By Amy Silverman
By Olivia LaVecchia
By Monica Alonzo and Stephen Lemons
By Chris Parker
By Michael Lacey
By Weston Phippen
Taking the money, according to Gerchick, was the only way Arpaio could pay all his deputies — notably the ones carrying out his political witch-hunts and those working on his anti-immigrant sweeps.
"If all of these officers had been paid correctly, the sheriff would have been over his budget every single year," she says.
County Manager David Smith sent a letter to U.S. Attorney Burke in October thanking his office for looking into misspending of the jail-tax fund and citing several laws Smith believes were broken, including theft, dereliction of duty by a public servant, destroying records, and forgery.
Smith announced recently that the fund will be paid back with $73.6 million in "excess" general funds and $25.9 million from jail-related funds.
So far, Gerchick says, the feds haven't subpoenaed financial data on the jail-tax fund misspending possessed by the Sheriff's Office — which could show "intent" to misuse the fund.
Sheriff Paul Babeu fully backs the notion that Arpaio was kept in the dark about his command staff's nefarious deeds.
Arpaio didn't closely manage his office and was "deceived" by Hendershott, Babeu said in a news conference on the day the massive report on his investigation was partially released.
Deputy Chief Jack MacIntyre, who counsels the sheriff on legal matters, said in Babeu's probe report that Hendershott had a "Svengali effect" on Arpaio.
But statements in the Babeu report and other documents directly contradict the assertion that Hendershott in any way had Arpaio under his control. In fact, it appears quite the contrary.
Deputy Chief Paul Chagolla, for instance, told Babeu's investigators that private talks between Hendershott and Arpaio "occurred on a regular basis and frequently occurred after everybody left the building."
Chagolla knew this because sometimes he would be called to such meetings and asked to answer a few questions before getting dismissed."So as to whether [the sheriff is] left out of the loop, or not, you know, I find that hard to believe," Chagolla stated.
Hendershott told Babeu's investigators that he had near-daily meetings with Arpaio — and that Arpaio gave him direction on sensitive cases.
"Well, I think you'd be surprised what the sheriff knows," Hendershott said. "I keep the sheriff well informed."
The Babeu report shows that Arpaio often didn't need anyone to tell him what was going on. He got plenty of information firsthand.
According to Hendershott's interview with Babeu, Arpaio told Hendershott in late 2006 that he and Andy Thomas had come up with the idea to form a special unit to go after high-profile public corruption cases.
Hendershott told investigators that after MACE was formed in December 2006, Arpaio had breakfast meetings with County Attorney Thomas about MACE issues once or twice a month — after which he would inform his second-in-command what was discussed.
Hendershott said Arpaio would announce to him the targets of various investigations, and he would relay the information to MACE staff.
One of the first targets was Stapley, whose financial-disclosure forms were reviewed by Thomas' staff as early as January 2007, the State Bar investigation against the former county attorney would later show.
Representatives of the Sheriff's and County Attorney's offices had two- or three-hour MACE meetings on Wednesdays, and Arpaio and Thomas attended many of the meetings, statements by two former MACE supervisors, Sergeant Brandon Luth and retired Captain Jimmy Miller, confirm.
Another early investigation looked into whether then-AG Terry Goddard, a Democrat, had made an improper deal with former state Treasurer David Peterson, who had pleaded guilty to fraud and campaign-finance violations.
Because Goddard had reduced Peterson's felony charges to misdemeanors months after Peterson transferred $1.9 million from the Treasurer's Office to Goddard's office, the sheriff decided something illegal had occurred.
Yet the deal wasn't really suspicious: The money was the AG's cut of a $5.3 million settlement due the Treasurer's Office because of losses incurred from a bad investment the state made with a company found in 2002 to have acted fraudulently. The AG's Office, which had performed legal services to help obtain the settlement, was entitled to 35 percent of the money under state law.
Though the case went nowhere because there was never any evidence of wrongdoing, it remained open.
Sergeant Luth told Babeu's investigators that he believed the MCSO was using the Goddard investigation as "a way of having leverage over the AG's Office," which was in a position to investigate Arpaio's office — and did so in the SCA case.
As the MACE team built its cases, Arpaio was among those making suggestions during the weekly meetings "about the tactics to be used," former Captain Miller told investigators.
Miller related that he and veteran prosecutor Tony Novitsky, assigned to MACE by Thomas' office, often kvetched that the methods Arpaio, Thomas, and Thomas' staff proposed were legally questionable.
Novitsky tried to "sway them from making us do some crazy, outlandish things," Miller stated to investigators. "Well, eventually that got old. They didn't like hearing, you know, their ideas shot down, so Novitsky gets removed."
By mid-2008, Aubuchon had been assigned to MACE by Thomas.
Arpaio and Thomas stopped attending regular MACE meetings soon thereafter, Miller said.
But Arpaio didn't cede control of MACE to Hendershott, as Munnell and Babeu claim, or stop going to MACE meetings entirely. As discussed, the sheriff dictated the terms of a MACE search warrant in early 2009. And he argued with Yavapai County Attorney Polk that there had been probable cause following Stapley's arrest on September 21, 2009. Plus, the Babeu report details how Arpaio reviewed supposed evidence in the Goddard case as late as 2009.