COTTONWOOD -- The recent real estate expansion that eventually led to the collapse of the American economy after 2007 might have been anticipated had we followed teachings of history right here at home. A similar real estate bubble during the past 10 years had played out two generations earlier.
The faces and conditions were different, perhaps more clear cut with a seedier list of players and regulations that were not so tight or in place at all.
The late 1960s and early '70s in Arizona saw pie carved out of the sky on bluffs and buttes that had not ever seen fruit before. And it was all through the imaginings of one key land huckster and his following of dozens of cohorts, allies and political cronies.
The story of Ned Warren and the Arizona land fraud shone a spotlight on Arizona. The bright and charming Warren painted the landscape with sparkling intentions. The Prescott Courier editor at the time, Jim Garner, would later describe Ned Warren as a "debonair, smooth as silk, handsome, devil may care, con artist who found great fun in selling undeveloped land in Yavapai County to unsuspecting buyers."
In the West and Midwest, his crew used slide shows to depict subdivisions that in no way resembled the actual property, Garner recalled. The Grand Canyon is "within shouting distance" and churches and schools are in place or soon will be.
The Independent in 1971 carried the headline "Paradise is Verde Village." Verde Village may feel like a dream today, but the early days of the development were no more than a pipe dream: a swimming pool, three-acre lake, baseball diamond, archery range, horseshoe pits were promised. Much of the community eventually came together thanks to the leaders who would buy some of that land rather than the developer.
The May 1971 Independent article shows a picture of the Verde Village sales office surrounded by cars of buyers with a caption that "eight million dollars in sales were recorded. Five units are completely sold out and the sixth is half-sold."
"It worked," Garner wrote in his editorial on the failed water system in the Diamond Valley development, near Prescott. "Thousands of lots were purchased despite the fact that no existing water supply was guaranteed, no paved streets were in place and all homes would be on septic tanks."
Neil McLeod came to Verde Village in 1978 and wrote the history of Verde Village. Warren built Verde Village with few services in place and poor road system under Queen Creek Land & Cattle.
"He was in the business to turn a dollar," said McLeod. "Lots started selling in 1968."
The company built a duck pond to woo future homebuilders, a pond that continues to attract ducks today thanks to the Verde Village homeowners Association, which operates a pump that brings water uphill from the Verde River.
Ned Warren had purchased the 800-acre ranch from a Phoenix dentist. The ranch land bordered Cottonwood and the Verde River.
Lots were sold through a vast sales program in the West and Midwest. "Some lots were sold twice," according to McLeod, "but Mr. Warren promised new owners their money back or another lot."
But the cash flow was not enough to ensure adequate roads and utilities as advertised. The problem was aggravated by the 1970 oil crunch when new landowners flocked to Verde Village. Warren tried to borrow money, but lending companies demanded rules and regulations, so the covenants and CC&Rs were established in Verde Village, but there were no provisions for penalties.
Roads were a common chip seal, reports McLeod, and so quickly deteriorated under heavy truck and vehicle traffic.
Communication was often by CB radio among property owners. Water was sometimes provided by running a hose from one house to another. There were no water meters, Mcleod continues.
APS provided electricity and Mountain Bell the phone service, but neither was equipped to handle the large number of installations, and delays were lengthy.
Property owners eventually became discouraged with the developer's ability to provide water, electricity and adequate roads.
A core group of disgruntled property owners from Verde Village One, who did have a phone, organized and sent a letter to the Arizona Corporation Commission, outlining the developer's faults and signed it, "Verde Village Property Owners."
That was the beginning.
The letter got immediate results, McLeod reports, and Queen Creek was ordered to cease all Verde Village property sales until service improved.
The development company had sent all its road building equipment to Kingman for a project there, and Verde Village roads became potholes and dusty gravel. A former California contractor, C. Bode, contacted state and federal agencies and Queen Creek was then order to repair the roads.
Fundraisers were held, including sale of sandwiches at the county fair to raise enough money for the legal requirements to incorporate the Verde Village Property Owners Association as a legal body in 1972.
Architectural guidelines came two years later with Elmer George as president.
The Ranch House was the site of numerous activities: dinners, dances and social activities.
The Women's Association held fundraisers, raising $30,000 to outfit the kitchen of the Ranch House with a commercial kitchen.
Mal Otterson, a recent president of the Association, said in 2008, "We wouldn't have the firehouse in the Village if it wasn't for the Association."
As the Village population grew, the chief of the Bridgeport Fire District approached the Association to form a joint district. Initially, equipment was parked on the properties of the volunteer firemen. A retired former fire chief, Glen Davis, became the first chief of the Village operation and loaned money to build on Queen Creek land. He and his wife lived in an apartment there.
A newsletter was circulated in the community that regularly printed 24 pages.
Volunteers contributed time to build the community center, when the ranch house became too small and the 40-by-80-foot adobe building was constructed beginning in 1981. Rafters came from the sawmill at Sawmill Square.
Otterson says, "When the bylaws were established in the '70s, there was very little out here and people were not mandated to participate."
"That was a big mistake," McLeod believed. "Queen Creek didn't want mandatory dues, because people wouldn't be interested in buying property.
Queen Creek Land & Cattle was sold to Flagg Industries and then did business as Sunbelt Construction and deeded the water company to Cordes Lakes water in exchange for supplies it provided.
In a 2002 ruling that modified a 1997 order of redress, the Federal Trade Commission ruled on a case involving Queen Creek's Valle Vista near Kingman, Cordes Lakes and Verde Village. The FTC alleged that Queen Creek, which became Sunbelt Construction Company, did not have sufficient assets to provide utility connections to Valle Vista lot owners.
