RICO Complaint Against|Former Ariz. Congressman

PRESCOTT, Ariz. (CN) - In a federal RICO complaint, investors claim that former Arizona Congressman Rick Renzi duped them into buying overpriced land from his business partner and debtor as a condition of support for their legislative land exchange proposals.

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American Land Holdings, Preserve Petrified Land Investors and C.A.K. Limited Partnership claim that Renzi, who left the House of Representatives in 2009 under a cloud of corruption charges, exploited his role on the Natural Resources Committee to make money for himself and business partner and co-defendant in this case, James Sandlin.

Both Renzi and Sandlin face criminal charges related to the plaintiffs' claims, and for their alleged roles in a similar land-swap deal with a mining company.

The plaintiffs sued Renzi, Sandlin and their wives.

They claim a development group working with the plaintiffs met with Renzi, a Republican from Flagstaff, in 2005, seeking his support for a proposal to swap some 15,000 acres of environmentally sensitive land near Petrified Forest National Park, and property near the San Pedro Riparian National Conservation near Tucson, for federally owned land elsewhere in the state.

During the meeting, Renzi told the developers they would have to buy property owned by Sandlin as a condition of his support, according to the complaint.

"Renzi insisted the Aries Group purchase the Sandlin property and include that property as part of the group's land exchange proposal," the complaint states. "Renzi represented to the Aries Group that the Sandlin property was environmentally sensitive and should be federally owned. Renzi told the Aries Group their land exchange proposal would receive a 'free pass' through the Natural Resources Committee if they purchased the Sandlin Property and included it in their proposal."

But Renzi failed to disclose that Sandlin "owed Renzi $700,000.00 in principal on an $800,000.00 promissory note," the complaint states.

It adds: "In April 2005, knowing that Renzi had mandated the purchase of the Sandlin property as a condition to his support of the Aries Group's proposed land exchange, Sandlin rejected the Aries Group's request for an option to purchase the property. Instead, Sandlin artificially inflated the sales price for the property, thereby causing the Aries Group (through American Land Holdings) to agree to purchase 480 acres of the Sandlin property from Sandlin and Russell for $4,500,000.00 - a price well above the market value of the Sandlin property." (Parenthesis in complaint.)

American Holdings executed the purchase contract for the Aries Group. It claims it would not have done so "but for Renzi's insistence that plaintiffs purchase the Sandlin Property as a condition to his support for the Aries Group's proposed land exchange."

A federal grand jury indicted Renzi and Sandlin in 2008 on several charges, including honest services wire fraud, mail fraud, money laundering, extortion and insurance fraud. Their trials are pending.

The civil plaintiffs seek a separate jury trial and damages for "a pattern of racketeering activity involving extortion, honest services wire fraud, money laundering, and various monetary transactions involving criminally derived property."

They are represented by Richard Thomas, with Smith Campbell, in Scottsdale.

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