by Staff Reporter | Jun 15, 2024 | News
By Staff Reporter |
Governor Katie Hobbs is under investigation for an alleged “pay-to-play” scheme with a group home that donated to her inaugural fund and the Arizona Democratic Party.
Last May, following the donations, the Arizona Department of Child Services (DCS) drastically increased the rates for the for-profit, state-contracted group home operator and major Democratic Party contributor, Sunshine Residential Homes (formerly Sunshine Group Homes). The nearly-60 percent rate increase was approved several months after the company gave $100,000 to Hobbs’ “dark money” inaugural fund. That $100,000 rendered to them by the second-largest donor after Arizona Public Service (APS). The governor raised nearly $2 million.
As the Arizona Republic reported, that $100,000 to the fund came several days after the group home operator was denied a rate increase in December 2022. No other group homes have been awarded rate increases under Hobbs, and none came close to the rate granted to Sunshine Residential Homes: over $230 a day, where the average was about $170.
The governor’s fund earned the unofficial “dark money” pejorative following reports that Hobbs pushed for $250,000 donations to her inaugural event, though the event itself only cost around $200,000.
Sunshine Residential Homes also donated $200,000 to the Arizona Democratic Party in September and October of 2022, and another $100,000 to the party in August 2023.
The group home operator’s CEO and founder, Simon Kottoor, and his wife, Elizabeth, also donated $10,000 collectively to Hobbs’ campaign.
Hobbs appointed the Kottoors to her inaugural committee.
Last year, the group home operator received a nearly 60 percent increase in rates: much higher than the rates awarded to other group homes, and unique given DCS choosing to cut contracts with dozens other group homes: 16, to be exact.
DCS blamed budget constraints coupled with a desire to scale back on the reliance of group homes for the contract denials.
Hobbs’ spokesman, Christian Slater, claimed the allegations came from a place of unsubstantiated scrutiny similar to other attacks by “radical and partisan legislators.”
“Governor Hobbs is a social worker who has been a champion for Arizona families and kids,” said Slater “It is outrageous to suggest her administration would not do what’s right for children in foster care.”
Some have questioned whether Sunshine Residential Homes wired additional funds to Hobbs’ inaugural fund after their $100,000 donation cleared in February 2023, or whether the group home operator or its executives issued donations to other groups operated by Hobbs, like the “An Arizona For Everyone” entity.
An Arizona For Everyone, a nonprofit, was activated in December 2022 and voluntarily dissolved in September 2023. No tax filings exist for the nonprofit on the IRS public search portal of tax-exempt entities.
Last Thursday, Attorney General Kris Mayes announced an investigation into the matter. On Friday, Mayes also ordered Maricopa County Attorney Rachel Mitchell to back off her investigation and for Auditor General Lindsey Perry to stay away.
“It would not be appropriate or in the best interest of the state to conduct parallel investigations into the same matter. Furthermore, a separate process conducted by the MCAO could jeopardize the integrity of the criminal investigation that my office will now proceed with,” wrote Mayes.
However, Treasurer Kimberly Yee urged Mitchell to continue her own investigation into Hobbs to complement Mayes’ investigation. In a press release on Monday, Yee announced request letters to both Mitchell and Mayes.
“Arizona taxpayers deserve financial accountability. Giving state dollars to political donors is a grave misuse of public funds,” posted Yee on X.
In her letter to Mitchell, Yee advised that Mitchell continue her investigation over Mayes’ conflict of interest.
“Pursuant to these legal authorities and due to concerns related to Attorney General Mayes’ ethical conflict of interests because her office is required to provide legal services to the agencies at issue and the fact that her representatives have personal and professional relationships with those individuals potentially involved in any alleged wrong-doing, I respectfully request that you investigate the allegations that have occurred in your jurisdiction, Maricopa County,” wrote Yee.
In Yee’s letter to Mayes, the treasurer advised the attorney general that her assertion of singular control over any investigation — especially one involving the state agencies she represents — was inappropriate and unlawful. Yee suggested that Mayes transfer the investigation wholly to Mitchell or another independent county attorney.
