For more than two years, a criminal probe into Arizona Registrar of Contractors Director Jeff Fleetham has languished in the Maricopa County Attorney's Office.
The investigation got its start in August 2016, when Arizona Attorney General Mark Brnovich received a detailed letter laying out criminal allegations against Fleetham, who was appointed by Governor Doug Ducey.
Its author alleged that Fleetham had attempted to illegally destroy public records — perhaps successfully, perhaps not — and that he had demanded an employee grant perks to his executive assistant, who co-owned a plumbing company with her husband. When the employee refused to do so, he was fired, according to the letter.
Its author also claimed that Fleetham was allowing employees to take home state-issued vehicles in violation of state law.
The full submission, which was leaked to Phoenix New Times, laid out the allegations in detail, and it closed with a request for further investigation by law enforcement and Brnovich’s office.
But the state AG's Office decided to refer the matter to the Maricopa County Attorney’s Office, headed by Bill Montgomery, citing a conflict of interest because it represents the Registrar and provides legal counsel to the agency.
When Paul Ahler, chief counsel of the criminal division at the AG's Office, sent the case to Keith Manning, law enforcement liaison at the county attorney's office, in October 2016, he asked the office to “advise us as to the disposition of this matter once it is concluded.”
To date, the state office has received no word. The investigation is "still open as far as we know," Ryan Anderson, a spokesperson for the AG's Office, said via email.
Jim Knupp, spokesperson for the Registrar of Contractors, said the agency has not been served, nor has it received subpoenas or motions. “I’ve gotten nowhere on getting answers,” Knupp said, after being asked about the status of the investigation.
What Montgomery’s office has made, if anything, of the allegations against Fleetham, remains a mystery, and his office has little to say about the matter.
“MCAO does not confirm or deny the existence of investigations, so I cannot offer a response to your inquiry,” Amanda Steele, spokesperson for the county attorney’s office, told New Times via email.
Ducey appointed Fleetham as the new head of the Registrar of Contractors in February 2015, soon after the governor began his first term in office.
The agency issues licenses to contractors. It also roots out and cracks down on those doing business without a license, as a hybrid sort of law enforcement agency. Its criminal investigators have the authority to issue misdemeanor citations and refer them to court.
When Fleetham was appointed, the construction industry cheered his arrival. "Better Days Ahead?" asked a blog post by Lang & Klain, a law firm packed with construction attorneys, citing the agency's "new, more pro-business philosophies."
Fleetham had already spent six years at the agency as an investigator, from 2007 to 2013. In September 2013, he stepped down “to activate 12-88 LLC,” a “dispute resolution company,” he told the National Federation of Independent Business in August 2015, six months after his appointment.
According to Fleetham, those different perspectives were valuable to him. “I realized from my time at the ROC that there was a necessity for somebody with experience on both sides — both the regulator and the one being regulated,” Fleetham, six months into his directorship, told NFIB.
A year later, someone in Fleetham’s office found his regulatory oversight, or lack thereof, alarming enough to report concerns to the AG's Office.
The five-page letter accused Fleetham of trying to grant Lisa Gray and her husband, former State Representative Rick Gray, special favors. The Grays owned Acacia Plumbing Inc., whose license with the registrar had been "inactive" since September 2011, according to the letter.
Under Registrar policy, its employees cannot be listed on an active license, which would allow them to operate as contractors. But since 1989, according to Knupp, the agency has allowed employees with active licenses to freeze them for the duration of their employment. Contractors cannot do business with a frozen license.
"Frozen" as a status doesn't appear in statute, and the convenience — a free, indefinite hold on a contracting license — is available only to employees. Fleetham, for example, has a frozen license for his company, 12-88 LLC.
All other contractors who want to put a hold on their licenses can render them "inactive" for two periods of up to five years each. They can reactivate it by submitting written notice and paying a renewal fee.
The Registrar can also suspend a contractor's license if the company affiliated with it has been dissolved — which Acacia Plumbing Inc. had been, at the time Gray joined the agency, even though the status of its license was simply "inactive," according to the license.
Around the time Gray was hired in March 2015, Fleetham asked the then-chief of the agency’s licensing department to change the status of Acacia's company from “inactive” to "frozen,” the letter said.
The licensing chief told Fleetham that per statute, he could not freeze the status of Acacia Plumbing’s license, according to the letter. He told Fleetham that Acacia Plumbing’s licensing should, in fact, have been "suspended," instead of "inactive," because at that point the company had been dissolved by the Corporation Commission for failing to file an annual report.
It’s not clear when Acacia was dissolved, but it was at some point, because a reinstatement document from the Arizona Corporation Commission on March 23, 2015, declared that it was cancelling the company’s administrative dissolution.
A few days after refusing to freeze Acacia's license, the licensing chief was fired, the letter said.
Knupp confirmed that Lawrence Matthews departed the Registrar on March 9, 2015, but he declined to explain why, saying the agency couldn't comment on personnel matters. His departure was five or six days after Gray's first day with the Registrar of Contractors.
The Corporation Commission's records show that Acacia Plumbing stopped filing annual reports after 2011, then started again in March 2015.
