It took less than two weeks for Jim Rhodes to become the most influential developer in the East Valley. Two weeks and $58.6 million.

That’s how much time and money Rhodes spent to buy more than 1,000 acres of state trust land in Apache Junction in December. With it he gained the right to master-plan 7,700 acres in the area and set the tone for development of 275 square miles of state land extending from the eastern edge of Maricopa County to Florence.

What officials at the state Land Department knew of Rhodes when they sold him the property and planning rights was that he was one of the largest homebuilders in Nevada, and had plenty of cash to map out and develop the project.

What they didn’t know was that Rhodes has admitted to illegally using his money to aid powerful politicians in Nevada; that he has repeatedly and successfully been sued over allegations of fraud, theft and self-dealing by his investment partners and others he’s done business with; and that he has a long history of complaints for shoddy workmanship and construction defects from people who bought his homes.

Jamie Hogue, deputy state land commissioner, said officials at the agency were not aware of those things when Rhodes officials first contacted them about the property nine days before the auction.

If they knew then what they know today, they probably couldn’t have done much differently because Rhodes met the bidder qualifications published before the auction, she said.

At that time, land department officials were concerned about who could bring the money to the table.

The character of the high bidder was not an issue, she said.

They didn’t anticipate it would be someone like Rhodes.

If they had been looking, land department officials could have found another state agency where Rhodes’ background and character have long been a concern. For almost two years, the Arizona Corporation Commission has been considering whether to issue Rhodes a certificate to operate a water company in Mohave County, where he has plans approved to build more than 130,000 new homes on raw desert land he’s been buying.

Part of the commission’s concern has to do with the availability of water. But for the past year, commissioners have stalled the application as they investigate whether Rhodes is the kind of person they want running a publicly regulated Arizona utility. “Fit and proper” is the term the commission uses.

It is not a term that factored into the land department’s sale.

“Looking at the ‘fit and proper,’ I don’t think we anticipated doing that type of review of prospective applicants,” Hogue said. “We expected the folks who would be coming to the auction would be people that we have worked with before and those types of ‘fit and proper’ issues wouldn’t need to be asked. I think it came as a shock to us, especially at the last minute, that we would have a developer we hadn’t worked with from Nevada. It was a surprise and it’s not something we necessarily planned for.”

Rhodes would not agree to an interview with the Tribune, despite repeated requests made over several weeks. He did testify in front of the Corporation Commission in March, after commissioners threatened him with a subpoena. After the hearing, Rhodes stood silently as a Tribune reporter asked him a series of questions about his ties to corrupt politicians in Nevada. He responded to only one — denying he had made secret payments to one county commissioner in Las Vegas.

In his commission testimony, Rhodes blamed many of his past problems on his underlings in an interconnected chain of companies he owns, or on unscrupulous lawyers and investment partners out to make a buck off of his success. In many cases, Rhodes claims, he is the victim.

Those who have gone up against him see it differently.

“What surprises me is how he has had the audacity to basically just screw over his partners and he hasn’t ended up in a hole out in the desert,” said Las Vegas attorney Albert Marquis, who represented a client who successfully sued Rhodes for using his companies to bleed one investment partnership of millions of dollars. “It doesn’t matter what the contracts say. Once he is in control and operating, he’s doing whatever he wants.”

And now Rhodes is partnering with the state of Arizona in the initial development of what has been called the “crown jewel” of the land department’s 9-million-acre portfolio.

RICHES TO RICHES

Rhodes started at the bottom of the construction trades and built his success through hard work and a keen, handson understanding of the industry, according to his corporation commission testimony. His father was a prominent dentist in Las Vegas. One of his brothers became a dentist; the other a physician.

Rhodes, 48, went to work on a construction crew out of high school, earning $3 an hour cleaning up job sites and hauling lumber for framing crews. Over the next several years, Rhodes built his own construction company by picking up piecemeal work like framing individual houses. He started hiring his friends, and by the time he was 20 had more than 100 people working for him.

By 1984, Rhodes turned to home building. He bought an empty lot by putting $20,000 down and built a house, plowing the profits from the sale back into other land purchases. Eventually, Rhodes started building custom homes, with the likes of magician David Copperfield and sports stars Andre Agassi and Greg Maddux among his clients.