“[T]hat is the only action that will ensure the integrity of the investigation and avoid the duplication of efforts you raise as a concern in asserting sole jurisdiction,” wrote Yee.
Sunshine Group Homes was recognized as a nonprofit by the IRS until 2022, when they were placed on the auto-revocation list that August (EIN: 86-0815254).
According to the latest publicized tax filings from a decade ago, the Kottoors received a collective $623,500 annually in reportable compensation from related organizations.
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by Matthew Holloway | Jun 14, 2024 | Economy, News
By Matthew Holloway |
The owners of the businesses that power the economy of southern Arizona are about to see some long overdue relief from a 2018 excise tax which was struck down by the State Supreme Court in 2022. Affected businesses will be able to file for a waiver or refund of the tax by April 9, 2026 to recover at least $87 million that was unlawfully collected by the county with another $4 million in interest to be paid out proportionally. Unfortunately, consumers who paid the tax as part of a transaction, will be unable to seek a refund.
The Pinal County transportation excise tax was invalidated by the Arizona Supreme Court in Vangilder v. Arizona Department of Revenue, in which the court found that the Pinal County Board of Supervisors violated state law by adopting a “two-tiered retail transaction privilege tax (TPT) on tangible personal property as part of a transportation excise tax.” While the court held that the basis of the tax was lawful, it invalidated the two-tiered system where the first $10,000 of any one item was taxed at one rate and any in excess was taxed at zero percent.
Arizona Supreme Court Justice Kathryn H. King, a former Deputy General Counsel in the Office of Governor Doug Ducey and appointed by Ducey wrote for the court:
“For the foregoing reasons, we conclude that Pinal County complied with state law in adopting the transportation excise tax. We further conclude, however, that state law does not permit Pinal County to adopt a two-tiered retail TPT structure as part of a transportation excise tax, whereby the first $10,000 of any single item is taxed at one rate and any amount in excess is taxed at a rate of zero percent. For that reason, Pinal County’s two-tiered retail TPT structure in Proposition 417 is unlawful and invalid.
Accordingly, we affirm the court of appeals’ opinion in part and vacate in part. We vacate paragraphs 2 and 23–30 of the court of appeals’ opinion. We affirm the superior court on other grounds. We deny Vangilder’s request for attorney fees.”
The filing opportunity was announced in a letter from the Arizona Auditor General on May 17 according to The Center Square. The letter detailed that approximately $87 million was collected through the excise tax which has earned $4 million in interest adding that the ‘applicable interests” would be paid out to those requesting a refund as well. However, the actual consumers who paid the 0.5% sales tax up to the first $10,000 have no such recourse because of the “transaction privilege tax” status of Arizona the outlet noted cited the Pinal County website.
The Auditor General wrote, “Between April 1, 2018, and February 28, 2024, the Pinal Regional Transportation Authority did not expend any of the 2018 Excise Tax revenues or accrued interest.”
The county website explained, “Specifically, taxpayers who will be able to request a refund or waiver of monies paid toward this invalidated tax are generally limited to those businesses that filed and paid tax to the Department for the April 2018 through March 2022 tax periods as part of their overall transaction privilege tax liability, for business activity that they conducted either in Pinal County or with Pinal County customers.”
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Matthew Holloway | Jun 14, 2024 | News
By Matthew Holloway |
Fresh off of a budget approval that will only see a 0.2% increase in the Phoenix Police Department’s budget, an additional $27 million to be precise, the Department released its 2024 Crime Reduction Plan on Wednesday. The new plan carries over much of the previous plan from 2023 but adds an emphasis on firearm-related violence and the fentanyl epidemic. Also on order is a massive technological upgrade integrating controversial solutions such as drones and gun-shot detection equipment.
In a statement released by the City Newsroom, Interim Police Chief Michael Sullivan said, “We are losing far too many of our young people to gun violence, and the effects of the fentanyl epidemic on our community have been immense.”
Speaking to KTAR’s Mike Broomhead in a Wednesday interview, Sullivan explained, “If the public takes a look at the plan, you’ll see at the back we have some metrics and those are from things that we learned over the past year. We also looked at what we faced last year and added a couple really small changes focusing on juvenile crime. Something that… not just here in Phoenix but I think we’ve seen throughout the valley an uptick in juvenile crime that we saw last year and then really focusing in on the crime and disorder that’s related to the fentanyl epidemic.”
