The Arizona House Speaker is investigating the attorney general over evidence that she may have rigged her investigation to protect the governor.
Speaker Steve Montenegro wrote a letter to Kris Mayes last Thursday challenging her on the result of her investigation into alleged pay-to-play by Gov. Katie Hobbs. Montenegro said the analysis published last month contained “serious deficiencies” that indicates Mayes had conducted her investigation in bad faith and for illegitimate purposes.
“The Memorandum suggests that your Office failed to pursue critical issues and reached conclusions that directly conflict with reliable evidence — including information provided by the very witnesses your Office claims to have interviewed,” wrote Montenegro. “Those failures raise the specter that your Memorandum was intended to influence the November election by attempting to inoculate the Governor from a perceived political vulnerability.”
In the five-page letter, Montenegro accused Mayes of failing to pursue specific critical issues that were allegedly made apparent throughout the investigation and then issuing conclusions that contradicted evidence of wrongdoing.
Sunshine Residential Homes, one of the top group home operators in the state, and Simon Kottoor, its founder and CEO, donated more than $500,000 to the Arizona Democratic Party in addition to Hobbs’ campaign, secret legal defense fund, and inaugural fund. Kottoor also served on Hobbs’ transition team.
Per the timeline provided in our previous reporting, Hobbs called Kottoor shortly after winning the governor’s race in November 2022 to solicit inaugural fund donations.
In December 2022, Sunshine Residential Homes sought a rate increase from the Arizona Department of Child Safety (DCS). That request was denied in February 2023.
In April 2023, Hobbs and her campaign manager at the time, Nicole DeMont, dined at the Kottoor home.
Weeks later, Sunshine Residential Homes reapplied for and received its desired rate increase. The operator also received another rate increase the following year.
Mayes investigated Hobbs for more than two years concerning allegations that she engaged in pay-to-play with a top group home operator, Sunshine Residential Homes.
The attorney general concluded her investigation with a seven-page memorandum that cleared Hobbs and Sunshine Residential Homes of wrongdoing.
The Arizona House is conducting a separate investigation into the alleged pay-to-play, as are the Maricopa County Attorney’s Office and the Arizona Auditor General’s Office.
Montenegro asked Mayes to answer five questions about her apparent lack of investigation into potential crimes committed by Kottoor or Sunshine Residential Homes, her decision to not substantiate former DCS director’s version of events concerning the pay-to-play, her denial of DCS personnels’ vocal perception of Kottoor’s influence over Hobbs, her acceptance of the rate increase justification due to threats of ORR poaching bed space despite evidence to the contrary, and her overlooking DCS violating its own contracts to award the rate increase.
Accompanying these questions were citations to evidence that Montenegro said indicated intentional oversight or obfuscation by Mayes.
Mayes’ memo omitted an incident in which former DCS Director Michael Faust revealed that Kottoor offered to recommend to Hobbs that she retain Faust as director. Faust refused the offer, and multiple DCS employees reportedly corroborated Kottoor improperly offering something of value to a government official.
“Kottoor’s apparent offer to Faust is not merely relevant because it could potentially constitute a crime in itself,” stated Montenegro. “It also provides the context for Sunshine’s subsequent rate increases, as it showed senior DCS personnel that Kottoor had the apparent ability and willingness to use his influence with Governor Hobbs to obtain a rate increase.”
Mayes’ memo omitted testimonies which conflicted with the version of events provided by David Lujan, the DCS director that Hobbs picked to succeed Faust and who no longer leads the agency. Montenegro cited three contradictions that Mayes’ memo omitted.
In one contradicted claim, Lujan alleged that staff recommended the rate increase approval, two staff members attested that staff recommended denial. It was out of fear of retaliation that the approval was secured, per interviewed staffers.
In a second contradicted claim, Lujan alleged that Sunshine Residential Homes was the only rate increase request he received by the fall of 2023. However, Lujan had rejected a rate increase request from another congregate care provider months earlier.
In a third contradicted claim, Lujan alleged that Kottoor had told him that his predecessor, Faust, had promised a rate increase. Faust has publicly denied ever making such a promise, which was corroborated by staffer testimony. On this contradicted claim, Montenegro questioned why Mayes had not investigated Kottoor for allegedly fabricating a statement from a DCS official to secure a rate increase.
“This alleged statement by Kottoor raises another concern. If Kottoor did in fact make that statement — and made it in an effort to obtain a rate increase — then your office should have considered whether the statement evidences a fraud scheme or artifice in violation of A.R.S. § 13-2310,” stated Montenegro.
Mayes’ memo claimed that DCS personnel weren’t aware of Sunshine Residential Homes’ political contributions to Hobbs. However, DCS staff testified that staff was aware of those contributions, and that Hobbs met with Sunshine Residential Homes personnel on the same morning her transition team interviewed candidates for the DCS director position in December 2022. Montenegro said Mayes’ memo offered a “sanitized account” of the political ties between Kottoor and Hobbs.
Mayes’ memo omitted evidence that Sunshine Residential Homes had been threatening to move their bed capacity to the federal government since at least 2021 in an effort to obtain a rate increase, and that both before and after Hobbs took office DCS had not been moved by those threats.
Additionally, Mayes’ memo omitted mention that Sunshine Residential Homes was contractually obligated to provide existing bed capacity through April 2024 and that DCS was cutting to address a surplus congregate care providers, contradicting claims that DCS was faced with an imminent risk of losing bed capacity and a shortage of providers should Sunshine Residential Homes decide to give their beds over to the federal government.
Finally, Mayes’ memo omitted mention that DCS awarded the rate increase to Sunshine Residential Homes outside of a contract extension as required by their congregate care contract.
“No other provider received the opportunity to obtain a rate increase that contradicted the contractual terms and conditions,” said Montenegro. “But your Office appears not to have even considered those serious questions.”
Friday, September 4 at 5 p.m. is the deadline for Mayes to respond to Montenegro’s questions.
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