Arizona Attorney General not charging Gov. Hobbs over pay-to-play accusations

PHOENIX - Officials with the Arizona Attorney General's Office say prosecutors will not be filing charges against Governor Katie Hobbs over allegations that Hobbs took part in a pay-to-play scheme with a group home company.

The backstory:

According to news reports in June 2024, Hobbs was placed under investigation at the time over her alleged ties to an operator of group homes for foster children. The investigation came following reports that a firm named Sunshine Residential Homes made six-figure donations to the Governor's inauguration fund and the Arizona Democratic Party, just before getting a large rate hike from the state.

At the time, Hobbs released a statement that reads:

"Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing. Governor 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."

What We Know Now:

Per a legal analysis that was published by the office, the investigation lasted two years, and involved 12 interviews, reviews of campaign finance records, records of procurement, bank documents, and state e-mails and chats.

"The investigation has not uncovered any evidence of the necessary quid pro quo to support a bribery charge," read a portion of the analysis.

Dig deeper:

The legal analysis also went into specifics over the state's bribery laws, and said that according to the U.S. Supreme Court, "punishing official acts following a political contribution, without more, ‘would open to prosecution not only conduct that has long been thought to be well within the law, but also conduct that in a very real sense is unavoidable so long as election campaigns are financed by private contributions or expenditures, as they have been from the beginning of the Nation.’"

Per the analysis, Gov. Hobbs had, in written statements, said that she had "never discussed DCS contract rates, Sunshine's rates, or any DCS procurement decision" with anyone affiliated with Sunshine in any setting, and at any time as governor, and that the Governor's Office "never provided direction or input to DCS on rate decisions."

"As for her campaign and her campaign staff, Governor Hobbs stated that ‘no campaign contribution, inaugural contribution, donation to the Legal Defense Fund, or other financial support from Sunshine or any other source influenced any state agency decision concerning Sunshine or any other provider,’" read a portion of the analysis. "Governor Hobbs further clarified none of her campaign staff ‘had any involvement in or awareness of any decision made by [DCS] regarding Sunshine at the time that the decisions were made.’"

The analysis had a conclusion over the rate hike: "Rather than the result of a bribe, the investigation has found that Sunshine’s rate increases appear as the result of its outsized leverage over DCS’ congregate care program."

What they're saying:

"Certainly, the timing of Sunshine’s large political contributions, followed by Sunshine’s rate increases, including receiving the highest per-day rate, raised serious questions that prompted this investigation. But in the absence of any evidence to suggest a quid pro quo, it is insufficient to establish a crime occurred, let alone a reasonable likelihood of conviction necessary to seek an indictment under the Criminal Division’s policies," read a portion of the analysis.

In their statement on the matter, Attorney General Kris Mayes was quoted as saying the "case shows there is a need for legislative reform."

"The Legislature and the Governor have the power to ensure greater transparency with regard to political donations made by state contractors. I am urging them to work together and try again to pass legislation that does so," AG Mayes said.

What's next:

Per the analysis, the Auditor General's Office is doing an additional investigation that may require the Attorney General's Office's involvement.

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