Arizona House Republicans hired an out-of-state law firm with close ties to President Donald Trump and GOP politics to conduct an “independent” investigation into pay-to-play allegations against Democratic Gov. Katie Hobbs.
Republican lawmakers hired Justin Smith from the Missouri-based James Otis Law Group to look into allegations that Sunshine Residential Homes, which operates group homes for foster children in Arizona, received preferential treatment from the state after its CEO, Simon Kottoor, donated $300,000 to Arizona Democrats and another $100,000 to Hobbs’ inaugural fund.
The investigation will focus on revelations, first reported by the Arizona Republic, that Sunshine Residential Homes received a nearly 60% increase in the rates it bills the state in 2024.
Hobbs has repeatedly denied she played any role in the decision to award that rate increase. Her administration has defended the decision, citing a letter from Kottoor saying the company was losing money and needed a higher rate to continue providing group home services to DCS.
But David Lujan, the former director of the Arizona Department of Child Safety, told the Republic that Kottoor’s past support for the governor put the agency in an awkward position when it came time to consider the rate increase request.
The investigations
Arizona Attorney General Kris Mayes, also a Democrat, already opened an investigation last year into the allegations.
“The state’s investigation is ongoing,” said Richie Taylor, Mayes’ spokesman, who declined to comment on the House’s decision to hire Smith.
Republican lawmakers have also asked Maricopa County Attorney Rachel Mitchell and Arizona Auditor General Lindsey Perry to investigate.
And in November, House Speaker Steve Montenegro (R-Goodyear) convened an advisory committee to conduct its own inquiry. That committee recommended the House hire Smith, according to a press release.
Montenegro defended the decision to begin yet another investigation into the allegations against Hobbs.
“The House has an independent constitutional duty to conduct oversight, and that duty does not depend on or defer to the executive branch,” he said. “Outside counsel allows the Legislature to review documents, interview witnesses, and assess conduct without interference, delay, or political pressure from the administration under scrutiny.”
That will allow the House to “independently evaluate the facts,” Montenegro said.
But there is some indication the firm hired by House Republicans may not be entirely free from political pressure.
The James Otis Law Group was founded by John Sauer, who currently serves as the U.S. solicitor general under President Trump. Sauer has also represented Trump in his personal capacity. Arizona Republican lawmakers have hired the firm in the past to defend controversial state laws, including a ban on transgender girls in school sports.
Hobbs declined to comment on the new GOP investigation when asked by reporters on Monday.
But her administration called the investigation a “shameless stunt from partisan actors who are desperate to score political points.”
“It’s about time the legislative majority stop with the politically motivated stunts that waste taxpayer dollars and focus on what matters to Arizonans: lowering costs, protecting our water future and restoring the Arizona Promise,” Christian Slater, Hobbs spokesman, said.
But Montenegro claimed Smith can remain neutral despite his firm’s close ties to Republican politics.
“Independence is measured by conduct, not political labels,” Montenegro said. “Mr. Smith was chosen for his extensive experience, integrity, and lack of local conflicts. His role is to gather facts and report them to the House advisory team.”
Promised reforms
Hobbs did reiterate her commitment to back legislation to require those seeking state contracts to disclose their political donations.
“I’ve said from day one I’m willing to talk to legislative leaders about how we can make changes to increase transparency and accountability and I’m absolutely willing to do that,” she said.
However, she declined to provide specific details about when she will propose that legislation and what it could entail.
“I don’t have an update on that,” Hobbs told reporters.
Hobbs made the commitment late last year after vetoing Republican legislation that would have required companies that seek state contracts or grants to disclose “anything of value” they have provided to the governor, a gubernatorial campaign or other entities that supported the governor’s election or inauguration in the past five years.
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