Queen Creek Republican to subpoena governor, attorney general on alleged pay-to-play scheme

By Howard Fischer
Mail | X: @azcapmedia

PHOENIX — Arizona state Sen. Jake Hoffman is issuing subpoenas to Gov. Katie Hobbs and Attorney General Kris Mayes to demand they tell his Senate Government Committee what they know about a 2023 decision by the state to give a nearly 60% increase in pay to a company that gave $550,000 to the governor and the Arizona Democratic Party.

At a press conference Wednesday, the Queen Creek Republican said the public deserves answers about how Sunshine Residential ended up getting so much extra money from the Department of Child Safety to provide housing for foster children after two prior agency directors concluded that the increase was not necessary.

He said the committee wants to hear directly from the governor and others in her orbit about the decision. Hoffman also wants the attorney general and her staffers to testify about their own investigation that last month, which concluded there was no evidence Hobbs directed her DCS director to approve the increase or that the governor even knew about it.

Also being subpoenaed is Simon Kottoor, owner of Sunshine Residential.

But Hoffman said this Sept. 29 hearing isn’t just to answer questions. The senator also wants them to produce all documents, including phone records, that are related to the decision to boost payments to Sunshine.

More to the point, he wants to see everything that investigators in Mayes’ office accumulated over its own two-year probe — not just the seven-page synopsis issued last month finding there was no evidence of any illegal act.

Those same records also are being requested by reporters.
Mayes, asked about those records during her own press conference Tuesday, said they are being reviewed to determine what can and cannot be released. She also said she does not want to make public anything that might impair a parallel investigation being conducted by the Auditor General’s Office — an arm of the Legislature — with help from Maricopa County Attorney Rachel Mitchell.

Hoffman said that’s not up to Mayes to decide.

“If the attorney general claims that a specific record is legally protected, her office must, under the law, identify that record and explain the legal basis for withholding it,” he said. “If there’s nothing to hide, there’s no reason for Kris Mayes to hide the Hobbs file.”

All of this comes with the threat that anyone who refuses to show up for the hearing or doesn’t bring the subpoenaed documents could end up with legal problems. Hoffman said they could be charged with ignoring a legislative subpoena, which is a Class 2 misdemeanor and carries a penalty of four months in jail.

“A legislative subpoena is not an invitation,” he said. “It’s not a letter saying, ‘We’d like to get together.’”

And if the threat of that misdemeanor doesn’t work, Hoffman pointed out that Arizona law says that those who refuse to obey a legislative subpoena or show up but won’t answer questions can be cited for contempt. That entitles the legislative body, by resolution, to order the sergeant at arms to go out, make an arrest, and bring that person to the chamber.

That, however, requires a vote of the full Senate. And it doesn’t return until January.

The senator said he intends to conduct a fair inquiry.

“We are not prejudging their testimony,” Hoffman said of those he wants to appear. “We will give them a fair chance to come in and have an honest dialog with the people’s elected representatives about what actually occurred.”

But at the press conference, Hoffman made it clear he thinks there is far more to be told about the increase in contract payments given to Sunshine. And he took a slap at the report that Mayes’ office produced, saying that the attorney general “feigned an investigation” into her fellow Democrat.

The press conference came as Hoffman stood behind a podium where Senate staffers had taped up a sign proclaiming ‘’Katie Hobbs’ corruption hurts Arizona.” Hoffman said that doesn’t mean he already has reached a conclusion.

Yet what Hoffman is planning — just days before early ballots go out — has some hallmarks of politics. For example, he said if people do not show up for the hearing, which will be available live online and is likely to get extensive media coverage, his intent is to still ask the questions.

“If that means asking them to an empty seat, we will gladly do that,” Hoffman said. And he snapped at a question of whether that was “pure political theater,” given that it would not produce any answers.

“I’m very shocked that you think that trying to get to the bottom of alleged pay-to-play corruption is political theater,” Hoffman said. “It will be a shame if Katie Hobbs or Kris Mayes or her staff or the staff of Sunshine Residential thumb their nose at the law of Arizona by failing to appear for compelled testimony.”

