In Depth: Hobbs Investigated For ‘Pay-to-Play’ With Major Donor To Inaugural Fund

In Depth: Hobbs Investigated For ‘Pay-to-Play’ With Major Donor To Inaugural Fund

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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Reforming The Arizona Commerce Authority: Lawmakers Should Resolve Constitutionality Problems First

Reforming The Arizona Commerce Authority: Lawmakers Should Resolve Constitutionality Problems First

By the Arizona Free Enterprise Club |

There are plenty of problems with the Arizona Commerce Authority. Since its inception in 2011, criticisms were raised concerning its freewheeling powers to dole out taxpayer money with practically no legislative oversight and broad exemptions from important guardrails such as the prohibition of using outside counsel (rather than the Attorney General’s office.) These issues have resurfaced over the years in critical Auditor General reports that have highlighted the insufficient reporting and record keeping for the administration of grants and awards provided by the agency to private businesses. This led to a mere 2-year extension of the agency in 2016, and a controversial reauthorization in 2018 when Republicans and Democrats alike banged the table for reforms. And most recently, the agency has come under fire by the Attorney General herself, for unconstitutional gifts in the way of wining and dining and Super Bowl tickets for CEOs.

Despite consistent criticism across the aisle and over the years, the ACA has evaded any real substantial reforms. That could very well change this year.

There now seems to be bipartisan interest in reining in an unaccountable agency with a $226M budget and a multi-million-dollar slush fund…


Reforming The Arizona Commerce Authority: Lawmakers Should Resolve Constitutionality Problems First

A Complicated History, An Uncertain Future: The Arizona Commerce Authority, Part I

By the Arizona Free Enterprise Club |

A contentious fight is brewing in the Arizona legislature, the possible reauthorization of the Arizona Commerce Authority (ACA). Governor Hobbs has made the reauthorization a top priority of her administration this session, mentioning it in her State of the State address. But the debate has an ironic element considering the history of its inception.

In 2011, the state was crawling out of a crippling recession, having lost literally hundreds of thousands of jobs and even selling off the state Capitol buildings to dig out of a deficit. The legislature, in collaboration with the Brewer Administration, introduced an omnibus bill sold as a “jobs package” which refashioned the bureaucratic Department of Commerce into the Arizona Commerce Authority, and incorporated both new targeted tax credit programs and incentives, as well as phased in corporate income and commercial property tax cuts.

Democrats a Decade Ago Opposed the ACA

The bill at the time was uniformly opposed by Democrats, including then Representative Katie Hobbs. Republicans mostly coalesced around the bill, with a handful of key conservatives voting in opposition of the legislation, largely in protest of the corporate welfare and multi-million-dollar “deal closing” fund with no legislative oversight. For those unfamiliar with the deal closing fund, it is a large pot of money appropriated to the Director of the Commerce Authority to throw at corporations to convince them to relocate to Arizona.

After the ACA was passed and signed into law, it would seem that only a few conservative voices and the Club itself would prove prophetic at the lack of oversight and inevitable gift clause violations, which is a constitutional protection from the government subsidizing private industry…


Tech Manager Indicted For Embezzling Over $124K From Arizona State University

Tech Manager Indicted For Embezzling Over $124K From Arizona State University

By Corinne Murdock |

Arizona State University’s (ASU) former information technology (IT) manager was indicted for embezzling over $124,000 from the institution over the course of over four years.

According to the auditor general, ASU leadership was partially at fault for the embezzlement.

Carlos Urrea, ASU’s former University Technology Officer (UTO) manager, allegedly embezzled the money through unauthorized personal purchases using his ASU purchase card. (The UTO is now the Enterprise Technology Office). ASU reported their findings on Urrea to the auditor general for further investigation.

In a report published last Friday, the auditor general found that Urrea used his purchase card to make over 800 personal purchases amounting to over $124,000. Urrea then attempted to conceal the purchases using over 700 forged receipts and falsified the business purpose descriptions to make them appear as if they were for valid ASU purposes. 

According to the auditor general report, an ASU audit in December 2021 revealed discrepancies between Urrea’s receipts and the issuing bank’s line-item details of the purchases. Urrea reportedly refused to comply repeatedly with further auditory efforts by the university. At the time, ASU found over $95,000 of unauthorized personal purchases made by Urrea. 

Upon further investigation by the auditor general, the amount Urrea allegedly embezzled grew by over $28,000. 

Among those unauthorized purchases were gift cards, including $11,000 in Costco Shop cards; electronics and accessories, including 10 smart watches; household items and furniture, including two Christmas trees; appliances, including a washer and dryer; gaming products, including 12 gaming consoles; fitness and recreation items, including a treadmill and a rowing machine; and warranties.

