Arizona continues to have some of the worse corruption in America according to a recent national survey. We recently received a grade of D. After what’s just happened, we deserve an F. The reason is, Arizona after what happened yesterday has become Mexico. People in this community need to understand what happened yesterday when my law license was terminated. Let’s recap. Powerful politicians twice indicted for corruption have gone free. Others who blocked investigations and prosecutions retaliated against law enforcement and demolished county government to protect themselves escaped justice. Insiders who knew how the system works and how to work the system have had a field day. Honest prosecutors have been unjustly smeared and punished. The rule of law is no more in this county. We will never know all the corruption cases that aren’t filed and the criminals that go free because of what’s happened. But the chilling effect on prosecutors is clear: Public safety and clean government inevitably will suffer. They already have.

Look at all the corruption scandals that have happened recently in Arizona while the rule of law has basically been repealed in Maricopa County. We had the U.S. Attorney who resigned in disgrace. We had the criminal chief of the U.S. Attorney’s Office plead the Fifth Amendment before Congress. You don’t see 50 front page stories about that. I have never pled the Fifth, I have answered every question under oath I’ve been asked. Tom Horne, people are aware of that investigation that has just begun. We have the firings after the court tower corruption scandal came out. We have the golf tournament scandal, which the Arizona Republic has reported. Now Don Stapley is enmeshed in an FDIC lawsuit which involves some of the original counts we first filed against him.

And consider this, and this is extremely important: In the Fiesta Bowl scandal, not one politician has been charged. They charged all the employees, but not one politician. Not Grant Woods, not Gary Husk, who is a politico. And the reason is the chilling effect of what has happened in the case that came to fruition yesterday. We now have a constitutional crisis as prosecutors and members of the executive branch are being targeted by the judiciary and other branches for blowing the whistle on corruption and misconduct in the judiciary. That is essentially what has happened to me. As county attorney, I took on many powerful special interests and corrupt individuals who retaliated with a witchhunt targeting my law license. Unless we want Arizona to become as corrupt as Mexico, the people of Arizona must take back their government. At this point, only the people of Arizona can make things right.

I will soon announce an effort to seek voter approval for reforms to fight corruption and improve our government. I will have more to say in my forthcoming book as well. I wish to thank the Republican Party and many others for their public support. This fight now shifts to the court of public opinion, a fair court.

FOLLOW-UP RESPONSES TO QUESTIONS

The Supervisors fired my first two sets of attorneys, then refused to fully fund my third set. The presiding judge who made the decision to disbar me should have recused himself, since he had ruled against me in a prior matter. It is not that we didn’t have evidence in the racketeering complaint, the judicial panel did not want the believe the evidence because it implicates senior judges and other friends of the Board of Supervisors. The evidence is there according to prominent seasoned lawyers in my office and elsewhere. Robert Driscoll is a prominent lawyer with the Justice Department. I had the senior charging attorney in my office say they committed crimes. I had another senior prosecutor who said so. She said she was joking later on the stand, but I don’t know what kind of person jokes about charging an innocent person with a crime. Those are facts. We had Bob Barr, who is former US Attorney, he thought there was probable cause to charge Judge Donahoe. And a detective from the County Attorney’s Office in a response to a direct question from Judge O’Neill, said that he thought there was probable cause. So Judge O’Neill was impeached by his own question!

I’ve not been contacted by the FBI. Everybody in that room ultimately concluded that there was probable cause to charge Judge Donahoe, and that’s what you do in law enforcement, you discuss whether or not you have charges. So for me to go to law enforcement professionals to decide whether to charge someone with a crime is a conspiracy? Then there are 40,000 conspiracies a year in this county because there are 40,000 felony cases. It’s absurd.

Some of the other county attorneys around the state were embarrassed by what came out. The Yavapai County Attorney’s Office couldn’t find the guts to prosecute these cases.

We’ve reached a point where prosecutors can’t do their job without fear of being second-guessed and having criminal investigations dropped every time you call Washington. As a result of what happened yesterday, our system of justice has been destroyed. There will no longer be candid conversations about the strengths and weaknesses of controversial cases in prosecutors’ offices. You’ll have prosecutors who will be afraid to bring charges against people who can reach out and touch them in courts and the State Bar.

Other men far greater than I have gone to jail in defense of principles they believed in; they would not cowtow to corruption. People like Gandhi, people like Dr. Martin Luther King, Jr., people like Solzhenitsyn, people like Thomas Moore. They stood for something. There are some things worth fighting for. And somebody has to clean up this town. And I’m going to stand firm.

