Another former Arizona Department of Child Safety official weighs in on pay-to-play investigation | #childsafety | #kids | #chldern | #parents | #schoolsafey

A longtime Arizona Department of Child Safety official backed up claims by the agency’s former director, who alleged a state group home operator and Democratic donor offered to help him keep his job in exchange for a rate increase that is at the center of pay-to-play allegations levied against Gov. Katie Hobbs’ administration.

But nothing in the new information released by the Arizona Senate on Wednesday implicates Hobbs in wrongdoing or contradicts findings by Attorney General Kris Mayes, who concluded there is no evidence that Hobbs put pressure on DCS leaders to approve the rate hikes.

The Attorney General’s Office released a report on Aug. 21 clearing Hobbs of criminal wrongdoing following a two-year investigation into allegations that campaign contributions from Sunshine Residential and its founder, Simon Kottoor, influenced the decision to hand the company two pay increases in 2023 and 2024 that upped the rate it charges the state to provide beds for children in foster care by nearly 60%.

But reporting by the Arizona Republic revealed that former agency director Mike Faust did accuse Kottoor of trying to use his political connections to secure the increase in 2022 shortly after Hobbs won election — something not mentioned in the Mayes report.

Faust, who was appointed by former Republican Gov. Doug Ducey, told investigators that Kottoor offered to recommend Hobbs keep him on staff if he approved a requested pay bump.

Kottoor denied that allegation, according to the Attorney General’s Office report.

“We cooperated fully with the Attorney General’s office and all investigating authorities for two years, and the record speaks for itself,” said Tommy McKone, a spokesperson for Sunshine Residential. “We understand this is a campaign season, and we respect that reasonable people can debate state contracting policy, as they should. What we will not do is let an unproven, recently fabricated false claim overshadow the evidence-based finding of a two-year investigation or distract from the work our staff do every day for Arizona’s children.”

New information

Now, a second former DCS employee is corroborating Faust’s story.

Senate Republicans released a statement from former Deputy Director Shalom Jacobs, who worked for the agency for 23 years before leaving just months after Hobbs took office in 2023.

She said Faust called her in November 2022 and told her that Kottoor offered to “put in a good word with the Governor” to keep Faust on as director if he approved the rate increase.

“It was my observation that Director Faust appeared clearly shaken by the conversation,” according to the statement.

Like Faust’s allegations, Jacob’s comments were not included in the attorney general’s report.

Republican Senators explicitly stated they are not questioning Mayes’ decision not to bring charges.

“We’re not calling for charges from this press conference,” Senate GOP spokeswoman Kim Quintero said.

But Warren Petersen, the Senate president, indicated that he does believe a crime occurred.

“So Kottoor offers the bribe,” said Petersen, who is running against Mayes in Arizona’s attorney general election. “Faust is an agent of the state. He’s an agent for the governor. He represents her. So that is where the bribe occurs.”

Petersen acknowledged that Faust said Hobbs never pressured him to give Sunshine Residential a rate increase.

In a letter to lawmakers, Mayes said she didn’t include Faust’s allegations in the report, because it didn’t amount to reliable evidence that could actually support criminal charges.

“Mr. Kottoor and Mr. Faust also made contradictory allegations in their respective interviews, neither of which were supported by evidence needed to support a criminal charge. They amounted to a ‘he said, he said’ situation and hearsay,” Richie Taylor, a spokesman for the attorney general, said in a statement.

Mayes also said it is unclear when Faust first told others about the call, though Jacobs told the attorney general’s investigators that Faust called her in November 2022, according to her statement.

The Attorney General’s Office said there were no additional witnesses with first-hand knowledge of the alleged proffer.

“The Arizona Attorney General’s Office brings charges in cases when a reasonable likelihood of conviction and proof beyond a reasonable doubt exists based on evidence that would be admissible under Arizona’s Rules of Evidence,” Taylor said. “Nothing the Republicans shared today changes the fact that no evidence needed to meet those standards exists in this case.”

Rates

But that didn’t stop Senate Republicans from questioning why DCS eventually approved the increase in May 2023 under former Director David Lujan, a Hobbs appointee, after repeatedly rejecting similar requests in recent years.

Lujan said Kottoor complained about financial challenges facing Sunshine Residential and threatened to begin working for the federal government’s Office of Refugee Resettlement instead of the state.

That threat, not a quid pro quo, justified the decision, he told investigations.

Jacobs contradicted some of those claims.

She said that the state sought to reduce its reliance on group homes in 2021, resulting in fewer children being placed into facilities like the ones run by Sunshine Residential. She estimated that cost the company between $2.5 million and $3 million in annual revenues.

She also said there was no immediate threat that Sunshine would abandon the state and begin offering its beds to the federal Office of Refugee Resettlement, because Sunshine was not an ORR contractor at that time.

She also said the beds were currently under contract with the state and breaking that contract would result in “fiscal consequences” for the company.

“Based on my experience and the information available to me at the time, I did not believe there was a justification for approving an out-of-cycle, special rate increase for Sunshine Residential in May 2023,” according to Jacobs’ statement.

The attorney general’s investigation was limited to whether criminality, such as bribery, occurred. And Jacobs’ testimony provides no new evidence in that regard beyond supporting Faust’s allegations against Kottoor.

Senate Republicans also provided no evidence that Kottoor approached Hobbs with a bribery scheme or that the governor had any involvement in the rate increase decision.

“Fully aware that no serious prosecutor would bring charges in this case given the lack of evidence and one-sided accounts from witnesses with severe credibility issues, these legislators have now resorted to trying the case in the media,” Taylor said. “It’s past time for the Republicans to explain just what exactly they are investigating, under what authority, and the amount of tax dollars they are spending on a partisan stunt during an election season.”

Release the files 

Republicans say the revelations about testimony from Faust and Jacobs raises real questions about what other information the attorney general chose to keep out of the public report.

They are calling on Mayes to release interviews and depositions from the investigation to the public.

“Arizonans deserve to see the evidence behind it. And Attorney General Mayes, we have one simple request, and that is to release the files,” said Sen. T.J. Shope, who first called for the investigation.

The Attorney General’s Office said it will release those files, though it is unclear exactly when that will happen.

“The Attorney General’s office is conducting a legal review of its investigative files and will release them under public records law once that is completed,” Taylor said.

In the initial report, the Attorney General’s Office noted it is keeping the case open as it assists the Auditor General with a separate investigation into the allegations commissioned by Republican lawmakers. The Maricopa County Attorney’s Office is also assisting in that case.

Arizona House Republicans are also conducting their own ongoing investigation.