Arizona AG to launch criminal probe of group home donations linked to Hobbs

PHOENIX — Attorney General Kris Mayes is opening a criminal probe into whether laws were broken in a contract awarded to a major donor to a political committee run by Gov. Katie Hobbs.

The move, announced late Thursday, stems from a decision by the Department of Child Services to increase the amount of money it is paying Sunshine Residential Homes for caring for children who are removed from their homes.

Capitol Media Services reported shortly after Hobbs took office in 2023 that the company had contributed $100,000 to cover the cost of her inauguration. Only Arizona Public Service, with its $250,000 contribution, donated more.

All totaled, Hobbs raked in nearly $1.5 million from corporations and other special interests to cover the expenses of the event, which cost only about $207,000.

That left her with money she can spend on other priorities — including attempting to flip the Legislature to Democratic control this year.

The Arizona Republic, which reported on Sunshine getting a 60% increase in the rates it is being paid by DCS, says the company donated another $300,000 to the Democratic Party, much of that while Hobbs was running for governor in 2022.

Sen. T.J. Shope, who heads the Senate Committee on Health and Human Services, said all that deserves a closer look.

“I am deeply disturbed by recent reports in the media outlining what can only be described as a pay-to-play scheme between Gov Katie Hobbs’ Office, the Arizona Department of Child Safety, and political donors,’’ the Coolidge Republican wrote in a letter to Mayes seeking an investigation.

Shope was very specific about what laws might have been broken, including bribery, conflict of interest, illegal expenditure of state money, and a statute against “fraudulent schemes and artifices,’’ a law that covers fraud or illegally obtaining any benefit.

In a letter late Thursday to Shope, Nick Klingerman, the chief counsel of the AG’s office criminal division, acknowledged his agency is statutorily authorized to investigate the list of crimes spelled out in the letter.

“To that end, the Attorney General’s Office will be opening an investigation,’’ he wrote.

Shope sent the same letter to Maricopa County Attorney Rachel Mitchell.

It’s not just Shope who is looking for answers.

In a separate letter to Mitchell, Rep. Matt Gress, R-Phoenix, offered the help of the state Auditor General’s Office, the agency with expertise in financial reviews. Gress is the current chair of the Joint Legislative Audit Committee.

“My chief deputy (Blaine Gadow) is scheduling a meeting between the (state) Auditor General’s staff and members who will conduct the investigation and assign staff from my office,’’ Mitchell wrote to both Gress and Shope late Thursday.

In a letter Friday, Mayes said state law gives her office the authority to “supervise the prosecution of all offenders investigated by the Auditor General.’’

“It would not be appropriate or in the best interest of the state to conduct parallel investigations into the same matter,’’ she wrote to Mitchell. “Furthermore, a separate process conducted by the Maricopa County Attorney’s Office could jeopardize the integrity of the criminal investigation that my office will proceed with.’’

There was no immediate response from Mitchell.

Back to homepage

Subscriber Login

Keep reading with a digital access subscription.

Subscribe now

Mayes wrote separately to Auditor General Lindsey Perry saying that “at this time, the assistance of your office is not needed … for our investigation.’’

Whoever is investigating the issue, Hobbs’ press aide Christian Slater dismissed the complaint and the probe as no big deal.

“Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing,’’ Slater told Capitol Media Services.

He said it should be no surprise that a company that is involved with the welfare of children would want to contribute to Hobbs.

“Gov. Hobbs is a social worker who has been a champion for Arizona families and kids,’’ he said. “It is outrageous to suggest her administration would not do what’s right for children in foster care.’’

One of the prior investigations was related to the governor’s inaugural.

Rep. David Livingston, R-Peoria, asked Mayes last year to determine whether Hobbs illegally used state resources to raise money in the name of paying inaugural expenses when most of the cash went into a fund the governor can use for political purposes.

He said that Hobbs, while still governor-elect, used a state website to raise money for both the inaugural ceremony at the Capitol on Jan. 5, 2023, and a separate inaugural ball two days later at Talking Stick Resort. But the records show that, even after paying off both events, there was still money left over.

Those excess proceeds from the inaugural went into the account Hobbs can use for political purposes; funds from the inaugural ball ticket sales went to the Arizona Democratic Party.

In a report in late 2023, however, Mayes’ office cleared the governor and her staffers of any wrongdoing.

“After carefully investigating and analyzing this matter, we did not identify any instance in which the 2023 website used public resources for the purpose of influencing an election,’’ the report concluded.

Gress, in his letter to Mitchell, said the rate increase given to Sunshine deserves a closer look.

“Given Sunshine’s average performance and involvement in past controversies, including the death of 9-year-old Jakob Blodgett, I was shocked to learn in the article that the Department of Child Safety increased Sunshine’s rates by nearly 60%,’’ he wrote.

That relates to the 2022 death of the child who suffered from diabetes and was allowed to refuse to take his insulin which he needed to stay alive.

Gress told Mitchell that no other group home is paid as much per day as Sunshine.

“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,’’ he wrote.