's
talking about how much she dislikes labor unions. Then, when asked whether media coverage
of Symington's exploits has prejudiced her opinion of him, she says no, and that she
considers him to be a very honest man.
Even the narcoleptic-looking judge seems fazed. He asks her what leads her to believe
in Symington's honesty.
"He's known for his honesty," she says.
At this point, the only ones with straight faces are her, the judge and Symington. She
goes on to deliver a little eulogy to her hero's honesty and integrity as a politician.
Then the judge asks Dowd if he wants to ask her any questions. "No!" he says,
beaming, and the audience cracks up again. You can almost hear him thinking, If we can
only find 11 more like her . . .
And he might get his wish. It seems only a formality that, when the prosecution asks
that the woman be barred from serving on the jury, the judge will agree. You're supposed
to have no preformed opinion of the accused, good or bad. The possibility of such a
devoted fan of Symington's being entrusted to decide whether he's guilty is ludicrous
enough to be surreal. But when the prosecution makes its request, the judge denies it.
There's no chance that the woman will be allowed to serve--before the trial really gets
going, either side can demand that six jurors be barred, and the prosecution will
definitely insist on getting rid of her--but it's obvious where Hizzoner's sympathies lie.
Will Symington get a fair trial? No. And he doesn't mind a bit.
I decide to head upstairs and see how George Leckie's making out. Annette Alvarez has had
the same idea--she's there when I arrive. It's the end of the trial, and both sides are
making their final spiels to the jury. Leckie's boy goes first. Leckie, it seems, is the
greatest man who ever lived, and never did a bad thing in his entire life. Same as Fife, I
guess. Maybe that's why they're chums. The lawyer argues that the evidence against Leckie
is purely circumstantial, and that one of the witnesses has admitted to perjury. It's a
theatrical display--I half expect the guy to wipe his eyes before he finishes up and sits
down. He declaims with such force that, even when you know that it's a performance and
that he knows what a scumbag Leckie is, it still gets to you on a certain level.
The prosecution, by contrast, does poorly. Their guy's attitude is snide, and he
doesn't really present any evidence against Leckie. He doesn't even dispute that the
evidence is circumstantial. Instead, he tells the jury that it doesn't have to be 100
percent sure of Leckie's guilt to convict him. The prosecution's case is weak, and it
looks pretty good for Leckie, but his demeanor is the opposite of Symington's.
It almost feels good to see Leckie here today, to see him like this. This man is an
arrogant criminal, who once smirked and swaggered as he and his friend Symington cut state
programs and laid off workers. This is a man who, when driving drunk, ran down a
cyclist--and then, when a witness barred his way to prevent his escape, he ran her down as
well. This is a man used to committing crime and getting away with it--in the DUI case,
the police didn't look for him, and it was left to the woman he'd nearly killed to track
him down. The police never submitted the case to the County Attorney's Office. Leckie is a
man whose experience has led him to feel free to break the law, knowing that his money and
his position will ensure that the police cover up for him.
This is as repulsive a human being as you could hope to see getting his deserts in a
court of law. So it almost feels good to see him here. Almost, but not quite. As I look at
him, I can't help but hope he'll be acquitted. I can't guess whether it's from the cancer
that ravaged him or from the shame of a criminal trial, but he has an air of pathos as
shocking as his customary arrogance. He seems smaller than he is as he sits quiet and
unmoving beside his lawyer. I imagine that he'd flinch if you went up to him and yelled in
his face.
It's late in the day, so the jury decides to start its deliberations the following
morning. The judge admonishes its members not to read or listen to the news meantime. Some
journalists get up to leave, wanting to get back to Symington. The judge doesn't let us.
He orders us to sit down and wait until he says we can leave. After a while, he decides to
release us, and we make our way back downstairs.
I decide to get out of there.
As I walk onto the street, George Leckie is just in front of me. When the jury acquits
him, his swagger and spite will return, but right now he doesn't know what the verdict
will be. He walks shakily, and talks to people in a hushed, painful rasp, a souvenir of
his cancer. He's so pitiful that a journalist who in the past has attacked him ferociously
in print goes up to him and tells him, with obvious sincerity, that he wishes him well.
This is kindness, something I wouldn't expect Leckie to understand, and it's hard to tell
whether he does. He just nods, thanks the guy and shuffles away. The suit he wears is as
expensive as Symington's, but Leckie makes it look cheap and shabby.
http://www.phoenixnewtimes.com/issues/1997-05-22/columns.html
|
|
Feds Will Retry Symington on Criminal Counts, Sources Say
 Symington criminal attorney John Dowd wants the government
to drop its case.
|
|
Federal prosecutors are expected to retry former Arizona governor J. Fife Symington III
on multiple bank and wire fraud charges, sources tell New Times.
The charges are expected to include the six counts on which Symington was convicted in
September 1997. Those convictions were overturned in June by the Ninth U.S. Circuit Court
of Appeals. Symington is also expected to be reindicted on at least some of the 11 counts
on which the jury deadlocked in the 1997 criminal case, sources say.
A grand jury would have to reindict Symington on the 11 hung counts. Federal
prosecutors would not need to reindict Symington on the six guilty counts that were
overturned. Instead, prosecutors can simply ask the trial judge, U.S. District Court Judge
Roger B. Strand, to set a new trial date on the guilty counts.
Symington says he's not concerned about a new trial.
"Once you have been through this once in your life, it's hard to believe, but it
almost becomes the ordinary course of business. I'm not worried about it," he says.