In little more than two decades, Rhodes built his company into the largest privately owned homebuilder in Nevada. He has built more than 7,000 single-family homes in that state, and generated more than $1 billion in revenue, according to documents filed with the Arizona Land Department.

His signature projects are the gated golf course communities at Rhodes Ranch about six miles southwest of the Las Vegas strip and Tuscany in nearby Henderson.

Despite that success, Rhodes says he would rather be swinging a hammer than putting together multimilliondollar land deals.

“I’m a carpenter by trade,” he says.

He plays to the image well. During testimony last month at the Corporation Commission, Rhodes said he could not explain with certainty the intricate ownership chains of his various companies. That is handled by his employees and the people who administer the 400-year trust he set up for his heirs.

Rhodes also could not delve into detail about the roughly four dozen lawsuits filed against him and his companies, with claims ranging from fraud to faulty construction. Those are handled by his lawyers, Rhodes said.

But the image of a simple craftsman is at odds with documents related to a criminal bribery case that went to trial in Las Vegas a year ago. Rhodes was not charged in what was dubbed the “G-Sting” investigation. But the federal government’s key witness in that case told the FBI that Rhodes had been paying one member of the Clark County Commission $20,000 per month to do his bidding, according to news reports published during the trial.

The commissioner, Erin Kenny, later went to work as a consultant for Rhodes and reportedly warned a county official it would be “dangerous” to go against her boss.

Arizona commissioners did not ask Rhodes about his relationship with Kenny. Her name has not come up in the Corporation Commission’s case.

G-STING

Kenny is a friend of Rhodes who did consulting work for his companies in early 2003, said Chris Stephens, vice president of Rhodes Homes who spoke on behalf of the company after Rhodes refused to talk to the Tribune. Stephens says he does not know whether Kenny was still on the payroll when she was busted by the FBI for taking bribes in May 2003. She almost immediately cut a deal with prosecutors and pleaded guilty to three counts of conspiracy and fraud.

Stephens has worked for Rhodes for about nine months, and joined the company after the relationship with Kenny was severed, he said. Though he acknowledged he has no firsthand knowledge of what went on between Rhodes and Kenny, Stephens offered a blanket denial of any wrongdoing involving his boss or the companies he controls.

“Certainly we deny that there has been wrongdoing,” Stephens said.

The G-Sting scandal was astounding, even by Las Vegas standards. It began with an FBI investigation in San Diego into whether strip club owner Michael Galardi was laundering money for drug dealers. That investigation did not pan out.

But in FBI wiretaps, Galardi was overheard boasting “I own every (expletive) county commissioner in Vegas right now. I’ve got them all on the payroll.”

For the next two years federal agents built a case of bribery and corruption in both San Diego and Las Vegas, cities in which Galardi operated strip clubs and sought favorable treatment from government agencies that regulated that industry.

The investigation led to Erin Kenny.

Kenny is a former casino waitress who had spent 10 years rising through Nevada Democratic political circles. After a single term in the Nevada Legislature, Kenny was elected to the Clark County Commission in 1994. The commission has jurisdiction over unincorporated areas that encompass most of metropolitan Las Vegas.

In 1997, Kenny bought a home in Rhodes Ranch. She once claimed Rhodes offered to give her a house, but after consulting an adviser she turned him down, according to media reports. She ended up paying $346,000 for the house, and sold it for almost double that amount seven years later.

Stephens says he doesn’t know if Rhodes offered to give Kenny a house, but adds it is not unusual that property values would double in the Las Vegas market between 1997 and 2004, when she sold the home in Rhodes Ranch.

According to court testimony, indictments, plea agreements and other court records, the G-Sting case unfolded this way:

Galardi was operating several strip clubs in Clark County and wanted to make sure local authorities did not crack down on the industry through ordinances such as a ban on patrons touching the dancers. The first to be bribed was Lance Malone, a county commissioner from 1997 until January of 2001. Malone cast several votes favorable to Galardi’s interests, and after he left the commission went to work as Galardi’s lobbyist.

By the middle of 2001, Galardi and Malone were coopting others on the commission in return for favorable votes. Commissioner Dario Herrera got free lap dances and sexual favors from Galardi’s strippers. Commissioner Mary Kincaid-Chauncey got money to send her grandson to ski school.

Kenny got cash. Lots of cash. By June 2001, Kenny was being paid thousands of dollars in return for favorable votes at the commission. Kenny eventually admitted taking between $70,000 and $100,000 from Galardi.

