"This situation has absolutely nothing to do with the Sheriff's Office."
That's what sheriff's spokeswoman Lisa Allen told New Times last week when questioned about the growing SCA campaign finance scandal — a claim that surely ranks right up there with "Pay no attention to the man behind the curtain!" and "I am not a crook!" when it comes to pathetic denials.
Sarah Fenske feature
Read previous articles and blog posts about the SCA scandal in Valley Fever.
After all, we're talking about a situation in which a half-dozen of the sheriff's highest-ranking officers systematically stashed tens of thousands of dollars in a secret account and then funneled the money to the Arizona Republican Party. Now these ace detectives would have us believe it's pure coincidence that the Republican Party just happened to donate virtually the same amount of money to a committee that financed the nastiest attack ad in recent memory — and that the ad just happened to target Sheriff Joe Arpaio's opponent.
Thanks to last week's belated financial disclosures, we now know that high-ranking sheriff's officers, including Chief Deputy David Hendershott, donated money from their paychecks using direct deposit. They then spent nine months denying their involvement — violating the most basic tenet of campaign finance law.
We also know now that donors to the fund included not just the sheriff's most enthusiastic employees, but one of his richest friends.
Yet we're supposed to believe the money was never meant to go to the sheriff's re-election efforts. We're supposed to believe, in fact, that this has absolutely nothing to do with the Maricopa County Sheriff's Office.
Pay no attention to the men behind the curtain!
The sheriff is not a crook!
There's good reason everyone at the MCSO keeps insisting that this whole thing is a giant coincidence, even though its explanations contradict all logic. If what appears to have happened really did happen — if the sheriff's men laundered money to attack his political opponent — someone just might end up in prison.
Lisa Hauser is an attorney with Gammage & Burnham who specializes in election law. In fact, for 10 years, she prosecuted such cases for the Arizona Attorney General's Office. (She is also, for the record, a Republican.)
While not speaking to the merits of this particular case, Hauser says the facts, as reported, raise a number of questions — and potential violations of the law.
I'll get to those in a minute. But first, a little background on the scandal, for those of you who haven't been able to follow my colleague Ray Stern's excellent minute-by-minute coverage.
Last October, as Sheriff Joe Arpaio was in the thick of a hard-fought re-election campaign, the Arizona Republican Party ran a vicious ad targeting his opponent, Dan Saban.
Saban and Arpaio had a history of animosity, to put it mildly. Four years earlier, when Saban ran against Arpaio in the GOP primary, Arpaio's top staffers (including spokeswoman Allen and Hendershott) leaked a police report to a TV news reporter alleging that a teenage Saban had raped his own foster mother. When the charge turned out to be baseless — the mother had a history of making false allegations and mental instability — Saban sued Arpaio.
That was a huge mistake on Saban's part. As much as he had been wronged in the 2004 election, the lawsuit opened the door to questions about his sex life. Sadly, that life had been rather complicated, including no fewer than four divorces ("Below the Belt," Paul Rubin, September 20, 2007).
Ultimately, the suit allowed Arpaio's attack-dog attorney, Dennis Wilenchik, to ask Saban about a number of subjects better left unaddressed by an aspiring politician, including whether the veteran cop had ever masturbated on duty. Unbelievably, Saban admitted he had. It was 30 years ago, but still . . . His videotaped admission provided one of the key visuals in the Republican's attack in 2008.
The ad was both outrageous in its pettiness and dishonest in its innuendos. In addition to the bit about masturbation, the ad suggested Saban might have once exposed himself to a child (he didn't) and attempted to rehash the whole foster mom allegation (which had no merit).
Not surprisingly, public pressure forced the Republican Party to yank the commercial after just a few airings. It also had to pull an ad smearing the opponent of Arpaio's best buddy, County Attorney Andrew Thomas. That ad accused attorney Tim Nelson of allowing child molesters to go free — simply because Nelson had taken contributions from defense attorneys.
Both ads were paid for by a group called Arizonans for Public Safety. Campaign finance records revealed that group was funded entirely by the Arizona Republican Party.
And that raised some questions from Republican legislators. They questioned why the party would use its limited funds to help Arpaio — who had a giant war chest — at a time when the Democrats were pouring money into legislative races, leaving them vulnerable.
