Arizona Attorney General Kris Mayes says there is no evidence of a quid pro quo between Gov. Katie Hobbs and a company that provides beds to children in foster care.
The investigation looked into whether donations Sunshine Residential made to the governor’s inaugural fund led to an increase in the amount the state pays the company for its services. Mayes and her office concluded it did not, and therefore, will not bring any charges against the governor.
Howard Fischer of Capitol Media Services joined The Show to talk about what the investigation did find and what might come next.
Full conversation
MARK BRODIE: Good morning, Howie.
HOWIE FISCHER: Good morning. Yes, wasn’t exactly a surprise, but let’s talk about that.
MARK BRODIE: Yeah, so what did this investigation find? Because as our listeners will remember, this company did get an increase per bed from the Department of Child Safety after it had made some donations.
HOWIE FISCHER: Well, let’s start off and talk about the size of the increase, because it’s not so much the increase. Sunshine Residential is probably the largest provider of beds for foster care children. More to the point, they can do some things that other foster homes can’t. They can take a brother and sister, they have a large capacity, and apparently Sunshine has been very willing to work with Department of Child Safety to find beds when needed.
This started out in 2023 with the company getting $140 per bed, per night. The company said, look, we need more money. If you want us to provide the beds, fine. And then they came back and said, "Well, wait, the feds are paying us $225, and they need the beds, for example, for children who are picked up by Homeland Security." So it came back to $234. So you’ve had basically a 60% increase over a couple of years.
What also occurred is, A, as you point out, the $100,000 donation to the governor’s inaugural fund. Now, remember, this inaugural fund was supposed to pay for the party, if you will. The party only cost $200,000; they collected like $1.9 million, and the rest of it got to be used for politics, which is part of the reason it’s suspect. There’s also another $300,000 that was given to the Arizona Democratic Party, which then can turn around and use it to help Katie Hobbs get elected.
And what we also subsequently found out from the investigation is that they gave yet another $150,000 to the governor’s legal defense fund, which is to help her go ahead and battle Kari Lake and that particular litigation. So there’s a lot of money involved, but again, proving a connection is difficult because the people who work for DCS say, "We were aware of the fact that they’d given some money, but we never told the governor." The governor said, at least through her attorneys, she didn’t know. But again, remember, she never actually sat down for an interview, take that for what it’s worth.
MARK BRODIE: Right. Well, how significant is that to the investigation? Did the final report say anything about the fact that the governor and her office provided written statements, but never actually answered questions?
HOWIE FISCHER: They only mentioned it sort of in passing because it was fairly obvious by that time. I mean, probably every press conference we had with the governor for the past year, year and a half is, "So, when are you going to sit down?" "We’re in negotiations, in talks with the Attorney General’s Office."
Which, as we found out this past week, even as she told us that, was a lie because they already knew they were only going to provide written response. Actually, they provided two written responses: one from her office, paid for by taxpayers, and another from her campaign side, paid for by, ta-da, a legal defense fund. Which gets into a whole another question in here is: Where is all this legal defense fund money coming from? It’s one of those loopholes in the law.
I can find out, for example, what companies have contributed to her, to the Democratic Party, to a special Katie Hobbs fund that can take larger contributions. But because the fact the way the law is worded, there could be $1 million coming in, maybe more, into the legal defense fund that the governor keeps with her law firm, Coppersmith Brockelman. And we have no idea where that comes from.
So, many things unanswered in this, other than the fact that we know that the attorney general won’t prosecute. Now, also remember, the auditor general, with the help of Maricopa County Attorney Rachel Mitchell, is conducting its own probe. What Rachel Mitchell tells me is, "It’s not my probe, we’re just helping the auditor general because we have the ability to issue subpoenas and do things that they can’t do."
Auditor general hasn’t called us back; Rachel says, "Not my probe." So we’re waiting to see what happens. Obviously, if they come up with a different conclusion than Mayes, that raises a whole series of questions.
MARK BRODIE: Right. So, Howie, you mentioned the legal defense fund and some of the questions about that. And the governor has faced a lot of criticism for vetoing some bills that would have ... broadly increased disclosures for these —some of these kinds of contributions. Would legal defense funds have been included in either of those bills?
HOWIE FISCHER: Actually not. What was crafted by Sen. T.J. Shope, who’s from Coolidge, said if you are bidding on a contract or if you have a contract, you have to go back and list for the last five years everything you’ve given to the governor, gubernatorial candidates, all of their funds — in other words, like the money the Democratic Party has earmarked for them — but did not mention legal defense fund.
I think that was sort of an oversight by Mr. Shope, but he also knew that the bill was going to be vetoed, so it kind of became sort of performative art there. But there is a clear issue there. Now, at one point, legal defense monies were included in the law. It was usually a lawmaker gets a little bit of help with some finance forms and things like that. Now, it’s become this whole, basically open purse that people can use for whatever they determine is their legal defense, which could be a whole bunch of things.
MARK BRODIE: Yeah, that’s really interesting. All right, well we’ll see if anything else comes, and as you say, another investigation, we’ll see the results of that at some point. That is Howie Fischer of Capitol Media Services. Howie, thank you as always.
HOWIE FISCHER: Have a great morning.
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