And Hoffman bristled at a separate question of whether he can be fair, given that an advertising firm that he owns has been paid to promote the gubernatorial campaign of Republican Andy Biggs.
“The reality is that this is the media trying to spin narratives that don’t exist,” he responded. “That question is absolutely inappropriate.”

Hoffman did not deny that his firm, 1Ten Media, is getting money from Turning Point PAC for advertising to promote Biggs’ candidacy. But he said that, as a part-time legislator, he is entitled to have outside employment.

That connection between Hoffman and Biggs did not go unnoticed by Michael Beyer, spokesman for the governor’s reelection campaign.

He cited public records showing money going from Turning Point to 1Ten Media on behalf of the GOP gubernatorial contender. And Beyer noted that polling has consistently shown Biggs running behind the incumbent.

“With just 21 days until (early) voting starts and Andy Biggs’ cronies realizing they are running out of time to change the trajectory of his floundering campaign, it’s no surprise a political consultant profiting from Biggs’ campaign is resorting to desperate political stunts to rescue him,” Beyer said in a prepared statement.

Richie Taylor, spokesman for Mayes in her official capacity as attorney general, was equally dismissive.

“This is nothing more than performative political nonsense at the taxpayers’ expense just weeks before an election,” he said.
Christian Slater, the governor’s official press aide, declined to comment.

Hoffman said this is just the Legislature providing the “checks and balances” that the Arizona Constitution requires of the executive branch — including both the governor and the attorney general.

The record shows that Sunshine gave $300,000 to the Arizona Democratic Party before the 2022 election, with another $100,000 the following year.

There also was $100,000 paid to the newly elected governor’s inaugural fund in December 2022 — second only to $250,000 provided by Arizona Public Service — for an event that collected $1.7 million but that actually cost only a fraction of that amount. The law in effect at that time allowed Hobbs to use the excess for political purposes.

And it was recently revealed that in 2023 and 2024, after the contract increases were approved, Sunshine gave another $150,000 to a largely secret “legal defense fund” maintained by the governor, one where she has declined to detail who else has given, how much she has collected, and where the money went.

What makes all that relevant is that Sunshine had sought a large increase in what the state was paying for housing foster children. That was rejected in 2022 by Michael Faust, the DCS director under former Gov. Doug Ducey.

But that changed after Hobbs was elected and appointed former state Rep. David Lujan to head the agency. He approved boosting payments — in the middle of the contract — from $149 per bed to $195 and, finally, to $234.

Mayes, in her investigation, said that despite the governor’s “close relationship” with Kottoor there was no enough evidence to support bringing charges linking Sunshine’s donations with the race increase.

Instead, she concluded Sunshine could get away with demanding more money because of its “outsized leverage.” Mayes said DCS needed the beds and the company threatened to instead make them available to the federal Office of Refugee Settlement, which was offering even more.

But in a statement given to lawmakers, Shalom Jacobs, a former DCS deputy director, said the state was in no danger of losing needed space that Sunshine provides for children in foster care.
She said Sunshine at the time was housing anywhere from 14% to 16% fewer children than the prior year, something she said likely represented a reduction in state payments by $2.5 million to $3 million a year. And it was that, Jacobs said, that resulted in any claim by Sunshine of financial hardship.

Hoffman, in announcing the probe, said the purpose is to hear from everyone he believes has any knowledge, including Jacobs as well as Faust, who turned down Sunshine’s initial request.

Slater, the governor’s press aide, did not respond to a question of whether his boss actually would appear at the Sept. 29 hearing.

What makes that question of her attendance significant is that Mayes was never able to get Hobbs to sit for an interview with her investigators during their probe of the deal with Sunshine. Instead, the Attorney General’s Office had to settle for a pair of letters written by her attorneys, one representing her in her capacity as governor and the other representing her campaign and inaugural fund.

Hoffman also wants answers to allegations by Faust that Kottoor had told him after the 2022 election that he would recommend that Hobbs keep him on as director if Faust would approve a rate increase for Sunshine. That was after Hobbs had won — and months after Sunshine already had given money to the Democratic Party.

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

Mayes made no mention of that in her seven-page report.
Pressed Tuesday on why she didn’t pursue it, the attorney general said there was no proof that such an offer had been made. And

Faust never reported what he said happened to police or prosecutors at the time.