Arizona Gov. Katie Hobbs accused in ‘pay-for-play’ scheme allegedly benefiting Democratic donor

PHOENIX – Authorities are looking into allegations of a “pay-for-play” scheme that might involve Arizona Gov. Katie Hobbs and a Democratic donor that operates state-contracted group homes.

The state Attorney General’s Office and Auditor General’s Office have indicated they are launching probes in the wake of an Arizona Republic story published Wednesday that details the appearance of preferential treatment for Sunshine Residential Homes.

Hobbs, through a spokesman, denied wrongdoing.

“Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing,” Christian Slater, the governor’s communications director, said in a statement. “Gov. Hobbs is a social worker who has been a champion for Arizona families and kids. It is outrageous to suggest her administration would not do what’s right for children in foster care.”

Sunshine, a private company contracted by the state Department of Child Services (DCS) to shelter neglected and abused children, made donations totaling $400,000 to Hobbs’ inauguration committee and the Arizona Democratic Party in 2022 and 2023, both before and after Hobbs was elected, the Republic reported.

Since Hobbs took office, Sunshine is the only group home operator to receive approval for a rate increase from DCS, and no other operator is paid as much per child, according to the state’s largest newspaper.

State senator seeks answers about alleged ‘pay-for-play’ scheme

In response to the reporting, Republican state Sen. T.J. Shope sent a letter to Arizona Attorney General Kris Mayes, a Democrat, and Maricopa County Attorney Rachel Mitchell, a Republican, requesting investigations into “what can only be described as a pay-for-play scheme.”

Shope suggested that the situation might violate state laws involving bribery, fraud, conflict of interest, illegal expenditure of funds and procurement code.

“This is a disgusting abuse of taxpayer dollars to further her political career, and our hardworking citizens deserve answers as to how she got away with this,” Shope, chairman of the Senate Committee on Health and Human Services, said in a press release Wednesday.

Today’s article on @azcentral by @sbarchenger brings many legal questions that are both criminal and civil in nature. I call for @AZAGMayes and/or Maricopa County Attorney @Rachel1Mitchell to investigate this matter. We must find the truth of what @GovernorHobbs knew and at what… pic.twitter.com/CVbyU6vnSs

— T.J. Shope (@TJShope) June 6, 2024

Shope noted that Sunshine is under investigation for the 2022 death of a 9-year-old boy in its custody.

“Knowing Arizona’s governor and the Arizona Democratic Party are providing preferential treatment to a facility alleged to have engaged in negligence leading to the death of a child is unconscionable,” he said.

The Attorney General’s Office told Shope on Thursday it will be opening an investigation.

“The Criminal Division of the Attorney General’s Office is statutorily authorized to investigate the allegations and offenses outlined in your letter,” Nick Klingerman, Criminal Division chief counsel, wrote in a response to Shope.

Maricopa County Attorney’s Office could be involved in investigation

Shope wasn’t the only legislator to contact the Maricopa County Attorney’s Office about Sunshine. Republican Rep. Matt Gress, chairman of the Joint Legislative Audit Committee, told Mitchell on Thursday that the state Auditor General’s Office was prepared to partner with her on an investigation.

“Make no mistake, we will allocate the resources the Auditor General needs to help restore what appears to be a major breach of trust in our government,” Gress said in a letter to Mitchell.

Mitchell responded Thursday with a letter addressed to Shope and Gress. She said the Auditor General’s Office had contacted her Wednesday about working together on the case.

“My chief deputy is scheduling a meeting between the Auditor General’s staff members who will conduct the investigation and assigned staff from my office,” Mitchell wrote. “We will keep you both apprised to the degree possible as we take next steps in this matter.”

A spokesperson for the Arizona Senate Republican caucus told KTAR News that the Auditor General’s Office action is separate from the Attorney General Office’s investigation.

Hobbs hits turbulence, with judge ruling against her in unrelated case

It’s been a tough few days for Arizona’s first Democratic governor since 2009.

On Wednesday, a judge ruled that Hobbs illegally appointed “de facto” agency directors while sidestepping opposition to her nominees by state Senate Republicans.

Hobbs didn’t have the authority to install “deputy directors” to lead 13 state agencies after multiple picks were rejected by the Senate Committee on Director Nominations following often-contentious hearings, according to the ruling.

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