Regarding the perjury charge against me, that is one of the most outrageous assertions. I didn’t even know that level of detail in the case. We have a State Bar and judiciary who are very angry about corruption in their ranks being exposed. Lawyers in the state are afraid of them, so I brought in experts from outside of the state, Bob Barr, Bob Driscoll.

I’ve stated my case. I did my job. A lot of powerful people didn’t like that. And they got even. But the loser is the people of Arizona. And that’s why I’m going back to the people. This is not going to be settled by the Supreme Court of Arizona or any court, it’s going to be settled by the people of Arizona, and I’m going to go to the people of Arizona and seek reforms. Finally we can deal with the corruption in this state.

STATEMENT BY LISA AUBUCHON

My name is Lisa Aubuchon. Unfortunately Judge O’Neill didn’t have the courtesy or respect to learn how to pronounce my name. I will be filing an appeal and a request for stay. I have a lot of clients who have a lot of faith in me and will continue to have faith in me. If you want to look into something, look into process. The Bar took advantage of a simple probable cause determination n the disciplinary process. The disciplinary process was changed effective January 1, 2011. They waited until the new process came into place so that they could skip over     the panel of eight people that would have determined probable cause. That will be one of the major issues on appeal. The other issue involves Judge O’Neill. He was the trial judge in the Judge Donahoe case. I appeared in front of Judge O’Neill in Pinal County. I made arguments on the Donahoe matter regarding the conflicts of interest. Judge O’Neill entered stays in that matter. He has no right to hear this case, he should have recused himself. And he was also involved in another matter that remains under seal, hopefully that will come out sometime in the future.

PROFANE PROTESTER CHAD “YELLOW SNOW” SNOW

At the press conference, attorney Chad Snow, who led the recall against Russell Pearce and spends all day online trolling the Phoenix New Times leaving profanity-laded comments about law enforcement, showed up with a handful of scraggly looking protesters and tried to shout down Thomas. He got into an argument with a conservative Latina supporting Thomas and called her a “crazy b***.” When asked why he called her that, he said “Because she is. Teabaggers don’t believe in free speech.” Sounds more like Chad “Yellow Snow” Snow is the one who doesn’t believe in free speech. Doesn’t he have ethical responsibilities as an attorney to treat people with respect?

Corrupt Maricopa County Supervisor Mary Rose Wilcox

Emboldened by the verdict against Andrew Thomas disbarring him, the Maricopa County Supervisors are going on a spending spree of our taxpayer dollars awarding themselves and their cronies millions of dollars. Arpaio and Thomas had tried to prosecute county supervisors and judges, but the defendants cleverly turned the prosecution around on Thomas by filing bar complaints against him, knowing the liberal State Bar would punish him. Now the Supervisors are handing out millions of dollars to themselves and their cronies like it’s candy. Even county employees who were not prosecuted by Arpaio and Thomas are getting in on the gravy train.  Don Stapley’s secretary, who was not prosecuted, filed a lawsuit against the county demanding $1.5 million. The Supervisors’ hatchet man David Smith said today that she will be awarded $500,000. You have to wonder if this was a payoff to her for keeping her mouth shut about Stapley’s wrongdoing? Supervisor Mary Rose Wilcox will receive $975,000 and retired judge Barbara Mundell will receive $500,000. The Supervisors have already awarded millions of dollars to other cronies for similar claims.

Wilcox, a Democrat, has a long sordid history of breaking the law and using her powerful political position to avoid punishment, some of which was reported by reporter Linda Bentley last year. A Grand Jury  indicted Wilcox on 36 criminal counts over some of her recent misdoings. Gila County Attorney Daisy Flores thought Thomas’s prosecution of Wilcox had enough merit to initiate a review. Although she eventually dismissed the charges, no doubt due to political pressure, she did not initially express any problem taking over the prosecutions from Thomas, and spent 10 months going over 10,000 documents in the case. Flores concluded that Wilcox had indeed failed to properly report financial information.

Smith says that he would rather settle the lawsuits now instead of fully litigate them in order to save the county money. The truth is that these people have no valid claims, so Smith is helping them skate around the judicial process. This is not right, these claims need to be properly litigated so it can be determined whether they have any merit or not.

Have the county coffers become a revolving door now? Anyone that threatens to sue the county we just give them money? Who is next? Quick, file a claim against the county claiming that Arpaio and Thomas stressed you out, and you too can get in on the county gravy train. Hurry though, Smith is resigning this month, and Supervisors Stapley and Brock will not be running for reelection. The free taxpayer handouts will probably end come election time.

