GOP lawmakers fault probe of rate case but provide no link to Hobbs

Coolidge Republican Sen. T.J. Shope cited a written statement from Shalom Jacobs, a former deputy director at the Department of Child Safety, who said the state was in no danger of losing the space that Sunshine provides for children in foster care. And Michael Faust, who was DCS director at the time, told investigators he had turned down the company's request for a rate increase.

Yet only after Democrat Katie Hobbs was elected governor and chose David Lujan to head DCS did Sunshine get rate increases — in the middle of its contract term — as the state boosted payments from $149 a day per bed to $195 and, finally, to $234.

But none of the four Republican senators who held a press conference Wednesday claimed they have any actual evidence that Hobbs played any role — or even knew — that DCS had decided to give Sunshine more money.

Nor could they point to any evidence that the conclusion reached by Democratic Attorney General Kris Mayes was inaccurate. Her two-year investigation ended with a finding that there was nothing to link the higher payments from DCS to the fact that Sunshine had previously contributed $100,000 to the governor's inaugural fund and another $300,000 to the Arizona Democratic Party.

But the Republican senators said Mayes should release the more than 100,000 documents and more than a terabyte of data she said her investigators used to reach her conclusion that there was no evidence of "pay-to-play'' between Hobbs and company owner Simon Kottoor.

Mayes' spokesman Richie Taylor called the GOP press conference a "partisan stunt during an election season.''

"The Arizona Attorney General's Office brings charges in cases when a reasonable likelihood of conviction and proof beyond a reasonable doubt exists based on evidence that would be admissible under Arizona's Rules of Evidence,'' he said in a written statement. Taylor said that, despite all of the claims by Republicans, "no evidence needed to meet those standards exists in this case.''

He also pointed out that while GOP legislators produced a statement from Jacobs, "they didn't even make her available to take questions.''

Mayes' election opponent makes claims

About the closest anyone came to alleging a crime had been committed was Republican Senate President Warren Petersen, who is challenging Mayes in the November election for attorney general.

He cited a statement given by Faust to investigators that Sunshine owner Kottoor had told him he would recommend that Hobbs keep him on as director if Faust approved a rate increase for Sunshine. That was after Hobbs had won, and months after Sunshine had given money to the Democratic Party.

Faust said he declined the offer and reported it to other senior department officials, including Jacobs.

"Mr. Faust is an agent of the state,'' Petersen said. "So he is acting on behalf of the governor in that instance. So that's a bribe.''

Petersen acknowledged that Faust said he had gotten no pressure from the governor about giving more money to Sunshine.

"But Kottoor is close friends with the governor,'' Petersen said. "Is there any reason they wouldn't be talking to each other? Obviously, they're talking to each other.''

Still, Petersen could show no actual connection between the governor and any conversation between Kottoor and Faust. And Taylor pointed out there are no witnesses to any of this.

Lawmakers see contradictions

Now the Republicans are using the statement from Jacobs, which Sen. David Farnsworth, R-Mesa, said raises serious questions about the decision to give more money to Sunshine. He said it contradicts findings in Mayes' inquiry.

That probe concluded that Sunshine was able to demand more money because of its "outsized leverage,'' being the largest provider of beds for foster care children in Arizona. At the same time, AG investigators said the company was telling DCS that if it didn't get a raise from the state, it would make fewer beds available and instead contract with the federal Office of Refugee Resettlement, which was offering more money for the beds. 

But Jacobs, in her statement, said Sunshine at the time was housing anywhere from 14% to 16% fewer children than the prior year, which she said likely represented a reduction in state payments by a range of $2.5 million to $3 million a year. It was that, Jacobs said, that resulted in any claim of financial hardship.  

Farnsworth said that undermines claims by Lujan, who told investigators that Kottoor needed the raise because of "different financial challenges that he was facing that he wasn't making enough money.'' The state used taxpayer funds to boost Sunshine's bottom line, Farnsworth said.

That's relevant, the Republicans said, not only because of the $100,000 given to Hobbs for her inaugural fund — money she could legally use for political purposes — and the $300,000 to the Democratic Party, but also because of another $150,000 that Sunshine donated to the governor's legal defense fund.

Taylor said all of that is unrelated to the investigation.

"We were tasked to investigate whether there was a bribery or fraud that occurred in exchange for Simon Kottoor's donations to Katie Hobbs in exchange for a rate increase,'' he said. "No evidence exists that we found to prove those claims.''

Timing questioned

The criticism of Mayes' findings comes as there are two other investigations going on.

One is being conducted by the Auditor General's Office, which is an arm of the Republican-controlled Legislature, with help from Maricopa County Attorney Rachel Mitchell, a Republican. House Republicans also have hired a private attorney to conduct their own probe.

But Shope said there is nothing wrong with Republicans having a press conference to publicly question and criticize Mayes' investigation. Nor does Shope think he and his GOP colleagues should wait for the results of those other inquiries before raising questions about Mayes' probe. 

"It seems like what we received late last week from the AG's office was anything but complete,'' he said.

"That's one of the reasons we're here asking for the files,'' Shope said, saying that with all the information Mayes said her office gathered, "there does appear to be things that have been left out.''

Taylor said the report only included conclusions where statements could be corroborated with documents and other evidence.

Asked why not make everything public so people can decide for themselves, Taylor responded, "The Attorney General's Office is conducting a legal review of its investigative files and will release them under public records law once that is completed." He said there are documents that may not be subject to disclosure.

He also said Mayes does not want to release material that may be needed by Mitchell in the separate probe she is conducting with the Auditor General's Office.

Shope disputed that Wednesday's press conference — two months before the general election and a month before early voting starts — was designed to try to affect the election outcome.

All four Republicans support Republican U.S. Rep. Andy Biggs in his bid to oust Hobbs as governor. And then there's the fact that Petersen is running against Mayes.

Shope said that, given his election preferences, he would rather have held something far earlier so there could be no claims of partisan motives.

But he said the timing ultimately comes down to the fact that it took Mayes more than two years before finally releasing her findings last month.