Arizona Daily Star from Tucson, Arizona • Page 1

Lender reportedly recommended 2 Mecham appointees See story below 1987 The Arizona Daily Star Final Edition, Tucson, Friday, October 23, 1987 88 pages Vol. 146 No. 294 a Kin ran UUULW( 0 President says panic could bring recession AT A GLANCE By R.W. Apple Jr. 1987 The New York Times WASHINGTON In a bid to calm the frenzy in the world's financial markets, President Reagan announced yesterday that he would meet with congressional leaders to negotiate ways to reduce the budget deficit, with "everything on the Market resists new collapse By Lawrence J.

DeMaria 1987 The New York Times NEW YORK The stock market, its ability to do business stretched to the limit, declined sharply yesterday in a session in which tense investors resisted a market collapse akin to Monday's historic fall. By day's end, an incipient panic had turned into a moderate rout, with the Dow Jones industrial average plunging 77.42 points, to 1,950.43, and volume exceeding 390 million shares. "It appeared that, initially, the Dow was going to be down 200," said Bernard Spilko, managing director of Bank Julius Baer in Manhattan. "I thought it would be Monday and Tuesday all over again." ForWall Street, it was a day of extraordinary cross currents. Greeting bleary-eyed traders in the morning were disturbing reports of Iran's missile attack on i (It President Reagan said he would meet with Congress to discuss ways to cut the deficit.

A tax increase was not ruled out. He acknowledged that a recession could begin if consumers panic. Reagan offered no stock market predictions nor plans for reversing the record plunge. Congress seemed to be taking the president's concessions seriously. Senate GOP leader Dole warned that a stalemate could bring further damage.

Reagan's leadership abilities were being increasingly questioned. news conference, his first in Washington in seven months, that the deficit for the fiscal year ended Sept. 30 amounted to $148 billion, consider table," including possible tax increases. Fighting to restore at least some of his fading reputation for leadership, and with it some vestige of credibility for his hard-pressed administration, the president conceded that if people "panicked" and postponed normal purchases because of volatility in the markets, it "could bring on something of a recession." But he said that there was "no need" for a downturn and repeatedly appealed for calm. Although he was pressed again and again during his nationally televised news conference last night, Reagan declined to state whether he would accept a tax increase of any kind, remarking that congressional leaders "will find out when I sit down there." "Overdue correction" He offered neither a prediction of what would happen to stock prices in rnminp wppks nor anv detailed I ably less than had been expected.

The figure represents a $73 billion decline from $221 billion last year. Commenting that the tumultuous events of the last four days were See REAGAN, Page5A jagenda to reverse what he called "a long-overdue correction. Reagan also announced at the The nation's leading banks cut their prime lending rates to 9 percent as other interest rates continue to drop. Page 1C. Money market mutual funds have a record increase in assets.

Page 1C. Kuwait's oil terminal. There were rumors that an influential market forecaster foresaw much lower prices. And the results from overseas stock markets were disappointing. But Citicorp lifted some spirits at the opening bell when it lowered the prime lending rate a quarter-point, to 9 percent, and was quickly followed by the rest of the nation's banks.

In the afternoon, the White House gave the market a boost in announcing that President Reagan wanted to meet with Democratic and Republican congressional leaders to talk about deficit reduction steps. Finally, after a day of wild price swings, the New York Stock Exchange said that it would close two hours early, at 2 p.m., today, Monday and Tuesday. The exchange, with Washington's support, said it had taken the unusual step so that it could process the flood of paper that the incredible stock volume of recent days had generated. Before opening of trading yesterday, Exchange Chairman John J. Phelan Jr.

addressed the exchange's brokers, specialists, traders and clerks. Speaking from the podium above the Big See MARKET, Page 3A Mi Appointments tied to loan to governor The Associated Press Glad to be home First lady Nancy Reagan kicks back her heel In a coquettish dance step to show how happy she is to be back at the White House. The president escorted her home yesterday, five days after she had successful breast cancer surgery at Bethesda Naval Hospital. Story, Page 8A. The Republic said Wolfson and his attorney, Gordon Cook, both denied that any kind of deal was made in exchange for the loan.

"Absolutely, unequivocally no," Cook said, "it was never discussed at the time. This thing was clean." Mecham, loan co-signers subpoenaed Corbin denies conflict, won't quit investigation PHOENIX (AP) The Arizona Republic, in a copyright story for today, said it learned that two people named by Gov. Evan Mecham to a state housing-bonds board had been recommended for posts in the administration by a Tempe attorney who secretly lent Mecham $350,000 and whose clients seek such bonds. The newspaper quoted unnamed sources as saying the loan and the possibility of political favors are the focus of a state grand jury investigation. The Republic reported that attorney Barry Wolfson acknowledged yesterday that he urged the governor to give real estate agent Jesse Watson and attorney Scott MacFie Clark state appointments, and that records show that the governor appointed both to the state Housing Finance Review Board shortly after he took office.

The board reviews industrial development bond awards to developers who propose building low-income housing. Wolfson and developer Hugh Gre-gan, who has worked closely with Wolfson on several projects, have made millions of dollars from such bond-financed projects, the newspaper reported. Both are defendants in a civil fraud and racketeering suit alleging the misuse of $368 million in industrial development bonds ihat were to be used to build low-income housing. Mecham and advisers from the highest levels of the governor's staff were subpoenaed yesterday by Attorney General Bob Corbin to appear before the grand jury Nov. 3 to discuss whether the loan from Wolfson was granted in exchange for political favors.

