Joe's Kickback Style
It's August 1989, and travel agent Joe Arpaio is sweating bullets. His contract to coordinate travel for the Maricopa County Sheriff's Office is up for rebid, and Arpaio must convince a four-person panel that his company's proposal is better than the other two finalists'. If he fails, he'll lose about $200,000 in business--a contract he had won the year before under a previous sheriff who happened to be a personal friend.
But now there's a new sheriff in town and Arpaio has stiff competition from other bidders. He's got only 30 minutes to convince the committee--composed of three deputies and one county civilian employee--that he'll deliver the best deal.
So he offers the department a kickback.
Dennis Hogan, the county Materials Management employee present that day, says Arpaio verbally offered to send a percentage of airline-ticket sales back to the sheriff's warrants division, which oversaw travel. The offer didn't match the written proposal Arpaio had submitted and was, in Hogan's view, so unethical that he reported it to his supervisor that day.
Arpaio tells New Times his verbal offer was no different from what he pitched on paper. And, besides, he adds, kickbacks are standard in the travel industry.
Not on county contracts they're not, Hogan counters.
Seven years later, Hogan works for a California medical firm, but Arpaio's offer--and his sheer audacity in making it--is still etched in Hogan's mind. Of the other three people present that day, Tricia Patterson and Kelley Waldrip remain with the Sheriff's Office and turned down interview requests. The third, Larry Tyree, has since left the department but refused to comment.
Due in part to his desperate offer, Arpaio lost the contract and the $200,000 in sales. (His wife, Ava, insists she was present--Hogan doesn't remember her--and that Joe never offered anything that wasn't in writing. "When we went to the table, those kickbacks were shown to them. We might give back 1 percent of our 10 percent [profit]. That was in the written contract," she says. Later, she insists that she and her husband offered a "rebate" not a "kickback.")
Three years later, Arpaio would become Maricopa County's sheriff himself.
He looks astonished when he's asked if he holds himself and his employees to a high ethical standard. Of course, he replies.
But recent revelations tend to indicate otherwise: In February, New Times reported that Arpaio spent $39,350 in public funds earmarked for jail enhancement on an attorney who filed a 1994 lawsuit against the county Board of Supervisors. Arpaio had promised not to spend public money in his lawsuit. He spent another $11,000 of the jail-enhancement money for video copies of his television appearances, directing a video service to send him copies anytime Arpaio spoke on camera. The jail-fund expenditures have prompted an investigation by the state auditor general.
Arpaio's office is also under investigation by the U.S. Department of Justice, which is probing claims of abuse of jail inmates. The Sheriff's Office has spread misinformation about the deaths and beatings of inmates, and it resists attempts by reporters to obtain public records.
Many view Arpaio as the most popular elected official in Arizona but, as a sizable faction of his deputies is eager to point out, his decision making is hardly beyond reproach.
And some of those decisions involve the appointment of people who have themselves been accused of improprieties.
The sheriff's political agenda is managed by a man who was bounced out of a job with the U.S. Department of Housing and Urban Development after the agency received complaints that he was using his position and political influence for personal gain.
And Arpaio has given authority over his jails--marketed as the country's toughest on lawbreakers--to an officer who has been accused by his ex-wife and others of misusing county property and lying about his whereabouts during business hours. The officer denies the charges and says that a sheriff's internal investigation exonerated him.
Bill Miller, a former deputy chief under Arpaio, says the sheriff's inner circle consists of sycophantic appointees with far-reaching powers. Miller, who retired in 1994, explains that despite Arpaio's 25 years as a federal Drug Enforcement Administration agent, he has little experience in other forms of law enforcement management.
"I don't think Arpaio knows how to spell 'homicide,'" says Miller. "He's walked all over evidence when he showed up at my crime scenes. We had to have his footprints taken so we could separate his prints from the other evidence."
Miller says Arpaio has been forced to rely on subordinates to an embarrassing degree. And with the mainstream media finally asking tougher questions in the wake of the death of jail inmate Scott Norberg, Arpaio's policy messes are increasingly being dumped into the laps of his inner circle.