"I'm living day to day."
John Dowd, Symington's Washington, D.C., criminal attorney, said Tuesday he has
"no knowledge" of grand jury proceedings or if a decision has been made to retry
Symington.
Dowd said he has met with U.S. Attorney Alejandro Mayorkaso in Los Angeles and urged
him to drop the case. Dowd said he spoke with Mayorkaso again on Tuesday.
"He told me he was still considering our submissions. He said he would call me.
That's all I know," Dowd said.
Thom Mrozek, a spokesman for the U.S. Attorney's Office in Los Angeles, declined
Tuesday to confirm or deny whether a grand jury is being formed. He would not discuss the
government's position on whether to retry Symington on the guilty counts.
Mrozek said the government has 60 days from April 6 -- the date the appeals court
remanded the case to the U.S. District Court in Phoenix -- to either drop some or all of
the 11 hung counts, or seek a grand jury indictment on some or all of them. The government
has 70 days from April 6 to either drop the charges on which Symington was convicted, or
seek to retry Symington.
The first public indication of the government's decision may come either through the
filing of pleadings or with the scheduling of a hearing before Strand. Mrozek said
prosecutors will decide within a few weeks whether to file papers or seek a hearing.
Sources tell New Times the government is prepared to move forward and retry the
former governor despite Dowd's insistence that the case be dismissed. Symington has
incurred more than $5 million in legal fees during the past decade defending himself in
criminal, civil and bankruptcy proceedings.
A three-judge appeals court panel overturned the 1997 verdict and vacated Symington's
30-month prison sentence. The appeals court ruled that Judge Strand had improperly removed
juror Mary Jane Cotey during deliberations. Fellow jurors had complained to Strand that
Cotey was inattentive during the trial and deliberations.
After individually interviewing all the jurors, Strand ruled that Cotey was unwilling
or unable to fulfill her duties and she was removed from the jury. An alternate juror took
her place and deliberations began anew. The new jury found Symington guilty on seven
counts, one of which was later dismissed by Strand.
Symington's attorneys challenged Cotey's dismissal, claiming she was removed because
she believed Symington was innocent on all charges.
The expected indictment will come as testimony continues in Symington's fraud trial in
U.S. Bankruptcy Court. Three union pension funds are seeking to win an $18 million
judgment against Symington stemming from a $10 million loan they gave a Symington real
estate partnership for the Mercado office and retail development in downtown Phoenix.
Symington was found guilty of defrauding the pension funds in the 1997 criminal case.
That count is among those expected to be refiled if the case is set for trial.
The 1997 criminal trial lasted 13 weeks and included 35 witnesses and more than 1,300
exhibits. The complex case was prosecuted by David Schindler and George Cardona. Schindler
went into private practice last summer. Cardona is leaving the U.S. Attorney's Office as
head of the criminal division on April 29 to take a job with the University of California
Los Angeles law school.
Nevertheless, it is possible the men could be named as special assistant United States
attorneys to prosecute the case. If so, they will have to do it for no pay. Schindler and
Cardona declined to comment on the case or their possible future roles, if any.
Symington resigned as governor on September 5, 1997, midway through his second term and
two days after the conviction. -- John Dougherty
|
Symington Family Partner Under Suspicion
U.S. authorities suspect a Mexican vegetable grower with
business ties to the Symingtons is involved in drug trafficking
Governor J. Fife Symington III's family has extensive
personal and financial ties to a Mexican businessman who cannot enter the United States
because of persistent drug-trafficking allegations, New Times has learned.
The U.S. Customs Service has compiled intelligence that Alejandro Canelos Rodriguez, a
Sinaloa produce farmer, shipper and distributor, may be involved in drug trafficking and
money laundering, according to federal sources and documents.
"He's a suspected doper," says one federal source familiar with Customs
Service intelligence reports on Canelos.
U.S. Drug Enforcement Administration documents indicate that agency also has compiled
information for law-enforcement purposes on Canelos. DEA declined to release the
information, citing privacy concerns.
Canelos' son, Alejandro Nicolas Canelos, told New Times in a March 17 letter that
Phoenix DEA special agent Gus Fassler would say "that any and all allegations were
false."
Fassler did, in fact, tell New Times that Alejandro Canelos "is not a suspect of
DEA."
However, a congressional staffer tells New Times he called the U.S. Consulate in
Hermosillo on March 18 and was told that "DEA is against issuing the visa" to
Canelos. The staffer asked not to be identified.
Despite conflicting accounts of DEA's role, there is no doubt that the Customs Service
has monitored Alejandro Canelos' activities for several years and has placed his name in a
narcotics intelligence database that has prevented him from obtaining a standard 10-year
visa to enter the United States. Canelos' attorney says Canelos was issued two short-term
visas in 1996 after he was denied a permanent visa in 1995.
The State Department denied Canelos' most recent application for a visa in December,
Mary A. Ryan, assistant secretary of state for consular affairs, reported in a March 3
letter to New Times.
Jeri Pudschun, a State Department spokeswoman, did not specify why Canelos was denied a
visa but cited a broad provision in law which says a visa can be denied if the applicant
is ineligible or fails to provide sufficient information.
Other State Department officials say that the mere allegation that a person is involved
in drug trafficking is sufficient to deny a visa.
Alejandro Canelos denies any involvement in drug trafficking and threatened to sue New
Times if it publishes "allegations or insinuations which attempt to connect me or any
of my businesses to drug-related activities."
