What officials at the State Land Department didn't know was that Rhodes, 48, 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; and that he has a long history of complaints for shoddy workmanship.
Since 2001, land baron 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 former Clark County, Nev., Commissioner Erin 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 U.S. Sen. Harry Reid, who got $10,000 in illegal contributions from Rhodes. Among Brown's other clients was strip club owner Michael 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.
A phone call from Rhodes
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.
An abrupt resignation
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.
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 Lance Malone, a former county commissioner, had paid cash to Kenny and Commissioner Mary Kincaid-Chauncey, and arranged sexual favors for Commissioner Dario 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.
"He's a bald-faced liar"
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.
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.
Galardi's accusation against Rhodes has not come up in Arizona Corporation Commission hearings over a proposed Mohave County water utility. 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.
Jamie 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."
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