Here's HUD in Your Eye
On Sundays, Sheriff Arpaio's executive assistant Tom Bearup preaches at a church in north Phoenix. He's a deeply religious man committed to the power of prayer. And it was during a prayer that he discovered his life's true calling. In 1980, God told Tom Bearup to run for mayor of Soldotna, a small Alaskan town where he had been a police officer for three years.
So he ran. And won. The experience exhilarated him and whetted his appetite for more. So, after moving back to his native Arizona, he volunteered to work for the Republican party. Bearup has since used his political contacts to land several jobs.
Today, as Arpaio's executive assistant, Bearup is paid $76,000 to "coordinate public affairs activity," a plum position he got after running Arpaio's 1992 campaign. Most observers familiar with the Arpaio administration place Bearup as either the first- or second-most influential figure under the sheriff himself.
Unlike Arpaio, who brags about his "open-door policy" but sent word through a subordinate that he's no longer accessible to New Times reporters, Bearup is cooperative and eager to discuss his past, especially after learning that New Times had obtained a report detailing a series of questionable actions by Bearup while he was a HUD employee.
Bearup is an effusive, glad-handing person who resembles Danny DeVito. He sits behind a large desk, surrounded by pictures of his family and of Nancy and Ronald Reagan.
Bearup says the early days of the Reagan administration were heady. He claims he'd made enough of an impression on the GOP from his remote mayoral seat in Alaska that he was considered for the ambassadorship to South Korea, where he had business contacts. He didn't get the post, but he says he liked having a White House connection. So when he moved to Phoenix after his term, he started working as an advance man for President Reagan.
He was also a reserve officer in the Maricopa County Sheriff's Office, sold real estate, and was a vice president of a company that wanted to develop business leads in Korea.
Then disaster struck. In January 1987, he was laid off when the foreign development project dried up. Sluggish real estate sales couldn't make up the difference.
Bearup found himself in serious straits, and he had many mouths to feed: seven children and a grandchild on the way. In February 1987, he stopped making payments on the mortgage of his Phoenix home.
Bearup says his lender told him he might qualify for a HUD program that would pay off his lender, take over his mortgage, and allow him to pay little or nothing while he got back on his feet.
He remembered that another Republican operative, Dwight Peterson, was with the Phoenix HUD office, so he called and inquired about the mortgage-assignment program. Bearup says Peterson referred him to another HUD employee who started the application process.
HUD investigators say the employee who handled Bearup's application reported that Peterson had warned him that Bearup's application "had better be handled properly, and he implied that if the mortgage was not accepted there could be problems because Bearup was well-connected politically." The investigators say the employee wasn't told outright to approve Bearup's application, "however, from the tone of conversation, he assumed that the assignment of Bearup's loan was supposed to be approved."
HUD accepted Bearup for the assignment program in July 1987, suspending his mortgage payments through January 1988, and then extending that period through March 1988.
But Bearup would make no payments on his house for 25 months, from February 1987 to March 1989, when he sold it.
Under HUD rules, after the initial period of suspended payments, Bearup should have started making payments based on a formula that factored his income and debts. But Bearup complained that he couldn't make the payments calculated by HUD. "At that time," a loan specialist told investigators, "he told me of other liens which he had against the . . . property . . . I was of the opinion that he had not fully disclosed all of his liability information to HUD."
The specialist made repeated attempts to get more financial information from Bearup, but she said he never responded. Bearup's assignment was extended for an additional period to September 1988, when the loan specialist once again attempted to put Bearup on a payment plan.
By then, however, Bearup had applied for a job with HUD. He'd learned from his friend Peterson of an opening for a manager in the Tucson office. The loan specialist was told Bearup's file would be sent for servicing either to the regional office in San Francisco or to the head office in Washington, D.C. She never sent another payment-plan proposal to Bearup.