According to the release from the City Newsroom, in early 2024 the Phoenix Police Department constructed a Real Time Operations Center at the Cactus Park Precinct to utilize more technological avenues to reduce crime specifically in the 27th Avenue corridor.
The plan calls for Phoenix PD to:
“Increase technology tools to continue to assist with lowering crime in the City. This technology includes the Real Time Operations Centers, drones, license plate readers (LPRs), gun-shot detection equipment, fixed cameras and laptops for all patrol officers.”
A 2021 press release from ASU’s Artificial Intelligence Cloud Innovation Center shows the Phoenix PD launched the Firearm Location and Interdiction System (FLIS) combining “acoustical and visual sensors, data analytics and omni-channel data access to help Phoenix police officers and citizens identify perpetrators of gun crimes.” The system reportedly notifies PPD automatically when a gun shot is fired providing audio, video, and location data to the officers via an application.
“Investigators are able to use the application to access the universe of data associated with the incident location and other evidence like license plates, forensics, and known associates.”
A similar, commercially produced system known as Shotspotter by SoundThinking, Inc.. has garnered serious controversy over the past two years facing major opposition in Chicago from Democrat Mayor Brandon Johnson as noted in Law Enforcement Today and from Democrats in Congress such as Senator Elizabeth Warren (D-MA) and Congresswoman Ayanna Pressley (D-MA) as reported by The Boston Globe.
In an interview with AZFamily, Ed DeCastro, Assistant Chief over Investigations explained, “We’re using the community as an ally as a partner with us, which has been a tremendous help. We’ve opened up a real-time operations center, so the technology we’ve gotten as a city is tremendous, and we’re able to catch the suspects a lot faster.”
As outlined in Phoenix PD’s Unmanned Aircraft Systems Use Guidelines published in 2022, the department may currently deploy drones in cases of: Vehicular Crimes, Violent Crimes/Homicide, Crime Scene/Criminal Investigation, Lab Evidence Collection, and Patrol/Investigative Support. Under tactical deployment, the drones are presently deployed for: tactical operational support, to provide enhanced levels of situational awareness during a tactical incident, and critical incident scene management.
Matthew Holloway is a senior reporter for AZ Free News. Follow him on X for his latest stories, or email tips to Matthew@azfreenews.com.
by Daniel Stefanski | Jun 14, 2024 | News
By Daniel Stefanksi |
A bill to help prepare the State of Arizona for international conflict and chaos may be close to the Governor’s Office for her decision.
In the recent Arizona Senate Republicans’ newsletter, Senator Frank Carroll discussed his bill, SB 1638, which would “require the Department of Emergency and Military Affairs (DEMA), to the extent possible, to: 1) identify any threats posed to Arizona in the event of a Pacific conflict; 2) complete a comprehensive risk assessment, including all vulnerabilities and recommendations for emergency response strategies for outlined areas; and 3) provide mitigation strategies and suggestions to limit or eliminate the risk posed to critical infrastructure and other assets as well as the safety and security of Arizona or the United States” – according to the purpose statement from the state Senate.
Carroll said, “A bipartisan bill to help ensure our state is prepared in the event of a future conflict overseas is making its way through the Legislature. I sponsored SB 1638 to require the Department of Emergency and Military Affairs (DEMA) to identify any threats posed to the state of Arizona in the event of a Pacific conflict. This bill will also require DEMA to provide a comprehensive risk assessment that includes vulnerabilities and recommendations for emergency response strategies in areas like critical infrastructure, state cybersecurity, public health, and safety and security.”
The west valley Republican lawmaker added, “China is strategically pursuing control over the Pacific, which includes our allies like Taiwan, in order to better position themselves to take down the United States. Their actions are a direct threat to our safety and freedoms as Americans, and we need to ensure we are informed and prepared to protect our state’s citizens. SB 1638 will head back to the Senate for a final vote before heading to the Governor for signature.”
