A Republican legislator is subpoenaing Democratic Gov. Katie Hobbs and Attorney General Kris Mayes to grill them in a public hearing about an alleged incident of pay-to-play.
The state granted a favorable rate increase to a contractor called Sunshine Residential Homes in 2023 after the provider donated $550,000 to Hobbs’ campaign and the state Democratic party.
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.
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 Department of Child Safety director under former Gov. Doug Ducey.
But all 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 recently wrapped up an investigation into Hobbs which didn’t result in any criminal charges.
Mayes determined that despite the governor's "close relationship" with Kottoor there was not enough evidence to support bringing charges linking Sunshine's donations with the race increase.
She did recommend that the Legislature look into boosting transparency laws to avoid similar situations down the road.
Lawmakers did put up a bill to beef up disclosure laws earlier this year, but Hobbs vetoed it.
Sen. Jake Hoffman said Mayes’ investigation must have been a farce, echoing the sentiment of other Republican lawmakers.
“When political donors receive government favors, that demands a public investigation. And what we have seen has every appearance of a pay-to-play corruption scandal at the highest levels of our state government,” the Queen Creek Republican said Wednesday.
Subpoenaing a sitting governor appears to be an unprecedented move by the Legislature.
Hoffman is issuing the subpoena in his capacity as the head of the Senate Government Committee, which is a majority GOP panel.
Hoffman said this won’t just boil down to a single hearing either.
“Assuming that they show up and testify, we will likely go back, we will do further analysis and further research on the claims that were made, and then we will likely follow up with either a invitation to come and testify again, or a second wave of subpoenas for further testimony,” he said.
The extent of the subpoenas
Neither Hobbs nor Mayes would say whether they’ll appear before the committee.
Hoffman noted that if they don’t show they’ll be guilty of a Class 2 misdemeanor, which carries a penalty of up to four months in jail.
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 subpoenas extend to other members of Hobbs and Mayes’ teams as well as Sunshine Residential owner Simon Kottoor.
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.
Hoffman said some of the evidence he’s looking for is contact between people laid out in phone records. He said he’ll look to see if calls were made between former DCS Director David Lujan and DCS official Robert Navarro, for example.
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 already 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 files."
“The executive branch investigated itself. Now the people's representatives will demand answers. This is exactly why the legislative branch has subpoena power,” Hoffman said.
Political accusations, and promises of impartiality
Hoffman said this will be an impartial investigation without political motives.
He is the head of a communications company that's being paid to support Congressman Andy Biggs' campaign. Biggs is running against Hobbs for governor.
The pay-to-pay allegations are a key focus of Biggs’ campaign.
Mayes’ investigation has also become a focal point of her opponent Warren Petersen’s campaign, who is currently the president of the state senate and running as the GOP nominee for attorney general.
Hoffman announced the subpoenas at a press conference standing behind a sign that read “Katie Hobbs’ corruption hurts Arizonans" but said he’s not prejudging any testimony. He also called Mayes corrupt.
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.
She questioned Hoffman on Wednesday about the fact that he runs an advertising firm which is being paid to promote the campaign of Hobbs’ gubernatorial opponent — Congressman Andy Biggs.
Hoffman initially declined to answer the question and called it inappropriate. He then accused “the media” of “trying to spin narratives that don’t exist,” saying that his treatment of Hobbs has been consistent throughout the entirety of her term.
“I can walk and chew gum at the same time,” Hoffman said.
Hobbs’ campaign spokesperson, Michael Beyer, said the hearing is clearly a political attack.
“With just 21 days until 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 an email. “As has been made abundantly clear multiple times by public reporting and the Attorney General’s report, there was no wrongdoing by Gov. Hobbs, the Governor’s Office, or the Hobbs campaign.”
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.
Hoffman said he’d undertake the same kind of action against any elected official regardless of political party.
Mayes’ campaign is accusing Petersen of being guilty of pay-to-play because he’s accepting donations from entities that Mayes has gone after as attorney general.
Hoffman said he doesn’t know the facts of that case and declined to comment.
Mayes’ report
Mayes 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 the space that Sunshine provides for children in foster care.
She said that Sunshine at the time actually 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.
EDITOR'S NOTE: This story has been updated to correct Micheal Beyer's position and the manner in which Sen. Jake Hoffman is being paid to support Congressman Andy Biggs' gubernatorial campaign.
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