Canelos is represented by John Dowd, a high-powered criminal-defense attorney from
Washington, D.C., who will defend Governor Symington in his May 13 federal trial on 23
counts of bank fraud, perjury and extortion.
Records obtained by New Times reveal that the governor and his family are linked to
Canelos in significant ways, including:
* The governor's wife, Ann Symington, has invested between $25,000 and $100,000 in a
Mexican corporation, Melones Internacional SA de CV, a corporation headed by Alejandro
Canelos.
* A "J. Fife Symington" is a director of Melones Internacional. The
governor's bankruptcy lawyer, Robert Shull, has said the corporate official is the
governor's son, J. Fife Symington IV.
* The governor's two eldest sons--J. Fife Symington IV and Scott H. Symington--are
business partners with Canelos' son, Alejandro Nicolas Canelos, in at least one Arizona
corporation.
* Governor Symington has used his political influence in the United States and Mexico
in an attempt to benefit the business interests of Canelos and his family. Symington also
has pushed for speedier processing of truck traffic entering the United States from
Mexico.
At the same time, critics contend that the state Department of Public Safety, which
monitors traffic on Arizona's highways, has seen its ability to combat drug traffic
curtailed by Symington's hand-picked DPS administrators.
The governor, his wife and sons refused to return phone calls and letters seeking
comment.
Canelos' attorney, John Dowd, at first said there was "no basis in fact to any of
the speculation or allegations" involving Alejandro Canelos. Dowd said on March 17
that Phoenix DEA special agent Fassler had cleared up all allegations involving Canelos
about a year ago.
"I'm telling you that the special-agent-in-charge of the Phoenix office
investigated that information and determined that to be false," Dowd says.
Fassler, however, tells New Times that he investigated only one allegation concerning
Canelos--at the request of the State Department--and determined it to be unfounded. He
adds that he is not aware of the intelligence that other agencies, including Customs, has
compiled.
Of course, as Dowd suggests, law-enforcement computers often store raw, unverified--and
often unverifiable--intelligence. But the suggestion that Fassler examined the entire
database, investigated the collection of allegations and absolved Canelos is distortion.
"I don't know about any other investigations," Fassler says.
When New Times relayed Fassler's statements back to Dowd, the lawyer acknowledged that
Customs intelligence information on Canelos remains in the State Department's files.
"I know of no new allegation or new information," Dowd says. "It's the
same old crap in the computer."
Dowd says there is no evidence linking Canelos to drug trafficking and says his client
is getting "his business destroyed because the State Department can't get its act
together."
Dowd's role as Canelos' attorney--in addition to several partnerships between the
governor's sons and Canelos' son--raises the possibility that Governor Symington has known
for some time that Alejandro Canelos has been under scrutiny as a possible drug
trafficker.
The congressional staffer says he was told by the visa officer at the U.S. Consulate in
Hermosillo that Symington's office had made calls to the consulate concerning Canelos.
Officials at the consulate declined to comment.
The staffer also says he was told Canelos reapplied for a 10-year visa on March 11.
Alejandro Canelos is the son of a Greek immigrant who illegally entered the United
States and was deported to Mexico, where he built a produce fortune from scratch. The
Canelos family operates a vast farming empire with properties in the Mexican states of
Sinaloa, Sonora and Baja California.
The Caneloses' main company, Grupo Agricola Canelos, is based in the violent and
drug-plagued city of Culiacan, located on Mexico's fertile western plains between the
Sierra Madre and the Sea of Cortez. The city is the capital of Sinaloa and is a major
warehousing and distribution center for narcotics smuggled into the United States.
Custom Service officials declined to discuss Canelos' operations--his trucking company,
which hauls produce more than 1,000 miles to the U.S. border, and G.A.C. Produce, his
distribution warehouse located in Nogales, Arizona.
The size of Canelos' trucking fleet, said to number more than 300, and the lengthy
transit trucks must make from Sinaloa to the U.S. border make it possible that people may
be loading drugs onto his trucks without his knowledge.
Federal sources indicate that the Custom Service has inspected Canelos' warehouses in
Nogales and San Diego and temporarily impounded a jet aircraft belonging to the Canelos
family after a hidden compartment was discovered in the craft. The dates of the
inspections and aircraft impoundment were not known, and no illegal items were discovered,
one of the sources says.
Rudy Cole, the U.S. Customs Service's Nogales port director, says Mexican truckers who
are involved in narcotics shipping typically haul drugs to towns just south of the
international border.
Once the narcotics reach Mexican-border towns, the drugs generally are removed from
trucks and smuggled across the border via other means, including foot traffic,
automobiles, horseback and commercial trucks, Cole says. After crossing the border, U.S.
commercial trucks are occasionally used to transport the drugs to their U.S. destination.
Revelations that members of the Symington family are in business with a suspected
narcotics trafficker come at a time when Governor Symington is lobbying Congress on drug
issues. Symington has fought congressional efforts to penalize Mexico for that country's
notorious government corruption in the war on drugs.
Last week, Symington traveled to Washington, D.C., and met with House Speaker Newt
Gingrich and other key House members.
"I was giving my regional point of view as a governor who works with Mexico very
closely in the Southwest. I said, 'What good would come from it [decertification]?' Mexico
cooperates with us on a whole range of issues, including the drug war," Symington was
quoted as saying.
The House, however, voted to give Mexico 90 days to begin fully cooperating with the
United States on the drug war--or face decertification. The Senate is considering the bill
this week.
Canelos is the second prominent Mexican with ties to Symington who has faced
allegations of drug trafficking.