The Tea Parties have championed cleaning up the County Supervisors office, and they will continue standing up to this kind of abuse. This is outrageous that not only did defendants like Wilcox get away with crimes, but now they are profiting off the taxpayers and calling themselves victims. Get involved with your local Tea Party and let’s stop this now.

Here is an Arizona Republic article about the settlements.

“Stapley was accused of inflating his assets and lying about his real income by Maricopa County Sheriff’s Office investigators to obtain loans from Silver State and Mortgages Ltd.    , including the $5.5 loan detailed in the FDIC lawsuit against the Silver State bankers.”

Maricopa County Supervisor Don Stapley tied to Silver State Bank loan

Phoenix Business Journal

by Jennifer Johnson

March 24, 2012

Earlier this week, the Phoenix Business Journal wrote about four former Silver Statebankers who were sued by the Federal Deposit Insurance Corp.    for making risky land loans to developers.

The lawsuit describes more than a dozen loans made to six developers that involved what regulators described as unsafe and unsound underwriting practices. In an interesting twist, one of the developers was Maricopa County Supervisor Don Stapley.

The $5.5 million Stapley loan described in the FDIC lawsuit was relatively small compared to borrowers such as Las Vegas developerThomas Jurbala, who told ProPublica he received about $100 million in loans from Silver State over a decade. Stapley and entities he owned also received other loans from Silver State, but only one $5.5 million loan is cited in the FDIC lawsuit against the four Silver State bankers for unsafe and unsound banking practices.

FDIC LOSSES

Stapley has not been accused of any wrongdoing, but the FDIC said it lost more than $5.2 million on the $5.5 million loan he received in September 2006.

This loan is interesting because in 2009, the Maricopa County Attorney’s Office indicted Stapley on 27 separate felony counts-and one of those counts is linked to Stapley’s $5.5 million Silver State Bank    loan.

Investigators from the Maricopa County Sheriff’s Office accused Stapley of initiating a complex scheme to defraud banks into lending him millions of dollars so he could develop high-end residential properties.

The loan matter is just a chapter in the highly charged dispute between Stapley and Maricopa County Sheriff Joe Arpaio that included the East Valley supervisor being arrested in a county parking garage and ended with two rounds of indictments and charges against him being dropped. It shows some of the complicated, convoluted and sometimes questionable lending and real estate business practices that permeated the Arizona marketplace during the last land boom and bust. Indictments brought against Stapley by Arpaio and former Maricopa County Attorney Andrew Thomas were dismissed or dropped.

In the second round of indictments, Stapley was accused of inflating his assets and lying about his real income by Maricopa County Sheriff’s Office investigators to obtain loans from Silver State and Mortgages Ltd.    , including the $5.5 loan detailed in the FDIC lawsuit against the Silver State bankers.

Stapley is an East Valley Republican who was briefly in the race for Arizona’s new 9th Congressional District but dropped out earlier this month.

STAPLEY PROJECTS

Back in 2006, Stapley and entities he owned were involved in developing two separate projects: 19 custom homes in Gilbert, known as the Sonterra development, and 17 custom homes in Queen Creek, known as the Paseo de Pecans development. To finance the projects, Stapley and companies in which he had an ownership stake, borrowed from Mortgages Ltd. to buy undeveloped land for the projects. Most of the Mortgages Ltd. loans were meant to be a short-term bridge until more conventional financing, with lower interest rates could be found.

In September 2006, Stapley’s company, Arroyo Pacific Partners LLC, along another entity, Tangelo Avenue Investments LLC, took out the $5.5 million Silver State loan to pay off a previous Mortgages Ltd. loan.

According to court documents, the Silver State loan officer who gave Stapley the loan, Tim Kirby, based the value of the loan on the estimated value of the finished development project, rather than the raw, undeveloped land.

In the boom years, bankers weren’t concerned about basing the loan values on undeveloped land because appraisals were steadily rising. The problem was that Stapley’s Sonterra project was never finished – and he ultimately walked away from the project shortly before the bank failed in July 2008.

Regulators said the lack of improvements on the Sonterra development site should have been a major red flag for the Kirby. That’s because almost all of the $5.5 million Silver State loan was being used to pay off the previous Mortgages Ltd. loan on property that already was worth much less than the appraisal value.

Maricopa County Sheriff’s Office investigators raised questions about how Stapley was able to borrow millions from Silver State and Mortgages Ltd.

