Did Karen Finley and Redflex Bribe Arizona Officials?
Friday's guilty plea by Cave Creek resident Karen Finley, ex-CEO of the photo-enforcement company Redflex, has many people wondering:
Who, if anyone, did Finley bribe in Arizona?
Redflex Traffic Systems, which is based in Phoenix as a subsidiary of Australia's Redflex Holdings company, has had numerous contracts with Arizona municipalities over the years, and it handled the much-criticized state contract for speed cameras along highways and freeways from 2008 to 2010. Were all those dealings clean?
News broke in 2012 of the scandal involving payoffs to Illinois officials, forcing the ouster of Finley as CEO. A subsequent federal indictment last August in Illinois describes how Finley allegedly helped bribe a Chicago transportation official with the help of Martin O'Malley, her "bagman." O'Malley pleaded guilty to bribery in December.
Finley's guilty plea doesn't mention the Chicago scheme — it focuses on her bribery efforts in Ohio. Yet the scandal may involve several other states, too. As New Times reported in 2013, Redflex conducted its own internal review of the scandal and ended up firing Aaron Rosenberg, former star salesman and vice president of Redflex in Phoenix. The company then filed a lawsuit against Rosenberg, naming him as the source of its troubles in Chicago.
Rosenberg followed quickly with a counterclaim in Arizona federal court, saying he was being made a scapegoat. He alleged that Redflex bribed officials routinely in 13 states — including Arizona — and his lawyer, James Burr Shields, said Rosenberg was cooperating with federal officials in a wider investigation. That lawsuit is still wending its way through Maricopa County Superior Court, with oral arguments set for July 15.
Redflex made some contributions to local politicians and political groups in the last few years that are worth looking into, though they don't necessarily indicate anything nefarious or illegal:
* On July 15, 2008, Redflex was selected as the vendor for the state's freeway-camera program. Two weeks later, on July 30, Aaron Rosenberg made a $5,000 donation to the Arizona State Democratic Central Executive Committee. Then-Governor Janet Napolitano, who pushed the freeway program, is a Democrat. Was the donation pre-planned, or maybe a "thank you" for the lucrative contract?
In fact, the money wasn't actually obtained by the state Democratic party because Rosenberg's check bounced, says Barbara Lubin, the current state director for the state Democratic Party's state caucus.
Lubin says the organization's records show the money was logged as a contribution initially, but then listed as a refund when the check bounced. We asked her to look into whether the Democratic Party asked Rosenberg to try making the contribution again, which we imagine it would do in a case like that. She says she'll get back to us if she learns more.
* In October 2010, Redflex made contributions of $1,250 each to the Republican House and Senate Victory funds. We left a message for the treasurer of those organizations to find out more.
* For 2012, Redflex upped its contribution to the Republican House and Senate Victory funds, giving $2,500 each. Republicans in the State Legislature keep threatening to get rid of photo enforcement, so these political donations make sense — this is the legal way to try to influence elected leaders.
* Also in 2012, Redflex gave $2,500 to Building Arizona's Future, a political committee dedicated to installing a Democratic majority in the State Legislature.
* We found that "Jim Sanders" of Redflex gave $100 to Building Arizona's Future in 2012, (that could be a misspelling of Jim Saunders, the current CEO of Redflex who announced in March he'd be stepping down at the end of June.) We also found that Jennifer Dwiggins, current or former director of operations for Redflex's Arizona office, gave small donations of $140 or less to legislative candidate Andy Tobin in 2011, and to former Governor Jan Brewer's campaign in 2009.
The Chicago payoffs were allegedly conducted by very suspicious means, as a former Phoenix executive with Redflex testified last year. Michael Schmidt told the Chicago Tribune that transportation official John Bills "coached" Redflex executives on how to win a contract in that city.
"(Schmidt) said he and five other Redflex officials flew from Arizona to Chicago in February 2003 to attend a meeting at City Hall where city officials would set out the parameters of the trial program and answer any questions from the two potential vendors. That team included Karen Finley, then vice president of operations, and Aaron Rosenberg, the company's top salesman at the time who is now cooperating with federal authorities under an immunity agreement.