U.S. intelligence reports reportedly say that Sonoran Governor Manlio Fabio Beltrones
attended meetings where drug lords paid off politicians who were protecting their
operations.
Beltrones is a close friend and political ally of Symington's; the Arizona governor
vigorously defended Beltrones after a story describing Beltrones' alleged narcotics ties
appeared in the New York Times.
"It's not going to change our relationship," Symington told reporters.
Beltrones has denied being involved with Mexican drug figures and is suing the New York
Times in Mexican courts.
If allegations against Beltrones and Canelos are true, Symington's association with the
men would contradict his professed views on the importance of fighting the drug war.
"There are those today across the country, including some conservative Republican
voices, who are saying that we're never going to win the drug war, and a lot of people are
frustrated by where we are and the resources that have been expended," Symington said
in December.
"I happen to disagree with them about that. I think we need to make a moral stand.
It's an important battle to fight for our children, and I would fight it even if somebody
told me we were going to lose it because I think the outcome is entirely
unsatisfactory."
Yet such rhetoric comes at a time when the Arizona Department of Public Safety--whose
director is appointed by Symington--is significantly scaling back its drug-enforcement
efforts.
Critics contend that the governor has politicized the state police agency with his
controversial appointments of administrators with strong personal ties to Symington.
Undercover DPS narcotics agents tell New Times there has been little funding for months to
purchase drugs and pay informants.
DPS Lieutenant Colonel Charles Warner has confirmed that funds are scarce and that
narcotics officers are using other methods to do their work.
DPS also is eliminating its asset-forfeiture unit, which generated millions of dollars
for narcotics enforcement, including undercover officers' drug purchases. Asset-seizure
responsibilities will be transferred to the Maricopa County Attorney's Office.
Finally, DPS Director Joe Albo last month severed a 15-year joint operation with the
Drug Enforcement Administration when he withdrew DPS officers from DEA-led task forces in
Phoenix and Tucson. DPS officials say they could better utilize their manpower in other
ways.
DPS is torn by dissension in the wake of Warner's promotion to assistant director in
December--a promotion that was requested by Governor Symington ("DPS: Department of
Political Safety," February 6).
Warner's rapid rise to power from a lieutenant in charge of Symington's personal
security detail in 1995 to the commanding officer of the Highway Patrol and Criminal
Investigations Bureau (which includes narcotics officers) has angered many veteran DPS
officers who say Warner is unqualified to lead the agency and got the job because of his
personal friendship with the governor.
The Symingtons' extensive financial ties to the Canelos family were first revealed in
May during a sworn deposition given by Ann Symington in connection with the governor's
bankruptcy case. The governor's wife testified that she had invested $25,000 in Melones
Internacional in November 1995, two months after her husband filed for bankruptcy,
claiming $26 million in debts and $65,000 in assets.
Ann Symington stated in the deposition that she invested in the company because her
stepson, J. Fife Symington IV, was a partner.
The governor's wife increased her investment in Melones Internacional to as much as
$100,000 in 1996, according to the governor's financial disclosure statement filed in
January with the secretary of state.
Mexican incorporation documents filed in Culiacan and obtained by New Times state that
Alejandro Canelos Rodriguez is the president of Melones Internacional and his son,
Alejandro Nicolas Canelos, is the secretary. The incorporation records state that a
"J. Fife Symington" is a director. None of the directors was required to sign
the incorporation papers.
The vagueness of the filing raised the possibility that the governor is a director in
Melones Internacional.
When New Times disclosed that it was unclear which J. Fife Symington was a partner in
Melones Internacional ("Fife's Mexican Connection," December 26, 1996), the
governor's bankruptcy attorney, Robert Shull, stated that the Melones director is not the
governor, but his son, J. Fife Symington IV. However, Shull has provided no proof such as
additional corporate filings that bear signatures.
Using the name J. Fife Symington without generational designation is unusual for the
Symingtons. In Arizona, the two men have been careful to separate their business
interests. Arizona Corporation Commission records show the governor affixes
"III" and his son "IV" to their names on corporate filings.
According to the Mexican incorporation papers, director Symington and the elder Canelos
have more powers than the younger Canelos. Symington and the senior Canelos are authorized
to obtain credit from Mexican and foreign institutions and to open and operate checking
accounts, powers not granted to the junior Canelos.
Mexican government records also reveal Melones Internacional is chartered as more than
just a melon-growing concern. The company's charter also allows it to conduct commercial
and residential real estate activities, businesses in which Governor Symington has
extensive experience.
And the incorporation documents state that since the majority of its stock is
controlled by Mexican citizens, the company gives its directors, including "J. Fife
Symington," access to real estate along coastal areas and international borders that
foreigners are otherwise forbidden to own.
The links between the Caneloses and Symingtons may have been forged by the two sons.
J. Fife Symington IV and Alejandro Nicolas Canelos attended Harvard University together
beginning in 1988. They lived in the same collegiate hall at Harvard--Eliot House--and
both graduated in May 1992.
The pair has formed at least two Arizona corporations, state records show. The men, in
their late 20s, are the sole directors in Symington & Canelos Industries Incorporated.
The company's March 1994 incorporation papers state that it specializes in the
manufacture, purchase, sale and distribution of lumber products.
In December 1995, J. Fife Symington IV, Nicolas Canelos and another son from the
governor's first marriage, Scott H. Symington, formed Fruit Stand Incorporated. The
company sells fruits and nuts in shopping malls.