After the bill was changed in the Arizona House of Representatives with a strike everything amendment, it overwhelmingly passed with a bipartisan majority – 45-15 on June 4. The Arizona Senate will have to concur with the new version of the bill before sending the legislation to the Governor’s Office.
Before the House resurrected this policy in SB 1638, Carroll’s proposal previously resided in SB 1338, which was defeated by the state Senate in March with a 12-16 result. Carroll pointed to an article in April as proof that the state needed to enact his bill, which had been transferred to SB 1638 at that point.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
by Daniel Stefanski | Jun 13, 2024 | News
By Daniel Stefanski |
Arizona’s Attorney General is facing yet another instance of Republican opposition to her desire to sideline Maricopa County Attorney Rachel Mitchell in an investigation of the Governor’s Office.
This week, State Representative David Livingston became the latest Arizona official to weigh in on the brewing scandal and investigation over the Governor’s Office’s alleged impropriety with taxpayer dollars, writing a letter to Attorney General Kris Mayes, demanding that she “immediately recuse [herself] from investigating the pay-to pay scandal, which involves substantial donations to both the Arizona Democratic Party and Governor Hobbs’ inaugural fund.”
In his letter, Livingston reminded the state’s top cop that he had previously communicated with her office to “express disappointment with your disposition of my public resources complaint, which alleged that then-Governor-Elect Hobbs misused public resources in violation of A.R.S. S 16-192 by impermissibly funneling 53 contributions to the Arizona Democratic Party through a state website.”
Livingston pointed to Mayes’ handling of this issue, in what he called a “clear conflict of interest in investigating my public resources complaint,” as fuel for his latest transmission to the Attorney General’s Office. He wrote that Mayes’ “conflict of interest and mishandling of my complaint warrants your recusal from investigating the pay-to-play scandal because it likewise stems from Governor Hobbs’ unprecedented inaugural fundraising and political donations to the Arizona Democratic Party.”
The Republican legislator also told Mayes that she “either grossly misunderstand[s] Arizona law or [is] making a desperate attempt to claim jurisdiction over the pay-to-play investigation to protect Governor Hobbs and/or the ADP” with her efforts to shield the Maricopa County Attorney’s and Arizona Auditor General’s Offices from the inquiry. Livingston explained that “it is the county attorney that may refer criminal matters to [the Attorney General’s Office] for investigation by the State Grand Jury if the offenses fall within its jurisdiction,” and that “the Auditor General routinely works with county attorneys to conduct investigations and is statutorily authorized to do so.”
As he concluded his letter, Livingston opined that “if [Mayes] dislike[d] Arizona’s laws or the limits of [her] authority imposed by those laws, you are welcome to advocate for statutory changes through the legislative process. He added a warning, stating that “what you may not do, however, is make false statements about Arizona law to micromanage the conduct of other elected officials and public servants or prevent them from exercising their own powers and duties.”
Livingston’s letter to Mayes comes after letters from two of his Republican colleagues in the State Legislature, Senate President Pro Tempore T.J. Shope and Representative Matt Gress, were sent to Mitchell and Mayes. Shope sent a letter on June 5 to both Mayes and Mitchell, asking both officials to “examine the facts surrounding the Department of Child Safety’s alleged decision to approve a nearly 60% rate increase for Sunshine Residential Homes and determine if conduct by any of the involved parties warrants a criminal or civil investigation.”
Gress followed up with a letter on June 6 to Mitchell, letting her know that “the Auditor General’s Office stands ready to partner with you in getting the facts about this troubling matter,” and that the Joint Legislative Audit Committee “will allocate the resources the Auditor General needs to help restore what appears to be a major breach of trust in our government.”
That day (June 7), Mayes fired off two letters to both Mitchell and the Arizona Auditor General, Lindsey Perry, over the investigation. Mayes told County Attorney Mitchell that “it would not be appropriate or in the best interest of the state to conduct parallel investigations into the same matter,” and that “a separate process conducted by the MCAO could jeopardize the integrity of the criminal investigation that my office will now proceed with.”
Mayes similarly told Auditor General Perry that “while [the Auditor General’s] office is statutorily authorized to examine records and conduct audits at the direction of the Joint Legislative Audit Committee, at this time, the assistance of [her] office is not needed by the Attorney General’s Office for our investigation.”
