Rio Nuevo investigation shows mismanagement, no criminal charges (updated with memo from attorney general)

2013-10-11T18:00:00Z 2014-04-08T18:41:15Z Rio Nuevo investigation shows mismanagement, no criminal charges (updated with memo from attorney general)By Darren DaRonco Arizona Daily Star Arizona Daily Star

The Rio Nuevo debacle may have squandered millions of dollars in taxpayer money, but no one will wind up behind bars because of it.

The Arizona Attorney General’s Office released a memo outlining its decision to decline prosecuting anyone for the nearly decade-long exercise in government mismanagement.

Many Rio Nuevo critics held out hope the attorney general’s and FBI’s investigations would bring charges against those responsible for wasting approximately $250 million and eroding Tucson’s trust in government.

But the memo, which was dated December 2012 but didn’t become public until late Thursday, dashed those hopes.

Even though the 18-month investigation uncovered “ample evidence” the city, Rio Nuevo board members and others botched the project from almost start to finish, the bumbling didn’t rise to the criminal level, it said.

But it might have, if not for a particular U.S. Supreme Court decision, the memo implied.

In 2010, the court ruled on who could be charged with a crime when it involves defrauding the government or taxpayers. That decision handcuffed future investigations across the country by making it difficult to prove wrongdoing occurred without direct evidence of bribery or kickbacks, the memo said.

Assistant Attorney General Mike Jette, who wrote the memo, led the 18-month investigation, which included help from two FBI agents and two FBI analysts.

The FBI joined the investigation in the summer of 2011 after two former Rio Nuevo board members reported criminal allegations surrounding proposed Tucson Convention Center hotel and University Science Center projects. The two board members were not identified.

Once Jette had his team in place, they began poring over tens of thousands of city and Rio Nuevo documents and interviewing dozens of witnesses.

Rio Nuevo alone turned over approximately 300,000 documents for them to sort through.

The five spent countless hours holed-up in a “war room the size of a small house” attempting to connect the dots with oftentimes incomplete records and unreliable tips, Jette said.

Since Rio Nuevo malfeasance had created an indelible stain on the city, Jette wanted to thoroughly vet every document and lead to ensure some sense of closure could be reached, even if convictions proved elusive.

They also looked at other complaints concerning about 15 other Rio Nuevo projects.

Some of the charges the two agencies investigated included ghost vendors, overbilling, conflicts of interest, bribes and kickbacks. But he said the passage of time between the alleged crimes and the investigation posed significant obstacles.

Jette’s memo said lost records, poor witness memory and more stymied the investigation.

Further, information provided by the two former board members who filed the complaint was oftentimes inaccurate or unreliable, the memo said.

In addition, those same board members compromised the investigation by “causing intense media scrutiny which impeded the FBI’s ability to catch material witnesses and potential suspects off-guard with unannounced interviews,” the memo said.

The memo concluded by stating that unless new evidence surfaced, the only option left was to close the investigation.

“We’ve lived and breathed this case. And there is nothing criminal at this time,” Jette said. “So everyone needs to take a deep breath and move on.”

City officials concur.

“Many of us have been saying all along that there’s a fundamental and legal difference between gross financial mismanagement and criminal wrongdoing,” Councilman Steve Kozachik said. The city and the former Rio board were guilty of the former. … Now the attorney general is finally conceding that there were no criminal smoking guns. Hopefully, now we can get focused on managing and investing the taxpayers’ money the way it always should have been and put the witch hunt to bed.”

Mayor Jonathan Rothschild said the city can now put past Rio Nuevo misdeeds behind it and focus on the future.

“The two agencies did thorough investigations and reached the right result,” Rothschild said. “It has long been time we looked forward about downtown. We have been doing that the past 20 months and we are seeing the rapid results.”

The Attorney General’s Office rarely publishes decline-to-prosecute memos because they could damage a person’s reputation, Jette said. But since Rio Nuevo continued to be a divisive issue in Tucson, it was important people were aware of the conclusion.

Contact reporter Darren DaRonco at 573-4243 or ddaronco@azstarnet.com. Follow on Twitter @DarrenDaRonco

Copyright 2014 Arizona Daily Star. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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