Kenny also admitted she had been taking $3,000 per month in bribes from a developer unrelated to Rhodes for favorable votes on the commission.

In all, Kenny said she took roughly $400,000 in bribes from Galardi and others. She denied taking money from Rhodes.

MISSING MONEY

Kenny confessed to taking bribes almost immediately after she was questioned by the FBI in May 2003.

But in 2001 and 2002, none of it was known publicly.

Kenny was still on the Clark County Commission. So was Herrera. But both had ambitions for higher office.

Herrera ran for Congress. Kenny abruptly announced in May 2002 she would run as a Democratic candidate for lieutenant governor. Both were still seen as rising stars in the Nevada Democratic Party, and were publicly endorsed by Senate Majority Leader Harry Reid, D-Nev.

During the last two years of their terms, Rhodes had more than 20 items related to his developments on the commission’s agenda, according to federal documents. He also became one of the most generous donors to both the Kenny and Herrera campaigns.

In her testimony against Herrera and other former commissioners last year, Kenny admitted she stole money from her 2002 campaign fund. She did not say how much she took.

Just weeks before the general election, Kenny’s campaign was running a deficit of more than $350,000, according to financial disclosure reports. It was Rhodes who bailed her out.

Kenny’s final report lists $80,000 in donations from Rhodes and the companies he controls. Half of it came in the day before the general election and half came two days after.

Defense lawyers grilled Kenny as to whether she covered thefts from her campaign by not reporting additional large donations made by Rhodes. She said she didn’t know.

For the entire campaign, Kenny disclosed $110,000 in donations from Rhodes and his companies.

Unlike in Arizona, Nevada law allows corporations to donate directly to candidates for state office.

Neither Kenny nor her lawyer responded to requests for interviews for this story. Kenny’s campaign accountant could not be located for comment.

Stephens, Rhodes Homes vice president, said it is not Rhodes’ fault if Kenny failed to properly report campaign contributions. He did not know the total amount Rhodes gave to Kenny’s campaign.

Kenny was never prosecuted for pilfering money from her campaign, or failing to report contributions. State and local authorities did not pursue any investigation into her admissions on the stand, according to officials in the Nevada Secretary of State’s Office, the Clark County District Attorney’s Office and the Las Vegas Metropolitan Police Department.

Stephens said he does not know whether Rhodes was ever questioned by law enforcement officers about the Kenny donations.

KNOWLEDGEABLE CONTRIBUTOR

Federal investigators did question Rhodes about $27,000 in illegal donations he arranged for Herrera’s congressional campaign, and $10,000 he raised for Reid’s Senate reelection effort.

Herrera was still on the Clark County Commission when his congressional campaign got its first $1,000 donation from Rhodes in April 2001. By then Rhodes had devised a scheme to secretly funnel illegal contributions to Herrera, according to Rhodes’ own signed admissions to the Federal Election Commission.

Aside from writing a check himself, Rhodes asked his top executives and members of his staff to donate to Herrera and Reid, with the understanding they would be reimbursed from corporate accounts. Rhodes also arranged for the reimbursement checks to be concealed with bogus entries in his companies’ ledgers, according to federal records.

It is illegal to reimburse people for campaign contributions. It is also illegal for corporations to donate directly to federal candidates, and to conceal corporate contributions by claiming they came from individuals.

Rhodes made good on his promise to pay back employees who donated to Herrera and Reid. Five corporate checks were written at Rhodes’ direction to reimburse the donations. Rhodes ordered phony entries be made in his companies’ books to cover the illegal reimbursements, according to federal documents.

Rhodes later had to file amended personal and corporate tax returns after his own accountants discovered the false entries in company ledgers.

“It appears that Rhodes acted with full recognition that the reimbursement scheme here was prohibited by law,” the FEC staff concluded in its investigation, calling Rhodes a “knowledgeable contributor” who had given $30,000 to political candidates in the past.

“As further evidence that the conduct here was knowing and willful, Rhodes also engaged in an elaborate scheme to disguise the reimbursement transactions in corporate accounting records,” the FEC reported.

The FEC report also notes that Rhodes and his companies had 22 items in front of the Clark County Commission while he was making the illegal payments to Herrera.

