Ducey's opponents attack him on Cold Stone sale

• Six Republican candidates are vying for the Republican nomination for governor.
• The primary is Aug. 26%3B early voting begins Thursday.
• The winner of the Republican primary will face Democrat Fred DuVal.

Republican candidate for governor Doug Ducey's opponents are pressing him to release details surrounding the sale of Cold Stone Creamery, the company Ducey once led and has made the centerpiece of his campaign.

Former GoDaddy executive Christine Jones and former Mesa Mayor Scott Smith accuse state Treasurer Ducey of "distorting" the company's record, specifically its 2007 sale to Kahala Corp., and have called on Ducey to release details of a settlement related to the deal and his deposition in the case.

A dispute over the deal was resolved through arbitration, but records of the settlement are not public.

The issue surfaced Sunday in a gubernatorial debate on Channel 3 (KTVK), during a tense back and forth among Ducey, Jones and Smith.

It arose again Wednesday in an e-mail sent by an attorney whose firm represented Kahala. Attorney Leo Beus wrote to Ducey's attorney, Smith and Jones that he had been asked about the "Cold Stone arbitration with Kahala and the related depositions," which put him in an "uncomfortable position because we are not at liberty to discuss the pleadings, depositions or documents related to the arbitration."

Beus added that Ducey had phoned him Tuesday — two days after the debate aired — and left a voice mail "inviting me to work with him in his administration when he becomes governor. This is the first contact I have ever had with Doug."

On the campaign trail, Ducey highlights his experience as Cold Stone's CEO to argue he's qualified to run the state. He frequently asks voters to judge him based on their experience with the company and touts its growth as an "American success story."

In a statement Wednesday to The Arizona Republic, Ducey wrote, "We sold Cold Stone to Kahala at the end of 2007. Shortly afterward an economic calamity — the meltdown of 2008 — occurred, and like many businesses Cold Stone was affected. As a result, through the previously agreed-upon arbitration process, my partners and I negotiated with Kahala and the final payments were completed.

"It was a business transaction, pure and simple, and in the end all involved were satisfied with the outcome." Due to "strict confidentiality agreements," he will not disclose details about the dispute, he wrote.

Jones and Smith have not been satisfied with Ducey's characterizations of the deal.

"If your reason for voting for him is because he was a great businessman at Cold Stone and you find out he wasn't a great businessman at Cold Stone, you may be inclined to change your vote," Jones told The Republic. "And that's why they need to know. He should be thoroughly vetted."

Smith accused Ducey of being deceptive because he did not initially acknowledge a dispute over the sale.

"He claimed this (dispute) didn't exist," Smith said. "No, they had a formal arbitration, a claim and a counterclaim, and they spent millions on attorneys, and depositions were involved. There's a pattern here of consistently misleading, misrepresenting and deception. Doug Ducey will say anything to sell an ice-cream franchise, he'll say anything to sell his business, he'll say anything to win an election, and he'll say anything to win the governorship. To me, that's a relevant issue."

The TV debate was the first time Ducey's opponents have publicly raised the Cold Stone-Kahala dispute, although behind the scenes it has been discussed for months.

Midway through the debate, Jones, during a heated discussion of education funding, turned to Ducey and said: "Let's talk about Kahala versus Cold Stone, Doug. Why don't you tell the voters the truth about that ... once and for all? You're asking them to judge you on your experience at Cold Stone — tell them the truth, Doug. Why don't you just unleash the file?"

Ducey attempted to illustrate that he has a good relationship with Kahala, responding that he had filmed a campaign commercial at the company's headquarters.

The moderator asked Jones to specify what she was referring to.

"He has sealed a court case specifically relating to sale of the company of Cold Stone," Jones said.

Ducey replied, "This is completely false. This is not true."

Jones said she and other candidates have gotten calls about the case, adding, "There are lawyers who took his deposition and it's sealed. I don't see why, if he wants to attain to the highest level of office in the Arizona state government, he wouldn't just unveil it, and say, 'Here it is, my record is open.' "

Ducey responded, "My record is open, we had a successful transaction between Cold Stone Creamery and Kahala."

Smith then jumped in, pressing Ducey, "Are you saying there was no challenge from Kahala to you on the terms of the sale?

Ducey said, "There was no challenge. Kahala and I discussed terms of the deal we sold in 2007."

Smith asked, "No, no they did not come back to you and challenge you?"

"No. We came to them and we discussed some business details," Ducey said. "This happens in a business transaction, Scott."

Smith continued, "There was no challenge from Kahala or any claim on the terms of the condition?"

Ducey replied, "No, we came and we settled a business dispute. No."

Polls say Jones and Ducey are neck-and-neck, with Smith a distant third. Many Republican primary voters are still undecided on who they will vote for in the Aug. 26 primary election. Early voting begins today.

As the race for governor has tightened into an apparent duel between Ducey and Jones, the pair have sparred over each other's qualifications for the office.

While Jones has attacked Ducey's Cold Stone record, he has suggested her only credential is her bank account. "You were a line employee at GoDaddy with no leadership experience," he said during the TV debate. "I don't know what qualifies you for this race except your wallet."

Ducey said in his Wednesday statement that he is perplexed by the "fixation with one brief period my partners and I sold" Cold Stone — "one small event in a large success story."

Late Wednesday, Ducey's campaign provided The Republic with a statement from Kevin Blackwell, who was CEO of Kahala and acted as the lead investigator on its purchase of Cold Stone Creamery.

The statement said the recession occurred shortly after the purchase, "adversely impacting the business and leading to a renegotiation of some of the terms of the deal."

"Such things sometimes occur in complex business transactions and I can happily say that our negotiations were resolved to the complete satisfaction of both parties," Blackwell's statement said. "While Doug and I had our differences during 'the heat of the moment,' Doug built Cold Stone into a great company and would make a great Governor for Arizona."

Asked why after the disputed sale came up during Sunday's debate he had phoned Beus, with the law firm that represented Kahala, Ducey said in his statement:

"Although his firm represented Kahala after the first part of the transaction when we sold Cold Stone Creamery, that was clearly not the purpose of my call. It was a typical fund-raising message, including a campaign update, a request for support, and expressing a desire to work together in the future. I do not know Mr. Beus, but part of my job as a candidate is calling business leaders — even those who I don't know — and asking them for support."

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