Utility Regulator Bribery

Former Arizona utility regulator Gary Pierce and his wife, Sherry, were arraigned on bribery and fraud charges.

Defense attorneys in the Arizona Corporation Commission bribery and fraud trial told jurors Thursday the case against their clients is based on a sloppy FBI investigation and an ex-wife who has a motive to lie.

Attorney Ivan Mathew who represents lobbyist Jim Norton said federal investigators interviewed just three people before deciding to indict his client, former utility regulator Gary Pierce, his wife Sherry, and utility company owner George Johnson. Only after they got a grand jury indictment, Mathew said, did they bother to seek out others, he claims solely to look for negative information.

Woody Thompson, Johnson’s attorney, also said there were a whole bunch of other people that the government never bothered to interview. That included former commissioners who voted the same way as Pierce on two key issues involving Johnson Utilities, the votes that the government claims Pierce made because of $31,500 paid to his wife by Johnson which had been funneled through Norton and his now ex-wife, Kelly.

And then, they said, there’s the question of the credibility of Kelly Norton who is an “unindicted co-conspirator” in what the prosecutors claim is the money-for-votes scheme.

Ashley Adams, representing Sherry Pierce, said Kelly Norton told federal agents that the Pierces needed the money. But Adams pointed out that investigators by that point had a credit report showing that was not the case.

“The FBI knew that Kelly Norton had lied about the Pierce’s financial status,” Adams said.

Adams said Kelly Norton, in meeting with the FBI in October 2016 made no mention of any bribes. It was only eight months later, after being offered immunity for anything she may have done, that the issue came up.

And Adams told jurors the evidence will show that, at Kelly Norton’s insistence, that immunity deal was altered to remove a requirement that she take a polygraph test.

It was Mathew who came closest to telling jurors why her credibility might be questioned, pointing to a Facebook post she made shortly after the indictment against the other four.

“Karma. No need for revenge,” the post read. “Just sit back and wait.”

And while Mathew made no mention specifically about why the couple divorced, he told jurors Kelly Norton was racking up monthly bills of $7,500 on her American Express Gold Card.

Jurors will decide whether they believe that Pierce, as a member of the commission, had a financial incentive to cast two separate votes on items that would financially benefit Johnson.

One vote was to allow the owners of certain companies, like Johnson Utilities, to pass along the cost of the owners’ personal income taxes to the customers. The other increased the book value of the company, a move that translated to higher rates.

The government’s theory is that Johnson used lobbyist Jim Norton to funnel funds to Gary Pierce, not directly but by having Norton’s wife provide a $3,500-a-month contract to Sherry Pierce, a contract that Assistant U.S. Attorney Frank Galati said did not actually require she do any work. Those funds wound up in the Pierces’ joint bank account.

Galati told jurors that Pierce, who served eight years on the commission, had initially voted against both proposals. It was only later, after the money had been paid to his wife, that Pierce took the lead in pushing the commission to support what Johnson Utilities wanted.

“George Johnson wanted something,” Galati said.

“Gary Pierce was a ‘no’ vote,” he continued. “A scheme was devised. Money was paid. Gary Pierce became a ‘yes’ vote.”

Thompson, however, said that ignores several facts, including that both changes required three votes on the five-member panel.

The defense lawyers also contend that there was a legitimate reason for Johnson to not only contract with Kelly Norton but to insist she, in turn, contract with Sherry Pierce. They said Johnson had an interest in issues in the San Tan Valley area of Pinal County and Sherry Pierce had political contacts there, allowing her to do things like look for a Mormon Republican to run for the Board of Supervisors.

“Who better to be hired as a contractor than somebody who knows everybody in the Republican Party?” Adams asked. And to buttress Sherry Pierce’s credentials, Adams intends to call former Congressman Matt Salmon and current Congressman Andy Biggs, for whom she did work.

That, in turn, goes to a key element of the defense: If Sherry Pierce was being paid for legitimate work, federal bribery statutes do not apply.

Adams told jurors there’s something else as she discussed the couple’s 45-year marriage, four children, 13 grandchildren and his political career.

“The government would like you to believe that the Pierces would give all of that up and everything they’ve worked for and everything they’ve stood for for $31,000,” she said.

Galati, however, said that’s not the whole story.

He told jurors that Pierce was interested in buying some land in east Mesa. Galati said there was a scheme being cooked up to have Jim Norton buy the property and have Johnson pay for it.

Galati said part of the reason it didn’t happen was because Kelly Norton balked, saying it would endanger her real estate license. And in the end, he said, the bank wouldn’t accept the offer.

But Patricia Gitre, Gary Pierce’s attorney, said there was never any discussion about Johnson buying the property for her client.

“It’s a made-up story,” Adams said of the whole government’s case.

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