Governor Symington has used his official position in an attempt to further the business
interests of Alejandro Canelos and members of his family. The governor has lobbied
Congress and the state Legislature on trade issues and has communicated with Mexican
President Ernesto Zedillo.
Last spring, the Fresh Produce Association of the Americas (PFAA), a Nogales, Arizona,
trade organization representing Mexican growers, sought Symington's help in a trade
dispute that erupted between Mexican and U.S. tomato growers. One of Alejandro Canelos'
companies, G.A.C. Produce, is a member of PFAA.
Symington lobbied Congress and fellow governors to support Mexican growers. (Symington
publicly disclosed his wife had an investment in Melones Internacional in his 1995 and
1996 state financial disclosure statements but failed to identify the enterprise as a
Mexican corporation. Instead, Symington gave a Phoenix address for the company, 345 East
Windsor, apparently a residence.)
Symington's lobbying efforts on behalf of PFAA were successful, culminating with a
communique, signed by 10 U.S. governors, that was critical to the association's effort to
thwart U.S. trade sanctions.
PFAA expressed its gratitude to Symington in a July 2, 1996, letter that stated,
"the entire membership of the Association is eternally grateful for the effort of you
and your staff."
Public records also indicate that Governor Symington has promoted Canelos' businesses
to Mexican President Zedillo.
On March 3, 1996, President Zedillo sent Symington a letter thanking him for his
continued support of the North American Free Trade Agreement. Before inviting Symington to
a luncheon in Mexico City, Zedillo updated the governor on a Canelos business enterprise.
"I have asked our Secretary of Agriculture, Mr. Francisco Labastida, to have a
meeting with Mr. Canelos regarding the ethanol project," Zedillo states in his letter
to Symington.
Public documents released by the Governor's Office do not describe any ethanol projects
or reveal who, besides Canelos, is involved.
The governor also has touted state and federal initiatives to speed commercial traffic
over the border at Nogales--an effort that would help not only Canelos, but all commercial
shippers.
Symington asked the state Legislature to appropriate $750,000 to supplement a federal
review of port operations in Nogales. The state funds were appropriated and earmarked to
develop ways to speed commercial traffic.
Symington has discussed the Nogales port issue several times with Mexican President
Zedillo and has received assurances from Zedillo that Mexico will cooperate with speeding
commercial traffic through the border.
He's also broached the issue with President Clinton, writing him in December that
Clinton's delay in permitting cross-border trucking "robs the entire U.S.-Mexico
border region of the full economic benefits that the North American Free Trade Agreement
promises."
Alejandro Canelos could not obtain a regular visa in October 1995 to enter the United
States. But that didn't stop Governor Symington and Canelos from holding a private
meeting.
The governor used his elected position and his access to a taxpayer-supported aircraft
to arrange a private meeting with Canelos in October 1995 in Culiacan.
Symington used the DPS' turbojet plane to transport himself, J. Fife IV and Nicolas
Canelos along with two state officials from Phoenix to Culiacan at taxpayer expense.
The entourage was part of a state trade mission to Sinaloa. Other Arizona businessmen
on the trip paid $350 to $400 for commercial flights, but the governor's son and the
younger Canelos were transported free.
State records indicate that the governor broke off from the rest of the state trade
delegation on the morning of October 10, 1995.
While the Arizona trade delegation he was leading met with Sinaloan businessmen over
coffee, the governor held a two-and-a-half-hour private breakfast meeting with Canelos at
the agriculturist's farm headquarters, state records indicate.
The records do not say what was discussed.
But the meeting came less than two months after "J. Fife Symington" joined
Alejandro Canelos Rodriguez on the board of directors of Melones Internacional.
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PAYING THE PIPERA KICKBACK RAISES NEW QUESTIONS
ABOUT SYMINGTON AND THE MERCADO
A partnership headed by J. Fife Symington III made an
apparently illegal payment to a pension fund investment manager who agreed to make a $10
million loan to a troubled Symington development, public records obtained by New Times
reveal.
The $10,000 kickback was paid in connection with a loan that several union pension
funds made to finance the Mercado, a downtown retail center developed by Symington's
partnership. It was the pension funds' attempts to collect on the long-overdue loan that
pushed Symington into personal bankruptcy last month.
The pension funds have alleged in civil court that the $10,000 payment--made to an
investment manager convicted and imprisoned for taking similar fees--violated federal law.
It is a felony under the federal Employee Retirement Insurance Security Act for a
pension fund manager to personally receive payment from anyone conducting a financial
transaction with the pension fund. It is also a crime for anyone to make and receive
unlawful payments to influence the pension fund manager.
Loan documents and federal court records show that the Mercado Developers Limited
Partnership, headed by Symington, paid William Earle Miller $10,000 when Miller agreed to
make the $10 million loan in October 1987.
The Mercado loan came at a crucial time for Symington. The details of securing that
loan--which figured so prominently in the governor's recent bankruptcy--almost certainly
will be crucial to his future.
It was mid-1987, and a highflying Phoenix real estate developer named J. Fife Symington
III needed money.
Symington's plan to build the Mercado retail development in downtown Phoenix was
stalled by nervous bankers, who didn't want to put up a $10 million long-term loan for the
risky project in the midst of a deteriorating real estate market.
If Symington didn't quickly find a permanent lender, his deal with the City of
Phoenix--which included such sweetheart inducements as free land, more than $1 million in
tax breaks and a $2.7 million low-interest loan--might fall through.
