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Prosecutors' key witness in Arizona utility bribe trial details contact with FBI

Prosecutors' key witness in Arizona utility bribe trial details contact with FBI

  • Updated
Gary and Sherry Pierce

Gary Pierce

PHOENIX — The government’s key witness in the Arizona Corporation Commission bribery case told jurors Wednesday she divorced husband lobbyist Jim Norton because he had multiple affairs but that her decision to testify against him and others was because “I didn’t want to go to jail.”

Kelly Norton testified how her then-husband Jim told her that utility executive George Johnson would give her KNB Consulting firm a contract. At the time Jim was lobbying for Johnson Utilities.

“But there was one caveat: I had to hire Sherry Pierce,” she said, the wife of commission Chairman Gary Pierce, something she said she didn’t want to do.

“He told me that I had to do it, and he was very angry,” Kelly said. “He told me they (the Pierces) were having financial problems and this was a way to help out.”

Kelly said the deal was pretty much sealed at a Sept. 28, 2011, dinner at a Mesa restaurant between the Nortons and the Pierces.

Eventually Johnson gave her a consulting contract for $6,000 a month, with Kelly signing a separate contract with Sherry Pierce for $3,500 a month.

The indictment charges that the whole thing was a scheme to funnel $31,500 of Johnson’s money through KNB Consulting to Sherry Pierce, money that wound up in the Pierces’ joint bank account. The reason, according to prosecutors, is that Johnson was buying Pierce’s vote on two issues before the utility regulatory commission.

One was a change in policy to allow the owners of companies like Johnson Utilities to pass along the costs of their personal income taxes to utility customers. The other increased the book value of Johnson Utilities, a financial move that entitled the company to increase its rates.

Both measures were approved by the commission, a move that required at least three votes on the five-member panel. But prosecutors contend it was Pierce who championed the changes.

Kelly Norton detailed how she first heard in 2015 the FBI was investigating her then-husband, Jim, along with Johnson who runs the water and sewer utility in the San Tan Valley that bears his name.

Kelly said she contacted Jim “right away” and how he immediately came to her offices at the Arizona Mining Association where she was president at the time.

In response to questions from Assistant U.S. Attorney Frederick Battista, Kelly said she told Jim at that time “that I was worried, that I didn’t want to go to jail.”

“He talk about spousal privilege and how we had dotted all the I’s and crossed all the T’s, and nothing would happen, and I shouldn’t worry,” she testified. And Kelly said her husband told her that they had documented everything “so nobody could say it wasn’t a real business deal.”

Kelly also told jurors she did not reach out to the FBI but that they came to her house with questions about the Pierces, Johnson and Jim, all of whom are now charged with bribery and fraud, as well as another yet-to-be-disclosed inquiry into another matter.

“I decided I needed to talk to a lawyer,” she said. “I kind of panicked.”

The initial result was an “off-the-record agreement” where she agreed to speak with the FBI and prosecutors.

That document did include a requirement that she submit to a polygraph.

Defense attorneys, in their opening statements, said she never did take that test. But Kelly Norton told jurors she had never been asked to take one.

“I signed this agreement in error,” she said when shown the document.

Eventually, she was offered immunity, telling jurors that the understanding was “that I wouldn’t go to jail,” what with the crimes charged each being felonies.

The divorce, she said, came years after the alleged scheme but before she learned of the FBI probe.

“I found out that he had a girlfriend,” Kelly testified. Asked by Battista if that was the first time, she responded, “No, it was not.”

That whole discussion led U.S. District Judge John Tuchi to tell jurors they are to decide whether Jim Norton and the other defendants are guilty of bribery and fraud solely based on the evidence on that issue, and that any other conduct he may have engaged in is legally irrelevant.

The defense team has laid out arguments that whatever money Johnson paid indirectly to Sherry Pierce was not a bribe for her husband.

They said there was no agreement for Gary Pierce to vote or act in a certain way at the commission in exchange for the money paid to his wife. And they said that Sherry Pierce performed work for the money she received.

Among the defense arguments is that there was no attempt to hide the transfer of funds, pointing out that payments were made through checks and that Kelly Norton gave Sherry Pierce a 1099, an Internal Revenue Service form used to disclose money paid to contractors.

But it has since been revealed that neither George Johnson nor Johnson Utilities provided a 1099 for the $6,000 a month paid to Kelly Norton and her consulting firm, some of which ended up being forwarded to Sherry Pierce.

After prosecutors finish their questions today each of the four defense attorneys get a chance to cross examine Kelly.

On Twitter: @azcapmedia

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