It seemed like the 1980s and 1990s all over again, the recent Arizona Republic story about a speculator ordered to pay $86.4 million arising from a lawsuit over the "Road to Nowhere" land play west of the White Tanks. The project promised housing for 300,000 residents. It was never built.
I urge you to read the story. The labyrinthine deal and long-running court battle defy easy explanation and benefit from the authoritative writing of veteran Republic reporter Dennis Wagner. If you're outraged by a government official padding his expense account, you should see how the private sector rolls in Arizona.
Unfortunately, local journalists rarely venture into alleged wrongdoing by corporations, much less the enormously powerful elements that comprise the Real Estate Industrial Complex. When this happens, however, the curtain rises, ever so slightly on how "the system" really works, how power is used.
This is one of those rare moments. And, not surprisingly, at the center of this story is the fascinating Conley Wolfswinkel. At about age 65, he is the Energizer Bunny — or the Terminator ("That's what he does! That's all he does! You can't stop him!") — of central Arizona land speculation.
Supercharged by money from newly "deregulated" savings and loan institutions, they went on a binge of leapfrog development and land assembly and flipping. It was especially helped by the abundant subsidies for sprawl, tax breaks, buying land along proposed freeways which they advocated for and tweaked alignments, and gaining commanding control of government to do their bidding. How this worked in one corner of the region in the 2000s was ably explained by Mark Flatten in the East Valley Tribune.
When the first orgy blew up in 1990, with enormous damage to Phoenix, the most notorious figure was Charles H Keating Jr. Then there was Wolfswinkel, Keating's sometime partner in business.
The public record is clear. Wolfswinkel was convicted of a felony bank fraud charge for an elaborate check-kiting scheme, trying to satisfy his investors as his empire, valued at some $450 million, was falling apart. He faced a judgment of $2 billion. Prosecutors wanted prison but Wolfswinkel was given probation. He sought personal bankruptcy protection and "lost everything."
Except that he was back by the 2000s, and not merely hanging out at Durant's like Keating. Thanks to numerous LLCs controlled by family members, with Wolfswinkel working as a "consultant, the empire controlled 80,000 acres of mostly undeveloped land in Maricopa, Pinal and Pima counties. Most of his legal troubles were worked out. His resurgence prompted profiles by Flatten and by Max Jarman in the Republic.
Of particular interest for the future, Wolfswinkel's enterprises are said to control a huge amount of groundwater in the Harquahala Valley. Hydrologists have claimed that roughly three-plus "Lake Meads" lie below the land that he and his partners own. This land sits also on the CAP canal route. Bill Levine, Dan Cracchiolo, and a major investor group based in New York City are among his partners. Of course, once the groundwater is pumped, it's gone — and intentions to recharge it are questionable given the oversubscribed Colorado River and its diminishing snowpack.
Yet Wolfswinkel is no Keating. He was raised in Mesa and his father was killed when he was a child. He graduated from Westwood High School, where he was head of the Future Farmers of America. Portly and balding, he looks like more like a farmer than a high flier. He was a dealmaker early on.
Although not a member of the LDS, he has worked well with Mormons, especially the Killian and Stapley families (the reader should know that my mother worked for patriarch Ray Killian at the Arizona Interstate Stream Commission). The LDS has been enormously influential in the development of central Arizona, especially the East Valley, so this proved to be an enormous advantage.
He is a polarizing figure, not least because of his business style. Some swear by him (even his parole officer), while others, including some family members, feel very differently. Some adversaries are hardly angels themselves. He can be irritating and charismatic, generous and penurious, insightful and clueless. The impression depends on the circumstance, person, or event. He is very complex and his rise, fall, rise, fall, and who knows what will happen next — it reflects some of that craziness about Arizona.
Especially after his 1990 fall, he has surrounded himself with able people. He has an eye for talent. Interestingly, Wolfswinkel is anti-Arpaio: He claims the Badged Ego has hurt the construction trades and the economy. Cornell University called him "an authentic entrepreneur."
And maybe all this is true. I remember covering Carl Lindner Jr., the Cincinnati financier and mentor of Keating (and perhaps who kicked Keating out of the Queen City of the West). Lindner was a ruthless dealmaker. He got the better of Karl Eller, a man of great integrity. In Cincinnati, Lindner was loved, despised, and feared. He completely avoided the press (this did not prevent us from running a groundbreaking five-day series on him) My best guess was that Lindner was a master of the game as it was played, especially going right up to the edge of the law if that helped him get the better end. He also grew up poor in working-class Norwood and was never, for all his wealth and power, really accepted by the Cincinnati blue-bloods.
The analogy is imperfect.
Wolfswinkel is a wheeler-dealer in the only thing central Arizona has going for it: land and the hope of continued population growth. He is both representative and unique. He is probably the last of the old-school players who made the leap to the new.
Unfortunately, the game, while profitable for a few, didn't include saving the city or the oasis or much of what made old Phoenix so magical. Equivalents of Wolfswinkel didn't emerge in other sectors, with the means to create an economy worthy of a huge metropolitan area. This "hunter-gatherer, use-it-up-and-move-out" extraction game doesn't offer a Plan B to create these assets or address competitiveness, sustainability or climate change. Indeed, it actively works against it by insisting on continued single-family housing sprawl above all, devil take the hindmost. And he will.