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State Farm Tried to Nail Its Customers for Arson, but the Bad Guys Were Firefighters

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Any good feelings that the Johnsons may have had were short-lived.

Sheriff's Detective Phil Dougherty told Betty Johnson by phone within hours of the arrests that he still needed to talk to her about those BankOne letters.

A few days later, Betty says, she informed Dougherty that a TV reporter had knocked on her door to ask about the letters, which she says the reporter claimed to have seen.

Dougherty's police report said that Betty told him during the call that she had been approached in 2002 by "Lillian," who said she worked as a loan officer for BankOne (supposedly producing business cards to prove it).

"Lillian" wanted Betty to privately invest money in a side deal with her, but Betty told Dougherty she never did. Betty claimed that the mysterious woman helped her compose the phony "construction loan" letters on bank stationery, which Betty in turn delivered to four subcontractors, including Robert Brewster.

It sounds dubious.

But Betty Johnson's oldest child, Summer, says she recalls a well-dressed woman named Lillian coming by the house to speak privately with her mother.

"She was a real person," says Summer, now a mother of three and wife of a Phoenix police officer. "My mom would not make something like that up."

Betty tells New Times that "Lillian" disappeared for good in the fall of 2002 after Robert Brewster filed a complaint with a sheriff's deputy. A sheriff's "field report" shows that the deputy came by the Johnsons' home to sort things out and then chalked up the dispute between Brewster and the Johnsons as a civil matter.

"When I confronted Lillian after the deputy came by, that was it — never saw her again," Betty says. "I made a big mistake by dealing with her. But it wasn't like we didn't pay people. We just didn't pay Brewster any more money because he didn't make his wrongs right on the job."

Court and other records show that none of the Johnsons' subcontractors, including Brewster, filed lawsuits, liens, or other public complaints against the Johnsons.

Sheriff's deputies served a search warrant on the Johnsons' home within hours of Betty's speaking with Detective Dougherty. Among other items, investigators seized two of the couple's computers and BankOne stationery.

Betty says another reporter contacted her shortly after the raid, saying Joe Arpaio was having another press conference the next day.

She gathered some girlfriends and drove to the sheriff's downtown Phoenix headquarters, apparently talking her way in by announcing herself as "the victim."

Betty recalls, "The sheriff was up there blowing smoke. He's talking about more arrests coming and so on. Someone in the media recognizes me and lets him know who I am. [Arpaio] was ticked! [He says,] 'What are you doing here?' This is my press conference!'"

A headline in the following day's Arizona Republic read, "Investigation in Arson Taking in Homeowners."

It noted the search of the Johnsons' home and that "the web of firefighters, contractors, and homeowners" had begun to unravel.

It sounded like quite the conspiracy, especially in light of the fact that the Johnsons didn't know any of the arrested Phoenix firefighters.

That would be the last story published about the case for years.


Sheriff's detectives wanted to charge Betty Johnson with committing fraud with the BankOne letters, but county prosecutors would not cooperate.

They also did not seek a grand jury indictment against Robert Brewster, who was allowed back on his Peoria fire truck about four months after his alleged cohorts were arrested.

The criminal case against the Phoenix firefighters soon fell into limbo: For unknown reasons, prosecutors "scratched " the charges against the trio shortly after the high-profile arrests, which meant they wanted further investigation to justify the filing of formal charges.

The three were released from custody. Avey soon resigned from Phoenix Fire, and Bishop remained on administrative leave (Lanning already had quit).

That July, the Johnsons sued their State Farm insurance agent for allegedly underinsuring the burned-up home on North 87th Drive.

The following month, their adjustor, Skipton, finally submitted a personal-property inventory to the insurer — a staggering claim of $238,000 in fire losses covering hundreds of belongings that included a 60-inch TV, leather couches, a pool table, and a pinball machine.

Though State Farm investigators were highly dubious, company claims adjustors moved the case along.

Claims section manager Debbie Smith wrote that "due to the extent of damage, there was only fine unidentifiable debris in the basement."

That comports with what Patrick Andler, the Johnsons' fire expert in the subsequent lawsuit against State Farm, later concluded. Andler said temperatures in the fire exceeded 1,200 degrees and probably consumed whatever combustible products were in the home.

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Paul Rubin
Contact: Paul Rubin