Corbin said earlier that he was also investigating why the loan, made shortly before last year's general election, was not disclosed in the governor's campaign statements "It's a typical thing. People who are drowning grasp at straws," Corbin added, referring to the concern about a possible conflict of interest. Miller said Corbin has been advising the governor on campaign finance laws and now is investigating him for possible violation of the same smacks of inherent unfairness," he said. "We'll ask that another governmental agency take it over." While Miller declined to say whether Mecham had been subpoenaed, Mecham spokesman Ken Smith said the governor had received a subpoena. Mecham declined to answer reporters' questions yesterday.

Subpoenas also were delivered to members of the governor's executive staff yesterday, including special assistants Edith Richardson and Ray Russell, Smith said. Members of Mecham's 1986 campaign fi-' See SUBPOENAS, Page2A State law says a person who knowingly misrepresents or fails to disclose the facts about any campaign contribution or loan is guilty of a class 6 felony and can be removed from office. Corbin has the authority to issue subpoenas on behalf of the state grand jury, which determines whether to issue indictments. Corbin said yesterday that the investigation goes beyond the unreported loan. "There are other allegations in addition to what's been printed," Corbin said, declining to elaborate.

Attorney Rick Miller and his father, Murray Miller, were retained by Mecham yesterday. The younger Miller said they plan to ask Corbin to remove his office from the criminal investigation because Corbin also acts as the governor's attorney an apparent conflict of interest. Corbin denied that a conflict exists, saying he has not represented Mecham in a criminal case. "Prove to me I have a conflict. We sure don't see any," Corbin said yesterday.

By Susan R. Carson The Arizona Daily Star PHOENIX Gov. Evan Mecham, members of his staff and co-signers of an unreported $350,000 loan to Mecham's 1986 gubernatorial campaign have been subpoenaed to appear before a state grand jury Nov. 3. Meanwhile, a lawyer hired by Mecham yesterday said Attorney General Bob Corbin should remove himself from the investigation because of an apparent conflict of interest.

Corbin said Wednesday that his office was conducting a criminal investigation on whether Mecham violated state disclosure laws by failing to report a $350,000 loan from Tempe attorney and developer Barry Wolfson, who, sources said, also received a subpoena yesterday. See MECHAM. Page 5A WEATHER Reagan relative drops plans to help Arizona get collider Governor's $85,000 chief of staff leaves job by 'mutual agreement' Clouds and breezes. Today will be mostly cloudy and breezy, with southwest winds of 10 to 20 mph and a 30 percent chance of rain. The high will be in the low 80s, the low in the upper 50s.

Yesterday's high was 81. the low 61. Details on Page 3A. By Jim Erickson The Arizona Daily Star President Reagan's son-in-law scrapped plans to help Arizona land a $4.4 billion atom smasher yesterday one day after an inquiry was made into charges that Gov. Evan Mecham tried to push through the contract Attorney General Bob Corbin said Be met in Phoenix Wednesday with "Ahdrew Miller, Arizona's chief lob-if isl for the Superconducting Super Collider.

said he wanted to discuss Whether Mecham tried to force iWIer to hire Dennis Revell, Maureen Reagan's husband. Corbin said yesterday that he met for about 30 minutes with Miller, an attorney with the Washington, D.C.. law firm of Dickstein, Shapiro Morin. Corbin said he asked Miller if the governor threatened to withhold renewal of the firm's $290,000 lobbying contract unless Revell's firm was hired to help promote Arizona's collider proposals. Miller, a former Virginia attorney general, said Mecham did not try to force him to hire Revell.

"There were no such threats." he See COUJDER. Page 2A By Susan R. Carson and Walt Nett The Arizona Daily Star PHOENIX Jim Colter. Gov. Evan Mecham's chief of staff, left his post yesterday, becoming the second key Mecham staff member to quit within two weeks.

Colter's replacement might be named as early as today. Mecham's press secretary'. Ken Smith, said yesterday. Rick Lavis. the executive vice president of the Arizona Cotton Growers Association, said he was of fered the job but had not decided if he will accept.

Lavis, an unsuccessful candidate for Congress last year, said he will meet with Mecham today to discuss the offer further, adding, "I'm right smack-dab neutral at this point." Smith said he didn't know whether Colter resigned or was fired, but added that neither term was appropriate. "He is gone. He no longer works for the governor." Smith said. "They reached a mutual agreement. They parted friends.

"The governor did say that they've been friends for 25 years; they're parting friends, but he is gone." Colter is the third member of Mecham's executive staff to leave during the governor's first 10 months In office. Ron Bellus. Mecham's first press secretary, was transferred to the state Office of Tourism in September, and legislative liaison Donna Carlson resigned Oct. 12. Smith said such resignations are common when campaign leaders See COLTER, Page 2 A INDEX Accent 1-HE Actualidades 17A Bridge 5E Classified 1SE-4G Comics 14E Comment 1H7A Crossword HE DearAbby Dr.Gott Horoscope HE Money 1-4C Movies 12E Nation lt-HA Obituaries HE Public records 11B Sports 1-HD Tucson today 4E TV-radio HE Washington 7-IA World 12-14A.