The questions led to a few interesting admissions. On October 9, a few days after the ads ran, the GOP's chairman, Randy Pullen, told the Arizona Capitol Times that he'd been raising money for county races because he was concerned that Arpaio's "numbers [had] been softening" and that County Attorney Thomas was "at risk." He said the money for the ads had come from a group called SCA.
"We went out to this group [SCA] and we got this money," he told the Capitol Times, according to a report published in the paper's online supplement, the Yellow Sheet. "That was money that we essentially set aside for county races . . . I already decided what I was going to do with the money before I got the money."
Pullen said he didn't know what SCA stood for, although at least one news report at the time suggested it stood for Sheriff's Command Association.
"As far as I know, my understanding of SCA is it's just a bunch of individuals who are concerned about what's going on in Maricopa County," Pullen said, according to the Yellow Sheet. "Some of them are ex-law enforcement and a wide variety of other people."
In a blog post responding to angry GOP activists, a Republican national committeeman named Bruce Ash seemed to second Pullen's suggestion that the money had been earmarked.
"The Saban ad campaign was not done using ANY funds from AZGOP which were donated for any other cause other than the specific campaign," he wrote, "and would not have been donated had the ad campaign not been run."
Reached by New Times earlier this week, Ash wouldn't elaborate — but he didn't retract his assertion, either.
Those admissions almost immediately triggered a complaint from the state Democratic Party. Campaign finance law clearly barred Pullen from allowing an independent expenditure committee, such as the SCA, to earmark its contributions for a particular race.
As attorney Hauser explains, one of the most important tenets of campaign finance law is full disclosure. If I give the max donation to Sheriff Joe Arpaio — perish the thought — his campaign filings have to show that I've done so.
But let's pretend I don't want people to know I'm a Sheriff Joe supporter. So let's say I write a $390 check to my cousin in Detroit, and then she writes a $390 check to the Arpaio campaign. At that point, the public has lost its ability to know who's attempting to influence the sheriff — and my cousin and I have just broken the law.
That appears to be what happened here. And if the sheriff's employees gave money to the Republican Party with the intent of having the party funnel the money to Arpaio's race, that's an attempt to hide the true source of a donation to Arpaio. It's just as dishonest as my cousin's putting her name on my money.
For that reason, it's illegal, Hauser says.
"If there is an intent to hide the source of the contributions, that's laundering money," she says. You can give money to a politician, but if you give money to a political action committee with the understanding it will go to a politician — thereby hiding any direct link — "that's very bad," Hauser concludes. "That can land you in prison."
The potential illegality is compounded by the fact that there are strict limits to what an individual can give to a campaign. (In 2008, it was $390.) But there are no such limits for political parties or independent committees: You can give them as much as you want.
But you have to do it honestly. I can give the party $10,000 to get its message out and aid its candidates, but I can't give the party $10,000 with the understanding it will help Arpaio directly. That's basically giving Arpaio a $10,000 contribution — which clearly exceeds that $390 limit.
That's a problem.
Last fall, it wasn't clear who the SCA's backers were, much less whether (as Pullen initially indicated) they'd meant to give the money specifically to Arpaio. When the party filed its initial report, it noted only two checks from SCA, totaling $105,000, and subsequent transfers totaling $102,000 to the newly formed Arizonans for Public Safety.
That's when things really got bizarre. The SCA then failed to file a report listing its donors. Campaign finance experts say that's unquestionably a requirement of state law.
Pullen told reporters that his contact for the group was a guy named Joel Fox. Pullen would later testify under oath that he asked Fox several times for the names of his contributors, but Fox refused.
As it turns out, Fox wasn't just John Q. Public, interested in democracy and the Republican way. He was a high-ranking sheriff's officer — and a true Arpaio partisan. Fox was one of the sheriff's employees who filed Arpaio's nominating petitions in 2004. And in the wake of a post-election housecleaning, in which top officers were demoted for their support of Saban, Fox was one of the guys who got promoted. He ended up in charge of the sheriff's SWAT team.
Fox had every reason to see that the money helped Arpaio.
But after the ads ran, Fox still refused to give Pullen a list of his backers. Even Pullen knew that wouldn't fly. Facing potential legal repercussions of his own, the party's chairman refunded the $105,000 to Fox on October 17 — one month after the transfers to pay for the ads and two weeks after the ads set off a firestorm.