When Queen Creek turned over the last of its lots to Flagg Industries, the Ranch House, the pool, corral, parking lot, park sites in Units 6, 7, and 8, property along the river and other lots were transferred to the VVPOA.
One of the park lots was improved by the City of Cottonwood. The riverfront land was finally closed off to create a Nature Preserve recently, led by former believed Association President Margaret Paddock.
In reports in 1975, The Investigative Reporters and Editors (IRE), which formed around the land scandals, that grew in the wake of some Ned Warren developments found, and investigators confirmed, that drunks and prostitutes were sometimes paid to sign contracts the signers never intended to pay and the mortgages were then sold to investment brokers, who did not realize until later that there was no way to collect.
The Great Southwest Land & Cattle Company, just one of dozens of corporate names spun off by Ned Warren's imagination, today identifies many mature communities. They include Chino Valley Development, Diamond Valley, Inc., Lake Montezuma Development, Prescott Valley Corp., Verde Lakes Subdivision, and dozens more.
It was Queen Creek Land & Cattle that built the 8 Units of Verde Village, outside the then-town of Cottonwood. Today Verde Village has a population larger than the city and its residents populate some of the Cottonwood commissions, where that is permitted.
Ned Warren, commonly called the "Kingpin or Godfather of Arizona Land Fraud," was finally convicted in 1978 of 20 counts of land fraud while managing Western Growth Capital Corp and Consolidated Mortgage, which sold land in Yavapai and Yuma counties. Investigative reporter Don Bolles was murdered in 1976 because he was about to blow the whistle on the money-laundering operation involving the mafia and Warren. Warren died in 1980 in prison.
James N. Cornwall, 39 was among the last living willing to testify.
Warren, born Nathan Jacques Waxman in Boston, came to Arizona in 1961, one year after his parole from Danbury, Conn., federal prison. He had concealed assets in a personal bankruptcy case in 1959. Warren had two prior convictions on conspiracy and confidence game charges. He served a year in New York State on the latter charge after investors forked over $39,000 for a musical, "The Happiest Day" that was never produced.
Real Estate Commissioner J. Fred Tally resigned amid allegations he had received bribes collected by Ned Warren from land developers. Talley died before he could answer the charges.
Joseph Patrick, an aide to Congressman Sam Steiger, faced an indictment that he lied to a grand jury about dealings with Warren.
Edward Lazar was shot to death by two Chicago hit men the day before he was to testify to a grand jury on the sale of virtually worthless land for as much as $400 million. Numerous other Warren associates died in car or plane crashes.
Leonard Hoffman of Prescott Valley, Inc. another Great Southwest holding, died in the crash of his private plane, January 1973.
In his memoir, Zachary Lazar speaks of the association that led to his father's murder. Lazar and Ned Warren, in 1969, had financed a down payment on a sprawling ranch south of Camp Verde that was to eventually become Verde Lakes. They paid the money into a trust and formed the corporation, Consolidated Mortgage. They hired crews to remake the ranch house, excavated a small lake and brought in breeding ducks and planted saplings around it.
"They did not build houses on the land, nor did they intend to," says Lazar. "It was empty desert divided on a map into quarter acre lots. The plan was to retail hundreds of these lots to small scale investors, many near retirement who would build their own homes there or resell the land, once its value rose."
Lazar recalls that when his father got out of the land business in 1973, he had nothing to show for it and was in debt.
James Cornwall, a former Warren business associate, told the press, "Mr. Warren told me he has the ability to pick up the phone and have someone maimed or killed. I believed it at the time and I believe it now."
Ned Warren was convicted of extortion, along with his son-in-law Gale Nace, in U.S. District Court in Seattle. He was indicted in Maricopa County for grand theft fraud and attempted bribery in the sale of land to American Servicemen in the Orient.
Posted: Wednesday, September 4, 2013
Article comment by:
Fabulous story! I would love to learn more about our heritage. Ned sounds like a real con man who knew how to play the game. I don't think we should go in and change all of these "developments". Folks that live there now are obviously happy or they would have left. If everyone leaves, the land goes back to desert. Not every community needs to be developed out like a city with community sewer, water, paved streets etc. In fact, that is part of the charm of this area. If city dwelling is your desire, there are lots of other places to retire to. Ned was a crook, but he did have one thing right...sell the land, let the owners decide how they want to live.
Posted: Friday, August 23, 2013
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I want to echo Patti's comments. This is a very informative and well researched article. I would hope the Verde Independent and Bugle would give their reporters the time to do this kind of in-depth article. It really explains why we have so many under-developed communities. Thank you Ned Warren! Verde Village has done a great job of taking responsibility on their development. But unfortunately, most of these Ned Warren developments are still lacking proper water and sewer infrastructure. Should Yavapai County intervene? Well, they allowed these under-developed PADs. Perhaps they should. Maybe with special districts. Many special districts developed at once could reduce cost. As the economy returns, let's look at these under-developed communities and adding to their infrastructures before adding more PADs.
Posted: Friday, August 23, 2013
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What a wonderful and informative article! Obviously you did a lot of work on this article. It is much appreciated. I've always heard a lot about Ned Warren...but, you really filled in a lot of blanks!!!
No wonder Lake Montezuma has such a flooding problem. One would think with the county knowing of these problems...They would do something about it... Or at least would have planned for problems before handing out so many permits... and collecting fees for them...