The auditor general reported that Urrea admitted to using the ASU purchase card for personal purchases. Urrea told the auditor general team that he used ASU’s Adobe Acrobat Editor software to alter his personal purchase receipts in PDF format.

Urrea also reportedly called his actions “very dumb,” and characterized the purchases as his means of providing for his family. 

According to the State Press salary database for ASU, Urrea made $45,000 in 2016, $75,000 in 2017, $77,250 in 2018, $92,700 in 2019, $100,116 in 2020, and $106,000 in 2021. 

According to the auditor general, ASU revealed that its executive administration officials allowed Urrea to bypass appropriate university policies and procedures for purchase cards so that Urrea could either provide immediate IT-related equipment or maintain his support for senior leadership. As a result, Urrea was exempted from engaging in the procurement process, obtaining prior purchase approval, submitting detailed business purpose descriptions for purchases, submitting receipts on time, and bypassing restricted spending protocols when receipts were submitted late. 

“Mr. Urrea was able to make and conceal his personal p-card purchases because management allowed him to: use his p-card instead of procurement process on the pretext of providing immediate support to senior leadership, make p-card purchases without seeking prior approval, submit vague business purposes, [and] submit p-card receipts 2-3 months late without restricting his p-card spending to $1 in accordance with policy,” stated the report. 

The auditor general noted that ASU modified its purchase card policy by requiring executive administration adherence where possible, or requiring the business team — not individuals — to make purchases where not possible. 

The Maricopa County Attorney’s Office passed on the auditor general’s findings to the Maricopa County Superior Court Grand Jury. The latter indicted Urrea on 14 felony counts of theft, misuse of public monies, fraudulent schemes, and forgery. 

Corinne Murdock is a reporter for AZ Free News. Follow her latest on Twitter, or email tips to

Rep. Cook Calls On ADOT To Address MVD Third-Party Service Provider Issues

Rep. Cook Calls On ADOT To Address MVD Third-Party Service Provider Issues

By Daniel Stefanski |

A legislator is speaking out and demanding action just days after the release of a concerning report from Arizona’s Auditor General about the Arizona Department of Transportation’s oversight of Motor Vehicle Division’s third-party service providers.

On Monday, Republican Representative David Cook, who is the Chairman of the House Transportation & Infrastructure Committee, transmitted a letter to Arizona Department of Transportation (ADOT) Director Jennifer Toth, outlining his fears over the issues raised by the Auditor General’s report and demanding action to address the matters.

In a statement that accompanied the release of his letter, Cook said, “When state agencies outsource their important government functions to third parties, and those third parties fail to meet their legal obligations and are not properly supervised as required by law, Arizonans suffer the consequences. In this instance, those consequences are particularly severe and threaten the public safety.”

Chairman Cook, in his letter to Director Toth, expressed alarm over the report that was published last week by the state’s Auditor General, who found that the “Motor Vehicle Division (MVD) failed to ensure authorized third party companies consistently issued vehicle title, driver licenses, and identification cards only to qualified or authorized individuals and entitles, increasing public safety risks such as unsafe drivers, vehicle and identity theft, fraud, and terrorism.”

The lawmaker noted his appreciation that the Department “agrees with the Auditor General’s findings and plans to implement all the recommendations.” Yet Cook was unwilling to allow ADOT to fall back into its shortcomings over a lack of oversight, stating his belief that “it is imperative that you exercise your statutory authority to take immediate remedial action to prevent an increase in the public safety risks that the Auditor General has already identified.”

Cook highlighted that ADOT’s proposed changes to the Auditor General’s findings were “drafted and are in the pilot phase,” pointing out that “it does not appear that MVD made any significant process during the six months following the Auditor General’s audit.” He asked Director Toth why MVD “hasn’t simply adopted its previous oversight procedures that were consistent with the Auditor General’s 2015 recommendations.”

The Chairman of the House Transportation & Infrastructure Committee didn’t hold back his feelings, writing that “these astonishing results are unacceptable and require an immediate response.” He requested that ADOT “(1) suspend or cancel the authorization of the three third-parties deemed ‘high-risk’ in the Auditor General’s report; (2) direct your Office of Inspector General and/or another appropriate division in your office to investigate all third party companies for compliance with A.R.S. Title 28, Chapter 13, article 1; (3) rescind the defective quality assurance process adopted by MVD in February 2022; and (4) immediately implement a revised oversight process per the Auditor General’s recommendations.”

Daniel Stefanski is a reporter for AZ Free News. You can send him news tips using this link.