Rhodes’ attempts to blame his underlings failed. He reached an agreement with the FEC, announced last year, admitting he controlled the scheme, ordered the reimbursement checks and directed company ledgers to be falsified. He and his companies paid a fine of $148,000 to settle the matter and end the investigation. No criminal charges were sought by federal authorities.

Yet despite that agreement, Rhodes continued to blame employees when he was questioned about the illegal donations by the Arizona Corporation Commission. He denied directing his companies’ books to be falsified and said he signed the agreement with the FEC to resolve the matter.

“I didn’t really want to throw any of my people under the bus,” Rhodes said when questioned about the settlement by commissioners Kris Mayes and Bill Mundell. “We made a mistake. As the owner, I accepted the responsibility for it and paid the fine to have it behind us.”

When asked directly whether he knew about the illegal contributions before he was contacted by federal investigators, Rhodes responded, “I don’t know. I don’t remember.”

Mundell seemed skeptical, pointing out that Rhodes signed an agreement accepting personal responsibility for the illegal donations, and attempts to cover them in company ledgers.

“I can tell you this commissioner doesn’t want it taking place here in Arizona,” Mundell said.

In the end, the political donations made by Rhodes had little impact in the 2002 elections. Kenny and Herrera were both defeated by wide margins. Reid did not face serious opposition and was re-elected in 2004.

Jon Summers, a Reid spokesman, said the senator did not keep the $10,000 that Rhodes arranged for his campaign. The money was forwarded to the federal treasury after it was discovered the donations were illegal, Summers said. Reid did not know that Rhodes was arranging the contributions, Summers said, an assertion backed by the FEC investigation.

‘DANGEROUS’ DEVELOPER

Defeated in her bid for lieutenant governor, Kenny left the Clark County Commission in January, 2003. The next day, she went to work for Rhodes as a consultant.

Since 2001, Rhodes had been negotiating to buy a 2,400-acre gypsum mine near the Red Rock Canyon National Conservation Area west of Las Vegas, an environmentally sensitive area marked by sheer cliffs and deep canyons.

The county’s general plan allowed one house for every two acres, meaning Rhodes could build no more than 1,200 homes on the property. He had bigger plans for the land, which he paid $53 million to buy. Rhodes wanted to build 5,500 homes.

There was stiff opposition from the beginning, but Rhodes pressed ahead. He launched a glitzy television campaign to sell his plans to the public, and hired Kenny to sell them to the Clark County Commission.

Rhodes faced two obstacles. The first was state Sen. Dina Titus, a Democrat who proposed legislation to freeze zoning in the Red Rock area.

The second was Clark County Commissioner Mark James, who was slow to come out against Rhodes’ proposal, making him a potential swing vote on the commission.

James also had ties to Rhodes. When he decided to run for Kenny’s seat on the commission, James lived outside the district. He rented a home from Rhodes to meet the residency requirement. Rhodes also contributed $5,000 to James’ campaign.

The law firm where James worked also had represented Rhodes, though James later insisted he never gave legal advice to the developer.

The day after Kenny left the commission, she was lobbying her successor — James — to back Rhodes’ Red Rock project.

Also at the meeting was Jay Brown, a Las Vegas lawyer who worked for Rhodes. Brown is a longtime friend and investment partner of Sen. Reid, who got $10,000 in illegal contributions from Rhodes. Among Brown’s other clients was Galardi.

Brown did not return phone calls seeking comment.

Kenny warned James that it could be “dangerous” to cross developers like Rhodes. James did not commit to anything.

In March, 2003, Kenny arranged a meeting between Rhodes and James. Rhodes said the property was a huge investment for him, and that he wanted James to vote in favor of his plans. Later that night, James met with area residents who voiced stiff opposition to the increased densities Rhodes was proposing. Within days, James decided to oppose Rhodes and introduce an ordinance that would freeze zoning in the Red Rock area. After announcing his plan, James got a phone call from Kenny.

“Ms. Kenny, in the heat of the conversation, made certain pointed remarks about my political future which may, in the mildest of terms, be characterized as hostile,” James said in an affidavit filed in defending a lawsuit later brought by Rhodes.

Shortly after talking with Kenny, James got a call from Rhodes.

“He (Rhodes) responded by saying ‘you’re murdering me,’” James said in recounting the conversation. “He then accused me of reacting because the matter was ‘politically toasty.’ He stated that he had unlimited money to give me ‘political cover’ to support his development. I declined his invitation.”