On Stapley’s taxes filed for 2005, the year prior to when he received the $5.5 million loan, he reported a loss of $73,000 on his $60,000 salary.

That’s where this saga takes another bizarre twist.

WOLFSWINKEL DEAL

Maricopa County Sheriff’s Office investigators interviewed Kirby to find out why he had approved multiple loans to Stapley, despite knowing about Stapley’s 2005 tax statement. Kirby told investigators Stapley’s attorney had given him documents describing options agreements between Stapley and companies owned by Arizona land baron Conley Wolfswinkel and Wolfswinkel’s family.

Stapley agreed to plege his options income as a personal guarantee on at least one Silver State loan.

Lawrence Rollin, an attorney at Udall Law Firm LLP in Tucson, who has worked with the Wolfswinkel family, said companies owned by Wolfswinkel and Stapley brokered three deals for land options on undeveloped parcels in Pinal County.

In August 2003, Stapley’s company, Arroyo Pacific, purchased a 200-acre parcel in Pinal County from an entity owned by the Wolfswinkel family. Stapley granted the Wolfswinkel company the option to repurchase the property for the same price within the next two years. According to bank records obtained through a Maricopa County Sheriff’s Office search warrant, Arroyo Pacific Investments was paid about $180,000 in options payments from Wolfswinkel between August 2003 and May 2004.

In June 2004, Stapley’s Arroyo Pacific sold 160 acres back to Wolfswinkel for $1.5 million. Stapley earned an additional $113,387 commission on the sale. Wolfswinkel then resold the same 160-acre plot for $4.4 million. The next month, Wolfswinkel purchased the remaining 40 acres from Stapley for $1.9 million. Stapley pocketed another $5,616 in commission.

Stapley then used his profit to broker two additional options deals with Wolfswinkel on two 70 and 80 acre parcels of land in Pinal County. Stapley earned thousands of dollars on the options payments from Wolfswinkel, which he then pledged as a personal guarantee for his Silver State loans.

SILVER STATE LOSSES

According to indictment court papers, one month before Silver State was closed by the FDIC, Stapley informed the bank he was walking away from his Sonterra development project. In July 2008, the bank failed, and now more than three years later, the FDIC says it lost $5.2 million on Stapley’s loan.

Questions remain about whether regulators were able to seize that options income when the bank failed, or if Stapley got to keep that income when he walked from his Sonterra development project.

The FDIC said it does not comment on pending litigation.

Even though the FDIC says it lost $5.2 million, an independent special prosecutor found there was insufficient evidence to prove that Stapley engaged in a scheme to defraud Silver State or to prove that it had suffered direct harm as result of his actions.

That is little confusing, because Silver State bank failed when developers such as Stapley began to default on loans the bank had made. Stapley’s loan was a drop in the bucket compared to many of the much larger loans the bank had made. As large uninsured depositors found about the bank’s troubles, they began to pull funds at lightening speed.

Stapley may have had an inkling the bank was troubled, but he definitely knew his own project was troubled. In March 2008, he sold his interest in the loan to Tangelo Investments. That left Tangelo Investments, not Stapley, on the hook when he walked from his development project.

Stapley deferred comments to his attorney, Merwin Grant, who said he was confused by why I was asking about the $5.5 million Silver State loan to fund Sonterra. Grant, who incidentally also is Stapley’s attorney in his fight against Maricopa County, said he could only comment on Stapley’s lawsuit against the FDIC.

That is the final bizarre twist in this convoluted tale.

After walking way from his Sonterra development project, Stapley turned around and sued the FDIC as a receiver for Silver State bank. One would think it would be the other way around.

Stapley alleged that Kirby had made numerous mistakes when he described the property and options that were pledged as loan collateral for another separate loan he received to fund his Paseo de Pecans development. Furthermore, Stapley alleged that his other development, Paseo de Pecans, failed because that separate loan, was never fully funded. That lawsuit was ultimately dropped, and Stapley and the FDIC paid their own court costs.

It’s hard to know what really happened in all of this minutia, except that the FDIC says it lost $5.2 million as a result of a loan Stapley originally received. But this is worth writing about for one reason: the complicated back story behind the Stapley loan illustrates the challenges and the complicated web regulators are up against in trying to recoup lost money for the deposit insurance fund. The FDIC mostly targets bankers, not developers for their unsafe and unsound banking practices. But the Stapley loan and the public records available offer a peak behind the curtain into how developers were operating during the boom times. This developer just happened to be the Maricopa County Supervisor.