On March 22, 2015, it filed its 2012 annual report. The next day, the company was reinstated. Acacia Plumbing was dissolved again in October 2015.
In March 2018, Arizona Congresswoman Debbie Lesko announced that she had hired Gray to be her district director.
Knupp, who said he could not comment on why Matthews had left the Registrar, said that Gray's departure from the agency was voluntary.
Gray did not respond to messages left with staff at Lesko's office requesting comment for this story.
In June 2015, the Registrar of Contractors closed four satellite offices in Yuma, Show Low, Kingman, and Prescott. The records from those offices were brought to the main office in Phoenix at the State Capitol's Executive Tower and stored in the basement, according to the letter.
But in July or August 2015, Fleetham’s executive assistant, Gray, who was responsible for destroying records from the shuttered satellite offices or sending them to the state archives, was planning to destroy "crime reports" older than seven years, the letter alleged. According to its author, any files from investigations should have been saved for at least 25 years.
The letter noted that the previous director, Bill Mundell, had issued a moratorium on all destruction of public records. It's not clear whether Fleetham overturned that.
It's also not clear from the letter what the author meant by "crime reports." It could have referred to police reports or warrants issued by the Registrar of Contractors in relation to misdemeanors for violating contracting licenses.
Knupp said that the Registrar of Contractors does not possess crime reports, and Hale said that the agency is not authorized to keep them. According to Hale, the ROC is required to keep any records from the agency's investigations for a minimum of seven years.
Ultimately, Knupp said, records from satellite offices were brought to Phoenix and reviewed. Those that met the requirements of the agency's retention schedule were destroyed; those which had not were kept, he said.
The discrepancies between the letter's claims and the state's explanations — whether the records slated for destruction really were crime reports, and if so, why the Registrar of Contractors had them at all, and whether records-retention law really was violated — remain unresolved.
This is not the first time someone at the Registrar of Contractors claimed the agency was violating records retention law. In 2017, the governor's office retained a private law firm to investigate allegations from a whistleblower.
"The law firm conducted interviews and reviewed documents and ultimately determined that no laws were violated," Pat Ptak, spokesperson for Ducey's office, told New Times via email.
He said the office was aware of a "supposed investigation" that had been initiated, but has "not received any official communication regarding an investigation."
After learning about the AG-initiated investigation into Fleetham, the registrar stopped destroying records in November 2017, said Knupp, the spokesperson. “We got the impression that it was related to records destruction, so we put a records hold on, just in case," he said.
The letter also raised questions about Fleetham’s own contracting business and the differences between profiles on contractor websites and Fleetham’s descriptions of his company's activities.
As director of the registrar, Fleetham was still advertising the services of that company, 12-88 LLC, despite the freeze on his license, the letter alleged. Under Arizona law, it’s illegal for contractors to advertise their services, never mind take work, without an active license.
In 2016, when the letter was written, 12-88 LLC appeared to have active profiles on third-party construction and contracting sites like eHardHat.com and TownContractors.com. Summaries of the company described 12-88 LLC as a residential and commercial contractor, even though its license was only for residential remodeling and repair.
Those characterizations conflict with Fleetham’s own descriptions of 12-88 as a dispute resolution company. Those sites also described 12-88 LLC as having been in business, variously, from two to four years, a time period that would have overlapped with Fleetham’s tenure at the registrar.
Those profiles still exist today, with one revised as recently as September 2018. When New Times dialed the 602 number listed for 12-88 LLC on eHardHat.com, no one answered, but the voicemail went to someone named Jeff.
The descriptions of 12-88 on these sites are unnatural, their wording jarringly awkward, as if a bot had written them. It's not clear who is updating them or whether Fleetham has control over the information they contain.
Neither site responded to queries about where they pulled their information from and how, or if, it was verified.
“Additional investigation would require a subpoena of the website administrator to determine ... if indeed Jeffrey Fleetham would have made these entries,” an attachment to the letter noted.
According to agency spokesperson Knupp, Fleetham applied for and received his B-3 General Remodeling and Repair Contractor's license in 2011, while he was employed as an investigator at the Registrar.
"The license was immediately frozen upon issuance in 2011, unfrozen when he left in 2013 and re-frozen in 2015 when he was appointed as the Registrar," Knupp wrote.
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According to a release by Ducey’s office when the governor appointed Fleetham, Fleetham had owned 12-88 LLC since 2013. But records with the Arizona Corporation Commission show that Fleetham filed to start the company in December 2010.
The letter also accused Fleetham of violating policy regarding the use of state vehicles. Previously, investigators who worked in so-called virtual offices, i.e. from home, had been allowed to use state vehicles. When he became director, Fleetham began requiring those investigators to work at a Registrar of Contractors office but continued to allow them to take home state-assigned cars, the letter said.
“Laws and regulations are mere suggestions to him,” it concluded, urging the AG's Office to investigate.
The investigation into Fleetham was first reported in April 2017 by the Arizona Republic. That story broke the news that Fleetham was under criminal investigation and that the case had been assigned to the Maricopa County Attorney’s Office, but it did not contain details of the allegations.