Two Elk Saga Part 2: “Working class but not deprived”

“The thing that was always odd about Mike. He loved to see other people have fun but he didn’t participate much himself. Mike, he would just get more enjoyment like that, watching people around him have a good time. – Ruffatto friend Patrick Dunahay, Denver 2013

[T]o understand the Two Elk story you first have to understand the man behind it. It is not an easy task. The taciturn Ruffatto, who splits time between luxury homes in Colorado and California, is extremely reserved in public.

His shyness persists even when he appears with his socialite wife, Eve Kornyei Ruffatto, at charity events at the Segerstrom Center for Performing Arts or the American Film Institute or other venues for causes the couple supports with generous contributions. Occasionally he will allow himself to be photographed with a movie star, most recently actor Kevin Spacey, at one of these gatherings. But the photographs are rare and he usually looks like someone trying to edge out of the frame.

Ruffatto seldom grants interviews. When a persistent Denver television reporter started calling him recently, inquiring into the suspended federal stimulus grant, Ruffatto hired prominent crisis public relations consultant Charlie Russell of Denver to represent him to the press.

Russell’s most famous clients were John and Patricia Ramsey, parents of six-year-old JonBenét Ramsey who was murdered in the family home in 1996.

Previous high-profile business clients include former HealthSouth CEO Richard Scrushy and, briefly, former Qwest CEO Joseph Nacchio, both of whom were eventually sent to prison after convictions in federal courts. Russell’s reputation as a damage control specialist, however, came mainly from his work on Scrushy’s first trial in 2005 when a Birmingham, Alabama, jury acquitted him on all counts in a federal securities fraud case.

Even longtime employees and business associates say they know little about Ruffatto’s income or the origins of his wealth.

“All I know is that he came to Denver with money. But I don’t have a clue where he got it,” said one former senior officer with North American.

“I think he had been very successful in California before he moved here,” said Nick Muller, an attorney and longtime executive director of the Colorado Independent Power Producers Association.

In 1999 testimony before the Colorado Public Utilities Commission, Ruffatto said North American Power Group had only one outside stockholder, Denver business owner Patrick Dunahay. Dunahay is a successful automobile radio wholesaler whose daughter was a friend of Ruffatto’s teenage daughter in the affluent, horsey suburbs south of Denver where both families lived.

The Ruffattos, Mike and his late first wife Joan, brought two quarter horses with them from California when they moved to Denver in 1989. Their sprawling compound in Cherry Hills Village, valued by the Arapaho County assessor at over $7 million, has a stable attached directly to the house so it conforms to the suburb’s restrictive deed covenants about out buildings. Dunahay and his wife Mary, who live in nearby Littleton, were among the Ruffatto’s first and best friends.

“We became friends through our kids,” Dunahay said in a recent interview with WyoFile. “Later he told me about a coal-fired power plant project in Wyoming. He approached me and said ‘If you want to invest, give me $30,000.’ But I never got any paperwork on it. Later, when I reminded him about it, he gave me back more money than I had originally given him, but there never was any paperwork. No 10-K forms; no stock certificates. We were social friends.”

Dunahay remembered a trip the two couples took to Florida. “Mike was renting yachts and chartering this and chartering that. I told my wife ‘I can’t keep up with the Ruffattos. I’m going broke.’”

He recalled another time when Ruffatto invited him and Mary to dinner. “He said he was interviewing five guys for president of his company and that he was inviting all five to the dinner. He wanted us to help choose. Dinner ended and he said ‘What do you think?’ It set me back a notch. I think that’s when I realized that we might be the only friends that Joan or Mike had who didn’t need them for something.”

Over the years, Mike Ruffatto has been generous, too, with his money. His charities have included Denver’s National Jewish Medical and Research Foundation and the Lupus Foundation of America, which funds research into the disease that afflicted both his late wife Joan, who died in late 2007, and his daughter Katherine, who now serves on the Lupus Foundation board.

In 2006, the family adopted Chester, a retired Denver mounted police horse who still lives on their Cherry Hills Village estate. Later the same year, the Ruffattos gave $5 million to the University of Denver for what is now Ruffatto Hall in the Morgridge College of Education.

According to a biography that Ruffatto, through public relations specialist Russell, provided for this article, he was an only child born in 1946 in Berkeley, California, to a working-class Italian-American and German-American couple, James and Evelyn (Hess) Ruffatto. “Working class but not deprived,” is how Ruffatto described his childhood.

His paternal grandfather had been a miner in Illinois and a school janitor in California. His maternal grandfather worked construction in Oakland. Ruffatto’s father worked on the Santa Fe Railroad and as an air conditioning and refrigeration salesman, then as a small business owner. His mother was a beautician when she met and married James Ruffatto.

When he was in the fourth grade, the family moved to San Jose, then a quiet agricultural town famous for prunes. The city once had a minor league baseball team, the San Jose Prune Pickers. The same area would later become the mighty Silicon Valley, world epicenter of the computer and internet industries. But in those days it was a rural backwater in transition.

“You could ride your bike to the end of any street and end up in an orchard,” Ruffatto recalled.