Besides making no payments on his mortgage--even after taking a $40,000-a-year job as manager of the Tucson HUD office--Bearup also asked HUD for permission to sell his property and allow the buyer to simply take over payments; he didn't want to bring payments up to date. He also asked that his original mortgage be extended by ten years. Both requests were outside the authority of the Phoenix HUD office to grant.
So Dwight Peterson directed HUD employees to draft a memo to the Washington, D.C., office requesting an exception in Bearup's case. A HUD manager told investigators it was the only such exception the Phoenix officer ever had sought. He also noted that before the request was sent, Peterson deleted from the application a notation that Bearup worked for HUD.
Bearup claims that all of this was done without his knowledge, that if HUD employees such as his friend Dwight Peterson favored him because of his political status, it wasn't because Bearup had asked them to.
Getting the managership at the Tucson HUD office should have made Bearup ineligible for HUD assistance on his Phoenix home.
Red flags should have gone up at HUD: Bearup was no longer living in the house for which he was receiving HUD assistance; he now had a $40,000 salary with HUD, and he hadn't responded to HUD's repeated requests for financial data. Yet Bearup continued to make no payments on his Phoenix mortgage, and HUD did nothing about it.
The loan specialist told investigators that Bearup continually promised that he was about to sell the house and needed just a little more time.
"My impression of Bearup was that he was attempting to buy time by telling me that he had potential buyers . . . ," the loan specialist said.
"When he got a job with HUD, or if he moved out of the . . . property to Tucson, HUD should have taken those changed circumstances into consideration and adjusted his monthly mortgage payments accordingly or possibly even called his note due. But that did not happen."
Finally, in March 1989, Bearup found a buyer for his house and paid off HUD. Long after someone without HUD assistance would have lost the house to foreclosure, Bearup had managed to pay off his loan, and he even turned a $3,100 profit.
Bearup told investigators that he hadn't done anything wrong. As manager of a HUD office, however, he did admit that he should have been more concerned with appearances. He acknowledged that it didn't look good for a HUD official to fail to make payments on his mortgage and to refuse to supply financial information to HUD while the agency had bailed him out.
HUD investigators also examined Bearup's purchase, and subsequent abandonment, of a market and motel in the town of Strawberry. After he bought the property in July 1988, Bearup's wife and several of his children moved into the motel. Investigators charge that Bearup gave the sellers the impression he and his wife would purchase the market in their names, but a week after entering escrow, the Bearups formed a corporation to buy the property, borrowing money from Bearup's ex-wife to form the corporation and make the down payment on the market.
The market's owners told HUD investigators they felt deceived, especially after Bearup failed to inform them in writing that he held a real estate broker's license (such notification is required by law). Bearup's wife and children operated the market for six months, subsisting on the stock of the store.
The former owners said that consuming the store's inventory and living in two of the motel's six units were among the bad business decisions that doomed the Bearups to fail. In January 1989, the day before an $80,000 balloon payment was due on the store, Bearup's wife and children left Strawberry and joined him in Tucson. Ownership of the store went back to the previous owners, but the actions of the Bearups forced them into bankruptcy, they claimed.
Tom Bearup claims that he was the one who had been deceived in the deal. The previous owner's sales projections were erroneous, he says. He says his actions did nothing to hasten their bankruptcy.
But HUD investigators noted that Bearup hadn't reported that he had borrowed $25,000 for the market (Bearup claimed that it was a corporate debt, and not his responsibility), nor did he report any proceeds or profits from the market--all while he was still withholding payments on his Phoenix home with a HUD-assigned mortgage.
HUD investigators were interested in other matters as well. After taking his job with HUD and moving to Tucson, Bearup told one of his clients--the Estes Corporation, a development firm that competed for HUD contracts--that he needed a larger house. The Estes employee mentioned that the company might be able to find him something.
Then, in January 1989, Bearup wrote a letter to the Pima County Planning Commission, criticizing the panel for requiring Estes to provide low-income housing in one of its proposed developments. Before he sent it, Bearup asked a subordinate to read the letter to an Estes representative to get his input. The Estes official suggested some slight changes, and the letter was sent to the commission.
