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Hobbs denies wrongdoing in payments to foster care homes who donated to her and Democratic Party

Posted 6/12/24

PHOENIX — Arizona Gov. Katie Hobbs is lashing out at those who say she and her administration did anything wrong in providing a huge boost in payments to the operators of foster care homes who …

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Hobbs denies wrongdoing in payments to foster care homes who donated to her and Democratic Party


PHOENIX — Arizona Gov. Katie Hobbs is lashing out at those who say she and her administration did anything wrong in providing a huge boost in payments to the operators of foster care homes who donated money to her and the Arizona Democratic Party.

“I’m a social worker,” the governor said Tuesday when asked about the state contract with Sunshine Residential Homes and the probe being launched by Attorney General Kris Mayes. “And it is just outrageous that I would not act in the best interests of Arizona’s children in foster care.”

Hobbs, however, declined to answer further questions about how the decisions were made that took the company from being paid $149 a day for each child housed in its facilities to the current rate of $234.

“I look forward to the conclusion of the investigation and finding that we acted in the best interests of Arizonans,” she said.

All this comes as Mayes is rejecting a demand by Rep. David Livingston that she recuse herself from investigating the fellow Democrat. The Peoria Republican said that Mayes, by her actions — including telling Maricopa County Attorney Rachel Mitchell to back off — “solidifies that any investigation by your office is already biased.”

An Livingston said that is backed by history, saying that Mayes cleared Hobbs of any wrongdoing last year even after there was evidence that the state’s web site had been used to solicit funds that ultimately ended up at the Arizona Democratic Party.

The inquiry stems from a request by Sen. T.J. Shope, R-Coolidge, for Mayes to investigate what he said appears to be a “pay to play” deal linking donations to Hobbs and the party by Sunshine to a sharp increase in what the Department of Child Safety agreed to pay the company.

Sunshine had given $100,000 to a committee which was seeking donations to pay for the governor’s 2023 inaugural. Only Arizona Public Service, at $250,000, was a larger contributor.

And that’s just part of it.

Even before the election, Sunshine contributed $200,000 directly to the Arizona Democratic Party. And there was another $100,000 donation in 2023.

DCS has said the 2023 rate hikes for Sunshine — there were two — were justified.

Agency spokesman Darren DaRonco said an initial increase request by Sunshine was rejected.

On May 27, 2023, however, the agency agreed to raise the standard rate from $149 per bed to $195, a 30% increase.

That, DaRonco said, came after Sunshine said unless it got more money it would make more of its beds available to the federal government which was looking for places for immigrant children. He said such a move — the feds were paying $225 — would have meant fewer places for DCS to place its foster children.

Then Sunshine got a new contract boosting its rate to $234.

All that, said DaRonco, was based on the need for the beds, especially since Sunshine has 70% of the beds the agency wants to place siblings together.

Livingston, in his letter asking Mayes to step away from this investigation, said she has a history of shielding the governor.

That goes back to the funneling of 53 contributions solicited through a state web site, money that went to the Arizona Democratic Party.

“The most shocking aspect of your ‘investigation’ was that you allowed the ADP to simply deposit the improperly procured funds into Gov. Hobbs’ state promotional fund — after I submitted my complaint — instead of holding Gov. Hobbs or her agents accountable,” Livingston wrote to her. “You could have sought civil penalties for each violation, to the tune of $265,000, but instead, you chose to sweep those statutory violations under the rug and protect your own party and Gov. Hobbs.”

All this, Livingston wrote, shows a bias.

“You have already proven that you will shield both the Democrat governor and your own party from any liability,” he said.

Mayes press aide Richie Taylor said his boss won’t be responding directly to Livingston. And as to that 2023 investigation, Taylor said it is closed “and we don’t have any additional comments to make.”

After that earlier probe went nowhere, Livingston crafted HB 2768. It spells out the procedure for the attorney general to follow when there are allegations about improper spending of public money.

More to the point, it would requires the AG to determine if there is “an actual or potential conflict of interest.” And if there is a conflict, the case has to be handed off to a county attorney.

The measure cleared the House on a 32-25 vote but has yet to be considered by the full Senate.

While having an attorney general investigate a sitting governor is unusual — especially someone of the same party — it is not unprecedented.

In 1987, Republican Attorney General Bob Corbin secured a state grand jury indictment against Gov. Evan Mecham over an alleged secret loan $350,000 loan to his campaign by developer Barry Wolfson. It was not disclosed on his legally required finance reports.

But Mecham was less compliant in the probe, even asking a judge to have Corbin disqualified because of what he claimed was an attorney-client relationship. That move proved unsuccessful.

Mecham went to trial but eventually was acquitted after his attorneys convinced jurors that the failure to list the loan was an innocent mistake, one he blamed on his brother, Willard, who had done the bookkeeping.

By that time, however, Mecham had been impeached and removed from office.

More recently, Attorney General Grant Woods launched a probe into what he said were $1.3 million in undisclosed donations to the campaign of fellow Republican Gov. Fife Symington by his wife at the time and his mother. That inquiry was dropped after both claimed that these were legitimate loans.

Woods did investigate the Symington administration in a bid-rigging scheme, resulting in settlements with aide George Leckie and the accounting firm of Coopers & Lybrand that resulted in penalties and a ban on Leckie from doing business with the state for five years. Symington, who later wound up facing criminal charges in federal court over his personal business dealings unrelated to the state, was never charged in the bid-rigging scheme.