Even with the refund, though, the problem didn't go away for Fox. He'd clearly supplied the checks to the party, even if they ended up serving as little more than a no-interest loan. Under state law, his donors had to be disclosed.
He's fought that edict for the past nine months.
Because the donation went to the state party, Arizona Attorney General Terry Goddard opened an investigation last fall. His spokeswoman declined comment, but it's pretty clear the matter is still under review.
And because the money may have also affected a county race, the county elections department also looked into the matter. When it found probable cause that violations had occurred, County Attorney Thomas — citing his own conflict of interest — spun the case off to a private attorney.
Jeffrey Messing, an attorney at Poli & Ball in Phoenix, landed the case by pure chance. The Yale-educated lawyer isn't known as a political guy, and many reporters openly wondered whether he had the will to take on the case.
As it turned out, he did.
Fox, then the only guy who was linked to the SCA fund, didn't make it easy. In a series of letters to Messing, and ultimately in front of Administrative Law Judge Thomas Shedden and Superior Court Judge Robert Houser, Fox argued long and hard that he never had intended to influence an election. Sure, he'd given money to the Republican Party, but who's to say the party didn't spend the money on hotel rooms for the National Republican Convention in St. Paul? Messing pointed out that Fox never had stipulated that the money shouldn't go for electioneering — surely, by giving money to a political party, he intentionally made a political contribution.
But Fox wouldn't give an inch.
He claimed that he'd never even spoken with the fund's donors. The money had just kind of rolled in — somehow, he said, the bank account number must have been passed around. Why did anyone donate? Well, he'd talked about doing something to combat the negative image of the Sheriff's Office in the media. Certainly not a commercial — no one watches TV anymore, he insisted. As for his donors, they'd given months, even years, before the election. How could they possibly have guessed their money would end up with the Republican Party, much less linked to anti-Saban ads? Why should they be subject to abuse from the media because of decisions he alone made?
Messing pointed out that Fox and a colleague, executive chief Larry Black, had taken the time to register two different political action committees in the fall of 2006 — and that those committees shared a post office box with the SCA. Didn't that indicate they'd intended to get involved in the political process? Nope, Fox replied, the shared post office box was pure coincidence.
And just one month before that, Messing noted, Black had purchased the domain name www.sheriffscommand.com. Didn't that mean SCA stood for Sheriff's Command Association? Certainly not, Fox said. It stood for nothing. It could even stand, he suggested at one point, for "second-chance apples."
Really, you'd have to hear this malarkey to believe anyone could say it without laughing.
Near the end of his long battle with Messing, Fox even suggested that he could show the list of names to elections officials — in private. They surely would see at that point that the donors weren't trying to the influence the election and would let the whole thing slide. Oddly enough, no one fell for that one.
Through it all, the spinning sheriff's captain kept a remarkably straight face. When I questioned him directly after one of the hearings, Fox told me unequivocally that his backers did not include Chief Deputy Hendershott. It was, he insisted, a very unremarkable list. Then he lectured me a bit about the way the media tries to take down innocent people.
I'll say this for Fox: He didn't lose for lack of effort.
It took nine months, an order from Judge Shedden, and the real threat of a $315,000 fine, but eventually, Fox coughed up his donor list.
Last week, we finally learned why he fought so hard to keep it secret.
The list included not just Hendershott, but six other top officers in the sheriff's department. Records showed that they had all set up direct deposit with the county so that $50 from every paycheck went directly into the account.
• Hendershott was in the very first batch to make contributions — before, in fact, Captain Joel Fox made his first contribution. He gave a total of $2,650.
• Frank Munnell, a deputy chief who runs the patrol division, gave $2,400.
• Fox, the SWAT team commander, gave $2,050.
• Brian Sands, a deputy chief who reportedly heads the sheriff's law enforcement division, gave $2,000.
• Scott Freeman, a deputy chief in the special investigations division, gave $1,800.
• Larry Black, the former executive chief (and current civilian MCSO employee) who helped Fox set up the political action committees in the fall of 2006 and registered the Sheriff's Command domain name, gave $950.
• Former deputy chief Jesse Locksa, who's also been rehired as a civilian, gave $300.
Records show that Freeman, Sands, and Locksa already had given Arpaio's campaign the maximum donation permitted by law.
In addition to the money from the Sheriff's Office employees, the fund also garnered contributions from five wealthy businessmen.