About the same time, a Scottsdale investment manager named William Earle Miller was
busy investing more than $200 million of union pension fund assets in about 80 shaky
Arizona real estate projects.
By 1987, many of the loans were in default; some borrowers never even paid interest on
the loans. But Miller hid the losses from the pension fund trustees.
Actually, Miller did more than hide losses. Miller accepted unlawful payments for loans
he arranged. In fact, federal authorities later alleged he had taken more than $600,000 in
kickbacks from a Tucson real estate broker for a series of real estate deals between 1981
and 1985.
Symington's and Miller's paths were about to cross. At the Mercado.
Their relationship--which began about 20 months before Miller's illicit activities first
were listed in an obscure federal civil suit--was facilitated by the leader of the Phoenix
firefighters union, Pat Cantelme.
In 1987, Cantelme was president of the Central Arizona Labor Council. One of his goals
was to assist construction projects that used union labor. He frequently helped arrange
union pension fund financing for construction projects, if developers promised to use
union labor.
"I would be involved as a catalyst to get things together, and that was the case
with Symington," Cantelme says.
Cantelme thought Miller might be interested in using union pension funds for the
long-term Mercado loan Symington desperately needed.
"I actually introduced Miller and brought them together," Cantelme says.
In October 1987, Miller and Symington hammered out an agreement. The union pension funds
would provide up to $11.1 million after the Mercado was built to pay off a $10 million
construction loan made by First Interstate Bank.
"The unions stepped up to the plate," Symington declared after the deal was
struck.
The agreement cleared the way for Symington and his development partner, a nonprofit
community group called Chicanos Por La Causa, to build the Mercado, which was expected to
provide subsidized leases to minority owners of small businesses.
But the pension fund loan came at a high price.
Its terms included a $10,000 payment to Miller. It was called a "loan processing
fee." But federal prosecutors have called similar fees illegal.
Miller learned this lesson in pension law the hard way and now has plenty of time to
reflect.
The former U.S. marine and Stanford University graduate is serving 37 months in a Las
Vegas-area federal prison. In 1993, he was convicted of receiving $600,000 in illegal
payments from Tucson real estate broker Keith Dolgaard in exchange for funding loans
sought by Dolgaard.
Dolgaard also was convicted of violating federal pension fund laws. He is serving 37
months in a west Texas federal prison.
But prison wasn't on the minds of Symington and Miller in October 1987. They had just
agreed on a $10 million loan that benefited them both. (Neither man agreed to be
interviewed for this article.)
Greed, deception and ambition, however, would soon trigger a brutal, high-stakes
struggle among the union pension funds, their money managers and Symington. That struggle
would put Miller in prison. Arizona would be left with a bankrupt governor.
Miller committed to lend up to $11.1 million from six pension funds controlled by three
unions--the Arizona State Carpenters Union, Arizona Operating Engineers Local No. 428 and
the Arizona Laborers, Teamsters and Cement Masons Local No. 395. Even with the new money,
delays continued to plague the Mercado development.
Construction was stalled until June 1988 by First Interstate Bank. The bank refused to
issue a $10 million construction loan until the U.S. Department of Housing and Urban
Development approved a $2.7 million loan from the City of Phoenix to Symington's Mercado
Developers Limited Partnership, public records show. The city loan needed federal approval
because the money came from a HUD grant.
By the time construction began in the summer of 1988, the Arizona real estate market
was eroding. Office vacancies were soaring, and the impact of the 1986 Tax Reform Act,
which changed fundamental rules for real estate investors, was beginning to be felt. By
year's end, Phoenix banks and thrifts were posting huge losses.
The collapsing market soon exposed Miller's poor investment choices. An internal audit
by the union pension funds discovered massive problems, and Miller was forced out as
investment manager in November 1988. Miller's departure would prove disastrous for
Symington.
Miller's duties were taken over by McMorgan & Company, a San Francisco
money-management firm that specializes in handling pension fund assets.
The more McMorgan investigators looked into Miller's handling of nearly $1 billion in
pension fund assets, the more problems they found. The biggest crisis involved nearly $250
million of pension fund assets Miller had invested, or had committed to be invested, in
poorly performing Arizona real estate.
In April 1989, the pension funds filed a federal lawsuit against Miller in U.S.
District Court in Phoenix, alleging he had engaged in racketeering, violated securities
laws and received illegal compensation when he invested union pension fund assets in
Arizona real estate projects.
Among other things, the pension funds alleged that Miller violated federal law by
accepting payments for arranging loans. The Employee Retirement Income Security Act of
1975 prohibits investment managers from receiving or conspiring to receive any
consideration from any party in connection with a transaction involving the assets of a
pension plan.
Miller's receipt of a $10,000 loan-processing fee from Symington's Mercado Developers
Limited Partnership wasn't included in the pension funds' initial lawsuit against Miller.
But an allegation that the $10,000 fee violated federal law was included when the pension
fund amended its legal complaint in June 1991.
The civil suit was the beginning of a dreadful series of events for Miller. The civil
allegations soon attracted the attention of the U.S. Attorney, who began an investigation
that led to a federal grand jury indictment on November 17, 1992.
The indictment alleged that Dolgaard received more than $6 million in fees for bringing
scores of real estate projects to Miller, who would then approve pension fund loans. In
return, the indictment alleged, Dolgaard paid Miller more than $600,000.
Trial testimony revealed that Miller also had taken $107,000 from a joint savings
account he had with an elderly client. In a desperate attempt to repay the money to the
client after it was discovered missing, Miller obtained $115,000 from a company controlled
by Dolgaard.
