Arizona treasurer tells AG to let others investigate Hobbs administration contract

At least part of the reason is political.

In a letter Monday to Mayes, Yee disputed Mayes’ claim that state law gives the Attorney General’s Office the authority to investigate the allegations, which are that a link exists between political contributions made by Sunshine Residential Homes and its officers and the company’s contract.

The treasurer took exception to what she said was Mayes effectively telling Maricopa County Attorney Rachel Mitchell and state Auditor General Lindsey Perry that the attorney general, in Yee’s words, has “singular control over any investigation.’’

“Such an assertion is not appropriate or authorized by law, as those entities have separate jurisdiction to investigate this matter,’’ the treasurer wrote to Mayes.

But even if jurisdiction overlaps, Yee said there is a “potential conflict of interest’’ as the Attorney General’s Office also represents the Department of Child Safety, which awarded the contract to Sunshine.

And then there’s the political angle: She said that Mayes, a Democrat like Hobbs, has “other relationships with the officials that may have been involved in the alleged scheme.’’

The bottom line, said Yee, a Republican, is her request that Mayes either transfer the entire case to Mitchell, who is also a Republican, “or an independent county attorney for review and potential action.’’

“That 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,’’ the treasurer wrote to Mayes.

Richie Taylor, the attorney general’s press aide, said a formal response is being prepared for Yee. But he disputed her contentions there is any sort of a conflict.

He said DCS will get outside counsel to represent it during the investigation. And no one from the Attorney General’s Office has given DCS any legal advice to date on awarding contracts for foster care, he said.

Richie also rejected the idea that party affiliation matters.

“The attorney general is a Democrat,’’ he acknowledged. “But she has to be able to investigate all allegations of criminal wrongdoing.’’

Richie said that most of the attorneys in the office are career staffers who have been there through various administrations, though he agreed that a final decision on this case, like all others, would have to come from Mayes.

Separately, Yee wrote to Mitchell asking her to conduct the investigation because of the conflicts she asserts Mayes has, and said she can provide the county attorney with whatever she needs.

“My office has independent authorities to access and review all agency records,’’ Yee wrote.

The treasurer also made a separate media post declaring that “giving state dollars to political donors is a grave misuse of public funds.’’ But Yee said that is simply a statement of what she believes, not that she has prejudged the case.

“The taxpayers of Arizona deserve to know how their hard-earned money is being spent,’’ she told Capitol Media Services. “I’m calling for financial accountability.’’

Hobbs’ press aide Christian Slater called this a “partisan stunt by Treasurer Yee,’’ saying any investigation will show that the governor’s administration “put the best interests of Arizona first.’’

Sen. T.J. Shope, a Coolidge Republican, who asked for the investigation, said he personally has no preference on who conducts it. But he said that doesn’t mean either the attorney general or the county attorney needs to step away.

“I don’t agree that one investigation necessarily harms the other,’’ Shope told Capitol Media Services.

At the heart of whatever probe will go forward is the fact that Sunshine gave $100,000 to a special fund Hobbs set up to pay the cost of her 2022 inaugural, the second largest donation after $250,000 from Arizona Public Service. All totaled the event, which cost $207,000, gathered close to $1.9 million from various donors, with the governor able to use the balance for political purposes including campaigns to elect Democratic lawmakers.

Sunshine also donated $300,000 to the Arizona Democratic Party.

All this came about the same time as the state was deciding whether to increase the amount of money DCS was paying to Sunshine for out-of-home care for foster children, as The Arizona Republic first reported last week.

Shope, who asked for the criminal investigations, separately wants answers from David Lujan, Hobbs’ pick to head DCS, about why a decision was made to give what he said is as 60% increase in what the agency is paying Sunshine.

Shope, who chairs the Senate Committee on Health and Human Services, said what he has seen “can only be described as a pay-to-play scheme coordinated between Gov. Katie Hobbs’ Office, your department, and political donors.’’

He also noted the 2022 death of a child at Sunshine who suffered from diabetes when staff there allowed him to refuse to take his insulin, which he needed to stay alive.

Shope told Lujan he wants to know how his agency evaluated Sunshine and what criteria were considered when agreeing to give the company a reported 60% rate increase “given the current budget shortfall facing our state and this particular provider’s more than troubling history of child welfare.’’

Agency spokesman Darren DaRonco said Shope was told a response is being prepared.

“We are working on gathering all of the items he requested,’’ he said.

As to the reason for the sharp increase, DaRonco said Sunshine is one of the largest providers and has about 70% of the beds available for sibling groups, something that has been a critical need for the agency.