Four of them are based out of state and don't appear to have strong ties to Arpaio. But the fifth, developer Steve Ellman, is a longtime donor who'd already given the maximum amount permissible in the 2007-08 election cycle.
The record suggests he's also a friend of Arpaio's. He roasted Arpaio at the sheriff's 70th birthday party and, at one point, served as a captain in the sheriff's advisory posse.
Ellman also has ties to Hendershott. A newsletter shows the men sharing a table at a Glendale Chamber of Commerce luncheon in 2006. They also had a business relationship: Hendershott's wife opened a restaurant in Ellman's Westgate City Center, records show. The eatery has since closed.
It seems likely that Ellman recruited at least one of the businessmen who contributed to the account. James Wikert, an aviation expert and real estate mogul in Dallas, serves with Ellman on a non-profit board devoted to forging better relations with Cuba. Records show that Wikert also purchased a 1 percent stake in the Ellman-owned Phoenix Coyotes, a deal that cost him roughly $1 million.
Ellman's office referred all questions to his lawyer, Grant Woods, who is out of the country. Woods' office said it would have no comment other than a prepared statement that does not address the Wikert matter. Wikert also didn't return a call for comment.
A third businessman on the list, James Liautaud, could also have contributed to the deputies' secret fund in hopes of helping Arpaio. Liautaud, who owns the Jimmy John's chain of sandwich restaurants in Illinois, was an early backer of Mitt Romney's presidential bid. So was Arpaio. (Arpaio's PR guy, Jason Rose, who also represents Steve Ellman, ran Romney's Arizona campaign.)
Interestingly, records show that Liautaud's parents each contributed almost the maximum allowed to Arpaio's campaign in 2006.
And there's one more curious fact that strongly suggests all five wealthy businessmen knew full well where their donations were going:
The Arizona Republican Party's chairman, Pullen, was forced to return the $105,000 donation to Fox on October 17. As I first reported on New Times' Valley Fever blog, within the next two weeks, four of the businessmen — and the wife of a fifth — turned around and wrote checks to the Arizona Republican Party.
The five families had donated a total of $95,000 to the committee started by the sheriff's deputies. The money they donated to the GOP in the month of the dirty Saban ad would total $90,000 — almost the exact total they'd previously given.
So these rich guys donated tens of thousands of dollars to SCA, a fund that the chairman of the state party, by his own admission, contacted in hopes of raising money to help Arpaio and Thomas.
SCA gave the money to the party. The party paid for the ads.
And then, when the party was forced to return the money to SCA, the same rich men turned around and donated nearly the exact same amount to the party.
Yet we're supposed to believe that money was never earmarked for Arpaio?
Are they stupid? Or do they just think we are?
I sat through nearly six hours of testimony at a hearing in March on the subject of the SCA money. Unbelievably, Fox was representing himself at that point. (He'd continue to do so until last week.)
At that hearing, I heard Randy Pullen change his testimony from what he'd told the Arizona Capitol Times in October and insist that he hadn't earmarked the SCA funds for county races. I saw Fox using his best amateur lawyerspeak to explain that the money wasn't for a political purpose, even if he gave it to a political party.
But the thing that made the biggest impression on me that day wasn't what anyone said. It was Joel Fox's demeanor.
As I wrote in my notebook at the time, Fox's hands were visibly shaking.
The poor guy, I thought. He's scared to death.
Of course, I felt a lot less sympathetic after I realized that the wily sheriff's captain had lied to my face about Hendershott's involvement. But it's clear to me now that, on some level, Fox was freaked out about screwing this thing up.
He wasn't the bad guy, I think. He was the fall guy.
It was Hendershott who'd made the first contribution to the fund. It was almost certainly Hendershott, if not Arpaio himself, who'd talked to Steve Ellman. Indeed, in a prepared statement, Ellman's attorney, Grant Woods, backed up Fox's assertions that Fox and Ellman have never spoken. Nor did Ellman speak with the GOP about the donations, Woods said.
This wasn't Joel Fox going rogue. This came from the top.
After all, Fox is a guy who's used to taking orders. He worked for Arpaio's campaign in a past election cycle. And plenty of guys in the Sheriff's Office believed his work on that campaign got him to where he is today — earning the promotion that put him in charge of the SWAT team soon after Arpaio's re-election in 2004.
