Arizona AG to open investigation into Katie Hobbs for alleged 'pay to play' scheme

The Arizona State Attorney General's office said it will be opening an investigation into Arizona Governor Katie Hobbs for an alleged "pay to play" scheme. The investigation comes after a report revealed a government-funded children's group home company donated $100,000 to Hobbs. The group home was then given more funding from the Arizona government, after being denied the increase previously.  

In a letter sent from Arizona AG Kris Mayes' office regarding the investigation into Hobbs, as well as Sunshine Residential Homes' office, an official wrote, "Thank you for your referral dated June 5, 2024, regarding Sunshine Residential Homes."  

"The Criminal Division of the Attorney General's Office is statutorily authorized to investigate the allegations and offenses outlined in your letter. To that end, the Attorney General's Office will be opening an investigation," the letter added.  

"Meanwhile, the company gave $100,000 to Hobbs' inaugural fund in December 2022, though the inaugural fund's records dated the contribution in February 2023. Sunshine also gave $200,000 to the Arizona Democratic Party shortly before the 2022 election," Axios reported. Additionally, the outlet says that "Sunshine CEO Simon Kottoor was on Hobbs' inaugural committee and contributed to her campaign, and his company gave her an award about a month before her election."

A report from AZ Central revealed that in February 2023, the Arizona Department of Child Safety (DCS) denied a 20 percent rate increase to Sunshine Residential Homes. A few days later, Sunshine Residential Homes donated $100,000 to Hobbs’ “dark money” group, per the outlet. After three months went by, Sunshine got a 30 percent rate increase from DCS, even though Arizona is putting fewer children in group homes. This year, Sunshine got a 20 percent rate increase. Other group home services have since gotten rate hikes, but only Sunshine had one outside of the normal schedule, per Axios.

Sunshine is a for-profit company; however, it is funded entirely by state contracts. Prior to the letter from Mayes' office, Republican state Senator TJ Shope called for a probe to "determine if conduct by any of the involved parties warrants a criminal or civil investigation."

 "Just like past investigations instigated by radical and partisan legislators, the administration will be cleared of wrongdoing," Hobbs spokesperson Christian Slater told Axios in response to the allegations. "It would be outrageous to suggest her administration would not do what's right for children in foster care."

A DCS spokesman as well as Slater told Axios that the agency's decisions are not impacted by the governor.