Arizona AG Kris Mayes to launch criminal probe of group home tied to Gov. Katie Hobbs

Arizona Attorney General Kris Mayes' office will launch a criminal investigation following reporting by The Arizona Republic detailing political donations made by a state contractor with ties to Gov. Katie Hobbs.

The investigation comes at the request of Republican Sen. T.J. Shope, of Coolidge, who asked the Democratic attorney general to look into the potential "pay to play" scheme. In his request, Shope named specific crimes, including bribery, fraud and contract law violations, that he believed could be implicated.

"The Criminal Division of the Attorney General’s Office is statutorily authorized to investigate the allegations and offenses outlined in your letter," a one-paragraph letter from Mayes' office to Shope sent Thursday reads. "To that end, the Attorney General’s Office will be opening an investigation."

The letter signed by Mayes' criminal division chief, Nick Klingerman, thanks Shope for his referral "regarding Sunshine Residential Homes." Klingerman's letter does not mention Hobbs nor the Department of Child Safety.

The focus of the nascent investigation is unclear, and Mayes' spokesperson declined to comment on the letter.

A spokesperson for Hobbs — who often notes she is a former social worker — said it was "outrageous to suggest her administration would not do what's right for children in foster care."

"Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing," spokesperson Christian Slater said in a text message.

A spokesperson for Sunshine Residential Homes said the company "continues to remain committed in caring for the population they have served for several decades in Arizona — troubled and vulnerable youth receiving the resources necessary to thrive.

"We have always been steadfast in our commitment and partnership to the State of Arizona and remain committed to do so going forward while cooperating fully with any inquiry," reads the statement from Tommy McKone, owner of McKone Strategies in Phoenix. McKone said he was "engaged" by the company "over the last week to help streamline communications and public relations."

Shope welcomed the quickly launched investigation.

"I hope that they will do a fine job and actually go through fairly, through the entire process, and completely thoroughly as well," Shope said.

Nonpartisan auditor general may also review

Shope had also asked Maricopa County Attorney Rachel Mitchell, a Republican, to look into the matter. Separately, on Thursday, Rep. Matt Gress, R-Phoenix, notified Mitchell's office that the nonpartisan Arizona Auditor General's Office would be available to help with an investigation.

Gress leads the Joint Legislative Audit Committee, which can direct the auditor general to scrutinize agencies.

“Their investigation is going to be nonpartisan, call balls and strikes," he said. The auditor general's role is to "get the facts and find out where the documents lead us and where the evidence leads us in terms of what happened here," Gress said in an interview.

Mitchell said in a letter to the lawmakers her chief deputy would schedule a meeting with the auditor general's and her own staff. Her letter says the auditor general reached out on Wednesday asking for the Maricopa County Attorney's Office to "work with them while they conduct an investigation into this matter."

Whether that would happen alongside Mayes' probe or in conjunction with it was not immediately clear.

Benefited: This Arizona group home donated $400,000 to Gov. Katie Hobbs, Democrats and got more state money

Donations to Hobbs, Democrats focus of Republic reporting

Sunshine Residential Homes operates about 30 group homes for children who have been taken from their parents and placed into state custody. It was the only provider to win a special rate increase from DCS during the Hobbs administration, though there were about a dozen requests, DCS records show.  When DCS renewed contracts with group home providers this year, it awarded existing providers more compensation — but Sunshine Residential Homes got the highest daily pay.

The for-profit company won the rate increase in 2023 arguing it was facing a deficit and would need to reduce its capacity to house children. It would be forced to offset the deficit by contracting instead with a federal migrant housing program, Sunshine Residential’s Chief Executive Officer Simon Kottoor wrote in a May 2023 letter.

DCS told the Republic it couldn’t lose the bed space provided by Sunshine Residential Homes.

But Sunshine Residential Homes also launched a political spending campaign, donating $400,000 in 2022 and 2023. Of that, $300,000 was donated to the Arizona Democratic Party in the course of three transactions that occurred before and after Hobbs’ election, state campaign finance records show.

The company also cut a $100,000 check to Hobbs’ inauguration fund, records previously provided by the fund show.

Reach reporter Stacey Barchenger at stacey.barchenger@arizonarepublic.com or 480-416-5669.

This article originally appeared on Arizona Republic: Hobbs-Sunshine Residential Homes ties: AG to launch criminal probe