Ruffatto attended Monroe Junior High School and the brand-new Del Mar High School. A good student, he played football and ran track. He also played trumpet in the school band. He spent what would have been his senior year, 1963-64, as an American Field Service exchange student in Germany, his mother’s ancestral home.

In the biography he provided WyoFile, he recalls that Germany in those years “was enjoying the energy of its post-war recovery while it was still ground zero in the Cold War. It was an interesting time.” The 1964 Del Mar High School annual featured a photograph of a tanned and athletic-looking Ruffatto, then sporting a flat-top haircut, and a note from him about his experiences in Germany.

“School is a great deal different here than in the United States,” Ruffatto reported. “The students do most of the work here. When you are called upon, you must stand alongside your chair, look the teacher in the eye and give the right answer in about 3 seconds or you have a bad mark.”

But in one way, he noted, high school life was the same. “There isn’t much difference between the way they dance here and California-style.”

Ruffatto was admitted on a partial scholarship to nearby Stanford University in 1964. He contributed with money he earned during the summers working in an auto repair shop and making candy at a Safeway plant in Santa Clara, California.

The 1960s were tumultuous times on American college campuses. Across San Francisco Bay in 1964, the University of California at Berkeley was gripped by the historic Free Speech Movement, precursor to mass student movements formed later over civil rights issues and the Vietnam War.

In 1966, David Harris, the national civil rights and anti-war leader, was elected president of the Stanford student body. Stanford, like UC Berkeley across the bay, had a strong anti-war movement.

Ruffatto was not untouched by these events. He pledged a fraternity that was created by former members of Alpha Tau Omega which — in a much celebrated 1960 stand against discrimination — was expelled from the national organization for admitting Jewish pledges. Ruffatto pledged the local replacement frat, called Alpha Tau Omricon, where he said he joined in votes to admit black members as well as Jews.

Despite the Vietnam War, Ruffatto joined the Stanford Air Force ROTC and, upon graduation, was commissioned as a second lieutenant in the Air Force. Ruffatto described his ROTC commitment as “partly patriotic and partly economic” as the military helped pay his tuition. He remains proud of his service, often referring to his North American Power Group, Ltd., as “veteran owned.”

After training at Mather Air Force Base in Sacramento, Lt. Ruffatto was assigned as a navigator to a RF-4 reconnaissance squadron that split time between Mountain Home, Idaho, and Europe, where it flew missions for NATO.

Promoted to captain after three years, Ruffatto became proficient enough in the RF-4 — the reconnaissance version of the F-4 Phantom fighter — that he was named a navigator training officer after the squadron moved to Shaw Air Force Base, Sumter, South Carolina.

In 1972 he enrolled in the University of South Carolina law school in Columbia, 45 miles west of Shaw AFB. In the mornings he attended law school; in the afternoons he trained Air Force navigators. When his unit was disbanded as part of an overall force reduction, Ruffatto joined an Alabama Air National Guard unit in order to maintain his flying status and help pay for law school.

After graduating from law school, Ruffatto moved to Phoenix, Arizona, where he had been hired by one of that state’s leading law firms, Snell & Wilmer. He passed the Arizona bar in 1975.

Starting in 1976, young lawyer Ruffatto began working on a contract basis with Arizona Attorney General Bruce Babbitt, who later became Secretary of the Interior under President Clinton.

Assistant Attorney General Ruffatto spent more than a year on one case, the sensational prosecution of Lincoln Thrift Association founder Robert H. Fendler on charges of conspiracy, false book entries, fraud, and failure to file individual or corporate income tax returns.

Fendler, who died in prison, operated 87 small thrift-and-loan institutions across the state in what was shown to be an elaborate Ponzi scheme. His prosecution in state court was one of the biggest fraud cases in Arizona history, dwarfed only by the Charles Keating savings-and-loan scandals a decade later. Lead prosecutor Ron Lebowitz recalled that the case had a staggering 10,000 exhibits.

A junior prosecutor in the case, Samuel P. “Terry” Goddard III, remembers Ruffatto as a hard worker and a mentor.

“Working by the hour was a good gig for Mike, since we worked around the clock preparing for the Fendler trial and then for over six months actually in trial. I think Mike did very well economically in the case, not enough to buy a power company, but well,” recalled Goddard, who later served as Arizona Attorney General and mayor of Phoenix.

“But he was always ambitious and bottom-line interested, so I’m not surprised that he went into business from law.”

Coming next in WyoFile’s Two Elk Saga:
“Pennies on the dollar”

— Rone Tempest was a longtime national and foreign correspondent for the Los Angeles Times. One of the co-founders of WyoFile, he served as its editor from 2008 to 2011. His first story on the Two Elk power plant project appeared in February, 2008. Tempest lives in Lander.

Sources & Acknowledgements

EDITOR’S NOTE: This Two Elk series, supported by grants from the Fund for Investigative Journalism and WyoFile founder Christopher Findlater, is an extensive case study of one troubled project; its audacious Colorado-based promoter, and the state and federal officials who kept the project alive despite numerous warning signs that it was a scheme beyond saving. Stories in “The Two Elk Saga” will  appear on Tuesdays and Thursdays until the series concludes on Tuesday, June 10.

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