But what's truly the smoking gun, to me, is just how hard the sheriff's associates worked to get out the word about Dan Saban's embarrassing deposition even before the GOP-funded ads.
Saban gave me a three-page set of notes, listing efforts on the part of both Hendershott and the sheriff's lawyer, Dennis Wilenchik, to use the information against him. They are incredibly detailed notes — and Saban has the supporting documentation to prove it all really happened.
Wilenchik really did use information from the deposition to file complaints about Saban with the Arizona Attorney General's Office, then-Governor Janet Napolitano, and the chairman of the board that certifies law enforcement officers in Arizona. He really did file a formal complaint with the Mesa Police Department and he really did attempt to get Saban placed on the Brady List, a roster of local police officers thought to have "integrity issues." (The attempt failed.)
The letters relied on facts that had surfaced in deposition — including the fact that Saban had masturbated on duty in the 1970s.
Interestingly, Wilenchik now represents the Sheriff's Office employees, including Fox and Hendershott, who gave money to the SCA fund.
And Hendershott, too, did his best to disseminate the information in the deposition.
Gerald Richard, a Democrat running for county attorney, is on the record as saying that, in the summer of 2008, Hendershott suggested Richard put in a public-records request for the contents of Saban's deposition. (Hendershott, amazingly, later confirmed the account to the East Valley Tribune.)
That's supposedly how the Arizona Republican Party obtained the depositions that formed the basis for their ads. Party officials have claimed that they heard the rumors and put in a public-records request.
But a political party isn't like an individual. If I pay for copies of public records, you'll never know about it. If a party writes a check, even one for $3, it goes into an official campaign finance report.
There's no record of the party's paying the MCSO for a public-records request, much less paying for videotaped depositions that lasted for hours on end.
And really: Why the heck would Saban's deposition be stored at the Sheriff's Office anyway?
The Sheriff's Office wanted the information about Saban to go public. And it's about time someone got serious about investigating the lengths it went to make sure voters couldn't ignore that information.
Hauser, the elections law expert, says the natural choice to investigate would be the Attorney General's Office. But Attorney General Terry Goddard is still technically "under investigation" in the sheriff's never-ending probe into a payment Goddard's office received in a civil case. (The "investigation" has been open for an astonishing 27 months, with no indictment to date.) Cries of "conflict of interest" could hamstring Goddard's office's efforts to hold Arpaio's people accountable.
Messing, who was appointed by Thomas to look into the mess, could also kick his findings back to Thomas, saying that what he found raised enough questions to warrant a "criminal referral." Thomas would then have to appoint another agency to investigate the case or face serious questions himself.
I asked Messing whether he'd done that. He declined comment.
In the meantime, my colleague Ray Stern has reported that the FBI was contacted by one of his sources — and that it was interested enough to follow up. That source says the FBI was given copies of New Times' coverage of the matter.
There's surely enough here to keep some law enforcement agency busy, Hauser says. "What's needed here, in order to find out if anybody else should be assessed civil penalties, or God forbid, if this warranted a criminal case, there has to be a comprehensive look at the facts," she says. "Someone is going to have to do a lot of interviews."
Investigators may want to start with Lisa Allen — yes, the same flack who merrily insisted last week that this has nothing to do with the Sheriff's Office. I'd recommend the authorities question her about a curious bit of foreshadowing that took place in December 2006.
Just a few days after Christmas, Dan Saban appeared on a radio talk show at the behest of former County Attorney Rick Romley, who was serving as guest host.
The two hadn't intended to take any callers. But when a producer poked his head into the studio to say that the sheriff's spokeswoman was on the line, Romley and Saban figured they might as well take the call.
And what Allen said, I think, offers a clear hint of what was to come.
"When all the cards are on the table," she said, "people are going to find out what a disgraceful person Dan Saban really is."
"I knew right away what she was referring to," Saban says today. "The depositions."
We also know today what was going on behind the scenes at the time of Allen's warning.
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Just two months earlier, Joel Fox and Larry Black filed the papers to create two political action committees. And just one month earlier, both Hendershott and Black began making direct deposits into a secret bank account — the account that would become SCA.
Did Lisa Allen know what the officers were planning? Did Hendershott?
The truth, as they say, is out there. And no matter what Lisa Allen says today, I'm convinced it has absolutely everything to do with the Sheriff's Office.