That was the last time James talked to Rhodes about the Red Rock plan.

Two weeks later, James got a phone call from a Rhodes attorney, Chris Kaempfer, who said Rhodes was going to try to “kill me,” according to James’ affidavit.

“I asked him what he meant and he said that unless I would agree to recuse myself, that Rhodes was going to sue me personally,” James said.

James says he stood his ground.

Kaempfer responded that “it was going to get bad for me because Rhodes was going to pull out the stops,” James said.

Kaempfer did not dispute the statements attributed to him in the James affidavit. But Kaempfer told the Tribune he was just relaying those sentiments from another Rhodes lawyer to James, a longtime friend. Kaempfer said he talked to James as a friend, not a lawyer for Rhodes.

James eventually sponsored the county ordinance to freeze zoning of the Red Rock property. Rhodes did sue him personally, claiming James had given him legal advice and, therefore, had a conflict of interest. The lawsuit was quickly tossed by a county judge.

The state legislation pushed by Sen. Titus to freeze zoning in the Red Rock area was unanimously passed by the Legislature and signed into law.

Within a year, James abruptly resigned from the Clark County Commission, citing family reasons.

He refused to talk to the Tribune.

FINGER-POINTING

The secret deals of corrupt Las Vegas politicians became public in May, 2003.

The FBI investigation of Galardi was reaching its climax. Galardi’s strip clubs were raided. Agents showed up at Kenny’s office and started asking questions about the money she took.

After consulting with her attorneys, Kenny confessed and agreed to testify for the prosecution.

So did Galardi.

Galardi said he and Malone, the former county commissioner, had paid cash to Kenny and Commissioner Kincaid-Chauncey, and arranged sexual favors for Herrera. All of it was done in return for favorable treatment from the commission, he said.

Galardi pointed the finger at others as well, saying local cops, prosecutors, judges, even FBI agents and an assistant U.S. attorney had taken payoffs in the form of money, campaign contributions or free services at his strip clubs.

Galardi also implicated Rhodes during his 2003 debriefing by the FBI, according to documents cited by the Las Vegas Review Journal during the trial last year.

Kenny was griping that Galardi was not paying her enough for her votes on the commission, according to FBI debriefing reports used during the trial.

“Jim Rhodes gives me $20,000. You only give me $10,000,” Kenny complained.

The FBI debriefing report goes on to say:

“As he told us previously, Galardi said he was good friends with Rhodes and confirmed with him that he was indeed paying Kenny that amount.”

After his testimony to the Arizona Corporation Commission, Rhodes did not respond when the Tribune asked him about his dealings with Kenny and Herrera. The only question he responded to was one about Galardi’s allegation.

“He’s a bald-faced liar, Michael Galardi,” Rhodes said.

Though he acknowledged knowing Galardi, Rhodes denied they are friends. He did not elaborate or answer additional questions.

Others have labeled Galardi a liar. Much of the defense strategy in the trial last year of Herrera and Kincaid-Chauncey was to challenge Galardi’s credibility. Defense lawyers argued Galardi made wild accusations, and noted most of the government officials Galardi claimed to have influence over were never charged.

The strategy failed though. Herrera and Kincaid-Chauncey were convicted. Malone pleaded guilty to Las Vegas charges after he was convicted in San Diego along with two city councilmen in a similar case.

FIT AND PROPER

Galardi’s accusation against Rhodes has not come up in the Arizona Corporation Commission hearings. Neither has his involvement with Kenny.

The commissioners have focused on Rhodes’ long litigation history, and the FEC settlement, in weighing whether he is “fit and proper” to run utility companies in Arizona.

Nothing about Rhodes’ history in Nevada politics has come up in state Land Department records.

Hogue, the deputy state land commissioner, said the agency had no choice but to accept Rhodes’ bid at the auction of the Apache Junction property. There was no “fit and proper” clause in the qualifications for bidders published prior to the sale. So the agency did not have the power to delve into those issues after the auction, she said.

“In hindsight, maybe next time around that’s a provision we add,” Hogue said, adding the agency has learned about some of the allegations involving Rhodes since the December auction. “I think we were trying to figure out who they were. I don’t think we had the information that I know is out there about the other allegations in Nevada.”