After the letters from Mayes, Arizona State Treasurer Kimberly Yee sent a letter to Maricopa County Attorney Rachel Mitchell, requesting “that [she] investigate the allegations that have occurred in [her] jurisdiction.” Yee also delivered a letter to Arizona Attorney General Kris Mayes, highlighting the state’s top cop’s recent assertion to the State Auditor General and the Maricopa County Attorney that her office had singular control over any investigation “is not appropriate or authorized by law, as those entities have separate jurisdiction to investigate this matter.”
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
by Daniel Stefanski | Jun 13, 2024 | News
By Daniel Stefanski |
Another Arizona official has weighed in on the pending investigation of the Governor’s Office.
On Monday, Arizona Treasurer Kimberly Yee sent a letter to Maricopa County Attorney Rachel Mitchell, requesting “that [she] investigate the allegations that have occurred in [her] jurisdiction.”
With the transmission of the letter, Yee became the latest elected official to insert herself into the discussion about what happened and what to do next with the recent allegations of improper use of state taxpayer dollars from Governor Katie Hobbs’ administration.
Less than a week ago, The Arizona Republic broke a story about the Arizona Department of Child Safety “approv[ing] what amounts to a nearly 60% increase in the rate that Sunshine Residential Homes Inc. charges to care for a child for a day.” The alleged action to approve the rate increase for the one organization was made while “DCS has denied pay increases to home operators and cut loose 16 providers during the contract renewal process.” The Republic also asserted that “no other standard group home provider was approved for any rate increase during Hobbs’ tenure.”
“As the Treasurer of Arizona, I am responsible for overseeing, safekeeping, and managing the State of Arizona’s securities and investments, which are duties I take seriously. Arizona taxpayers need financial accountability and deserve to know how their money is being spent,” said Arizona Treasurer Kimberly Yee. “Providing state dollars to political donors is a grave misuse of public funds. “Pay to play” and special favors have no place in state government.”
The Republican Treasurer also sent a letter to Arizona Attorney General Kris Mayes, highlighting the state’s top cop’s recent assertion to the State Auditor General and the Maricopa County Attorney that her office had singular control over any investigation “is not appropriate or authorized by law, as those entities have separate jurisdiction to investigate this matter.”
Yee added, “The Attorney General wrongfully asserted that she has singular control over any investigation. I have requested a separate investigation to be conducted by the Maricopa County Attorney’s Office. The Maricopa County Attorney’s Office has separate jurisdiction in this matter and the current investigation by the Attorney General’s Office raises concerns of potential ethical conflicts of interest in representing state agencies and officials involved in the alleged scheme.”
The maneuvering to stake out a claim to investigate the Governor’s Office seemingly began after Senate President Pro Tempore T.J. Shope sent a letter on June 5 to both Mayes and Mitchell, asking both officials to “examine the facts surrounding the Department of Child Safety’s alleged decision to approve a nearly 60% rate increase for Sunshine Residential Homes and determine if conduct by any of the involved parties warrants a criminal or civil investigation.”
State Representative Matt Gress followed up with a letter on June 6 to Mitchell, letting her know that “the Auditor General’s Office stands ready to partner with you in getting the facts about this troubling matter,” and that the Joint Legislative Audit Committee “will allocate the resources the Auditor General needs to help restore what appears to be a major breach of trust in our government.”
That day (June 7), Mayes fired off two letters to both Mitchell and the Arizona Auditor General, Lindsey Perry, over the investigation. Mayes told County Attorney Mitchell that “it would not be appropriate or in the best interest of the state to conduct parallel investigations into the same matter,” and that “a separate process conducted by the MCAO could jeopardize the integrity of the criminal investigation that my office will now proceed with.”
Mayes similarly told Auditor General Perry that “while [the Auditor General’s] office is statutorily authorized to examine records and conduct audits at the direction of the Joint Legislative Audit Committee, at this time, the assistance of [her] office is not needed by the Attorney General’s Office for our investigation.”
The letters from Mayes led to the communication from Yee, who will likely not be the last Arizona official to comment on the direction of this pivotal investigation.
Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.