"'Bills looked right at me and told me, "I'm going to address you by name, but you have to pretend like we never met. It has to look on the up and up." ... He detailed to the jury how Bills pretended not to know him at the City Hall meeting the next day. 'He went out of his way to say, "You're Mike, right?" when he didn't have to. I thought that was very telling.'
"In February, Schmidt described Finley... 'I remember glancing over at Karen, and she just put her finger to her mouth quietly as if to say, "Sshhh." ... It was obvious that something was going on that shouldn't be."
The crime information report to which Finley pleaded guilty outlines how she helped bribe officials in Cincinnati and Columbus from 2005 to 2013.
The idea was to influence public officials in those cities in order to "obtain and retain municipal contracts" for photo enforcement, and payments from Redflex to political campaigns were "concealed" through a consultant acting as a liaison.
The unidentified consultant sent an email to Rosenberg (who's also not named in court records, but has been identified as the "executive" named in records), asking for contributions totaling $30,000 "for the campaigns of certain officials."
Rosenberg tried to negotiate a lower payoff amount, asking the consultant, "What is the minimum you would recommend, that would still get us recognition and keep you (and us) in good graces?"
During "internal discussion" of the payoff, Finley told Rosenberg in an email, "WOW that is a big handout. Is this how our local city handles campaign financing — now I understand the 'order of protection' for our friends."
Finley ordered the $30,000 to be paid a few days later, records state. The consultant provided Redflex with an invoice for $30,000, and Finley paid it knowing the money would go not to for consulting services, but to the campaigns of the desired public officials. The consultant then purchased bank checks with the money and doled it out to the various officials under the names of third parties.
In 2009, the consultant emailed Rosenberg an invoice for $5,000. Rosenberg tried to delay him, but the consultant told him "if you can't get it here this week I will have to take [Redflex] off the list..." records state. Soon enough, "Finley urgently requested a check" to be cut. The consultant then told Rosenberg he was with a public official, and that the official said "thanks."
A couple of years later, the consultant handed Redflex an invoice for $20,000, saying it was for a "success fee" concerning the extension of Columbus's red-light-camera program. Finley signed a memorandum of understanding that the fee would be paid, knowing the consultant "would use the proceeds to make campaign contributions" in Columbus.
The consultant deposited Redflex's subsequent check for $20,000, then made a $20,000 contribution to the Ohio Democratic Party in his own name. The Democratic Party then made a $21,000 contribution to the official's campaign.
According to the Columbus Dispatch , that official is Columbus City Council President Andrew J. Ginther, who's currently running for mayor.
This week, Ginther denied any involvement with a bribery scheme, but did acknowledge talking to Rosenberg: “We talked about the campaign in 2011 in October or September,” Ginther told the Dispatch. “I solicited (Rosenberg) on behalf of the council team. That request was followed up with an email from my campaign committee and that request was never honored. I never contacted Karen Finley and I am not aware of any contribution from Redflex.”
Finley, who was released on bond pending her sentencing hearing, (the date of which still has not been posted), faces up to five years in prison and a $250,000 if convicted.
Rosenberg's attorney, James Burr Shields, didn't return calls for this article.
Phoenix police Sergeant Trent Crump tells New Times that city officials have also seen the allegation of bribery in Arizona, but that "we've got no indication that it's here in Phoenix."
Redflex signed a three-year contract with the city in 2008 that gave the option for two one-year renewals without city council approval. The police department opted to accept both of those renewals, Crump said. The city has since renewed Redflex's contract again for its speed- and red-light cameras.
"We have audited our contract with them and we are comfortable with the current contracts," Crump says.
If you know anything about Redflex bribing any public official in Arizona, send us an email (anonymous, if you like) or otherwise let us know how to track that information down.
We'll update this story once if and when we learn more.
Get the ICYMI: Today's Top Stories Newsletter Our daily newsletter delivers quick clicks to keep you in the know
Catch up on the day's news and stay informed with our daily digest of the most popular news, music, food and arts stories in Phoenix, delivered to your inbox Monday through Friday.