The government alleged the October 15, 1985, payment from Dolgaard to Miller was made
with "the intent to influence Miller"--and the union pension fund assets Miller
controlled.
A jury convicted Dolgaard and Miller of three counts each of violating federal pension
fund laws. Two of the counts were related to unlawful payments to influence the operations
of a pension fund. Dolgaard and Miller were sentenced to 37 months in federal prison on
March 28, 1994.
Assistant U.S. Attorney Joelyn D. Marlowe says the government did not review the
$10,000 payment from Symington's partnership to Miller because the government's case was
narrowly focused on the Miller-Dolgaard relationship.
In addition, the payments between Miller and Dolgaard were kept secret, Marlowe says,
while the payment between Symington's partnership and Miller was recorded in loan
commitment papers. The Symington partnership's payment to Miller was relegated to
obscurity before New Times began investigation of the Symington bankruptcy.
The pension funds continued their case in civil court against Dolgaard, Miller and
Miller's employer, Mitchell Hutchins Institutional Investors Inc. The suit ballooned into
a massive case, involving numerous counterclaims, that was finally settled in November
1994.
The union pension fund was the big winner in the settlement, collecting $93.3 million
from a series of defendants, including Chemical Bank and Paine Webber Group Inc., which
were the past and current owners of Mitchell Hutchins. The two companies paid a total of
$80 million.
Other losers were the union pension fund trustees, who agreed to pay $9 million to
settle claims, brought by the U.S. Department of Labor, that they failed to properly
monitor Miller's investments.
Miller's downfall directly affected another prominent figure--Phoenix developer Fife
Symington.
Miller did not require Symington to sign a personal guarantee to repay the $11.1
million pension fund loan commitment when the two men struck their deal in October 1987.
But by June 1990, when it was time for the pension funds to actually issue the loan,
Miller was long gone.
The new pension fund money manager, McMorgan & Company, refused to issue the loan
unless Symington signed a personal guarantee, McMorgan officials say.
By the summer of 1990, the Phoenix real estate market was a shambles. Building the
Mercado had cost more than anticipated; the pension fund loan would not be enough to pay
off First Interstate Bank's interim construction loan. There was a $1 million shortfall.
Symington was forced to renegotiate the shortfall with First Interstate. The bank
granted a one-year extension on repayment; the full amount was due in June 1991. First
Interstate Bank also got Symington to personally guarantee repayment of the loan.
McMorgan wanted the same sort of guarantee.
"We had one of those eyeball-to-eyeball meetings," says Paul Morton, a McMorgan
vice president. "We needed to collateralize this loan because of the changing
market."
Normally, McMorgan would have had very little leeway in changing the loan commitment
signed by Miller and Symington in October 1987. But McMorgan had been dealt a powerful
negotiating card.
Symington was no longer just another private developer. He was in a five-way primary
race for the Republican gubernatorial nomination. Any delays in the Mercado project might
have publicly exposed Symington's financial weaknesses prior to the election.
So Symington signed a personal guarantee pledging his assets to repay the pension fund
loan. Symington's wife, Ann, also signed the guarantee, pledging any assets she and her
husband held as their community estate.
As part of the guarantee, Symington submitted a financial statement that, the couple
promised, was "true and correct."
The December 31, 1989, financial statement--signed only by Fife Symington--said their
community property was worth $12 million, McMorgan officials say.
With the guarantee and financial statements signed and delivered, McMorgan funded the
$10 million permanent loan on June 29, 1990.
The ink was barely dry on the pension fund loan when the Mercado suffered its first
major public blow. In early July 1990, an anchor tenant, C. Steele & Company, closed
its doors, just seven months after Mercado's grand opening.
The restaurant and catering business, one of the largest retail tenants in the Mercado,
never paid rent before shutting down. Symington Company officials tried to put the best
spin on failure. Company president Randy Todd contended "there are a lot of good
things happening" at the Mercado.
Symington survived the fallout politically, winning the September 1990 Republican
gubernatorial primary. But Democratic candidate Terry Goddard, who strongly backed city
support of Mercado while Phoenix mayor, sensed an opening.
As the general election approached, Goddard focused increasingly on apparent weaknesses
in Symington's development company. The week before the election, Goddard ran television
ads stating Symington's development projects were $200 million in debt. Symington was
livid, claiming Goddard was attacking below the belt.
But Symington survived, defeating Goddard in a February 1991 run-off election.
Once in office, Symington wasted little time attempting to shore up the Mercado's poor
leasing. He had little time to turn the project around; if more space were not leased,
loan reserves set aside to make mortgage payments would be exhausted. Then Symington's
company would be responsible for the shortfalls.
In May 1991, McMorgan officials held a series of discussions with Symington concerning
repayment of the loan. The governor warned McMorgan that the only way the loan would be
repaid was for the pension funds to work with Symington, McMorgan officials say.
The governor, McMorgan officials say, indicated that only he had the power to make the
project work.
McMorgan was not impressed with Symington's political muscle-flexing, or his demand for
a "workout" of the loan's terms.
"What we need from you is dollars," a McMorgan official says was the reply to
Symington's renegotiation demand.
On May 31, 1991, Symington responded to McMorgan's request for payment with a stunning
document. The governor--who 11 months earlier submitted a financial statement claiming he
and his wife had a net worth of $12 million--voluntarily sent a new financial statement to
McMorgan.
According to Superior Court documents, this statement was prepared by Symington's
personal accountants--Coopers & Lybrand.
As related by McMorgan officials, both Coopers and Symington contended the governor
wasn't the wealthy developer he claimed to be only months earlier. Instead, the new
financial statement said Symington was $23 million in the red, McMorgan officials say.
Somehow, Symington had seen his net worth plummet by $35 million in 11 months.
Two days after Symington declared his massive indebtedness to McMorgan, the governor
defaulted on the $1 million loan to First Interstate Bank that he had renegotiated and
personally guaranteed.
First Interstate Bank couldn't do much about Symington's refusal to pay; a foreclosure
action would leave the bank in "second position," behind the pension funds that
would have primary claim on the Mercado property.
Once it became clear Symington wasn't going to make payments to either the bank or the
pension funds, McMorgan notified the governor it planned to foreclose on the Mercado.
McMorgan sent a notice of trustee sale to Symington on October 10, 1991. Symington's
response to the notice was terse. According to McMorgan officials, the governor said the
pension funds will be unsuccessful in forcing him to make good on his personal guarantee
to repay the $10 million loan because he was broke. Symington said he and his wife had no
community assets--despite the financial statement a year earlier showing joint assets of
$12 million.
Symington also warned McMorgan that if the pension funds insisted on calling in the
personal guarantee, the governor would simply file for bankruptcy.
Nearly four years after Symington first told McMorgan officials that he would file
bankruptcy rather than pay his debt to the pension funds, the governor acted. On September
20, he sought Chapter 7 protection in U.S. Bankruptcy Court.
The filing is Symington's attempt to liquidate his debts rather than reorganize them
and set up a payment schedule, as he could have done under other portions of the
bankruptcy code. Symington's bankruptcy filing was delayed for years, largely because the
governor was able to vigorously defend against lawsuits that the pension funds had filed
against him. That protracted defense was carried out by lawyers from the state's largest
law firm, Snell & Wilmer.
It is unknown how much Symington has paid or owes Snell & Wilmer. The governor
stated in his bankruptcy filing that his debts to his lawyers and his accountants are
"unknown."
These "unknown" debts raise questions about whether Symington has used
political power to benefit some of his creditors.
For example, three Snell & Wilmer attorneys have landed key positions in state
government since Symington took office. The appointments include: Mary Leader, executive
assistant for health and human services; Rita Pearson, head of the Department of Water
Resources; and former head of the Department of Environmental Quality Ed Fox.
The governor's accountants, Coopers & Lybrand, were awarded more than $4.5 million
from two state contracts related to Project SLIM. Coopers & Lybrand was forced to
repay $725,000 from the first contract to end an attorney general's investigation into
possible bid-rigging. The second contract has also raised questions; state records appear
to document Symington's involvement in steering work to Coopers ("How Fife's Friends
Got Fat on Project SLIM," March 16).
Lawyer and accountant fees are not the only mysteries of Symington's bankruptcy filing.
Officials with union pension funds say they want these key questions answered during the
bankruptcy proceeding: ù Are Ann Symington's extensive assets--reportedly in the millions
of dollars--available to creditors? After all, the governor listed community assets of
more than $12 million on at least two financial statements.
ù What is the value of Symington's four trust funds? The governor claims they are
worth less than $1 million. The pension funds want to see proof, and they also want to
explore tapping the trusts to pay off creditor claims.
ù What is the explanation for Symington's sudden change in net worth? How could he
suffer a $35 million swing in 11 months, from a positive $12 million to $23 million in the
hole?
ù Did the governor transfer assets to his wife before filing bankruptcy?
ù How did the governor pay off $1.2 million in loans his wife and mother made to his
campaign in 1990? During that time period, the governor told pension fund officials he was
broke.
ù How closely do Symington's financial disclosure statements, filed annually with the
secretary of state, correspond with personal financial statements submitted to pension
fund officials and other creditors? (The 1991 financial statement Symington submitted to
the state shows a positive equity in his real estate projects; in May 1991, Symington told
pension fund advisers he was $23 million in the red.)
ù What happened to a $300,000 commission Symington received in 1994 from the sale of
the Esplanade, another failed Symington real estate project? The bankruptcy filing
suggests it is already gone. But gone where?
If the pension funds or other creditors can show Symington fraudulently or illegally
obtained loans, there is a possibility the debts could be excluded from Symington's
bankruptcy. Such debts would continue to follow the governor indefinitely.
"We don't see this as over," says pension fund attorney Keith Overholt.
"There are still a lot of things we can do."
Creditors aren't the only ones interested in the fine print contained in Symington's
bankruptcy filing.
A federal grand jury is continuing a criminal probe of Symington's finances that began
more than two years ago. Sources familiar with the investigation say the grand jury is
piecing together answers to many of the questions creditors have been asking about
Symington's finances, and about possible shifts of assets to his wife.
Much is still unclear about the grand jury probe. It has not been disclosed whether
that panel is examining the roots of the Mercado loan, or the legality of the $10,000
"loan processing fee" paid by Symington's partnership to Miller.
In a civil suit against Miller, pension fund lawyers alleged the payment violated
federal law. Miller's acceptance of similar payments from real estate broker Keith
Dolgaard helped land both men in federal prison.
But are prosecutors examining loan commitment documents signed on October 15, 1987, by
William Earle Miller, now an imprisoned felon, and J. Fife Symington III, now a bankrupt
governor?
At this point, anyone outside of federal law enforcement can give only one truthful
answer to that question: unknown.
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