The next month, Bearup rented a home from Estes for $850 per month--$400 per month less than the previous tenant had paid. HUD investigators noted that Bearup's check for move-in costs bounced.
Bearup explains that the previous tenant had paid more to have access to ten acres of land around the house, and that he felt Estes Homes treated him no differently from any other tenant. One of his co-workers, however, told investigators that he had warned Bearup that renting from Estes could backfire on him. HUD investigators reported that Bearup "acknowledged that his rental relationship . . . could be seen by outsiders as a conflict of interest and that as the manager of a HUD office he should be concerned with appearances."
Finally, HUD investigators were interested in a building project that Bearup helped promote before he started working at HUD. Bearup was one of many investors who were hoping to build a special government-aided development project in Casa Grande. Although he had put up none of his own money, Bearup was promised a healthy percentage of the profits on the deal because of his work in putting together the original team of investors. He also stood to make $50,000 as a brokering fee if HUD accepted the project.
When Bearup took a job at HUD, he relinquished his interest in the project's profits. But even though he no longer was a partner, he still stood to collect the $50,000 if HUD accepted the deal. One HUD employee told investigators he advised Bearup that if the agency hired him, he "would have to divorce himself from the Casa Grande Farms project; that they could not discuss it anymore; and that Bearup still raised the issue two or three times after he became Manager of the Tucson office." HUD turned down the project.
And after completing its investigation, on June 30, 1989, HUD fired Tom Bearup.
Bearup says he was investigated only because he had called for HUD to investigate why appliances were disappearing from HUD homes, and he was the victim of a witch hunt. The firing left him with few options, he says, because he was blackballed in the business community.
He says if he'd really wanted to use his influence for personal gain, he could have just picked up a phone to the White House. That he didn't do that, he says, is proof that he never misused his position but was simply the target of an office that wanted to dump somebody in the face of public animosity (under Reagan, HUD had been rocked by a series of scandals). Bearup says he made it convenient for the Tucson office to claim that it had cleaned house.
The years following his firing were grim, Bearup says. He managed a Taco Bell in Prescott until his pride made him quit.
Bearup says that through it all, Joe Arpaio was the only friend who stood by him. Years later, he would run Arpaio's campaign for sheriff, then become his executive assistant. Bearup gets misty-eyed remembering his friend's loyalty.
But when New Times cornered Arpaio at a speaking engagement, the sheriff gave a different version. Asked about Bearup's troubles with HUD, the sheriff says: "I didn't know about it when I hired him." Arpaio says he found out about the HUD investigation in a background check done after Bearup had been hired, not before, as is customary with other Sheriff's Office employees.
"As far as I'm concerned," Arpaio says of Bearup's actions at HUD, "he did nothing unethical in that."
The Cook, the Chief, His Ex-Wife and Her Mother
On the morning of April 12, 1996, Diane Wendt called the Maricopa County Sheriff's Office asking for her ex-husband, deputy chief Larry Wendt. She knew that her attorney intended to serve him with court papers regarding their custody battle, and she wanted to know where her lawyer could find him.
Diane was told that her ex-husband was at the Legislature, lobbying on behalf of the sheriff.
She didn't know that her attorney had found Larry Wendt an hour earlier, but not at the Legislature. Larry Wendt had been served papers at a barbecue in Cave Creek.
Wendt oversees some of Arpaio's most notorious creations--his tent jail, chain gang and other well-known penal deprivations--and serves as Arpaio's legislative liaison. Wendt agrees with observers who say he's probably third or fourth in the office pecking order.
He also operates Cowpunchers, a barbecue business which grossed $150,000 in 1995.
His ex-wife claims that Wendt operates the business on county time, using a county vehicle, and that he's lied to sheriff's investigators about his misuse of and even theft of county property. Complaining that her ex-husband was harassing her and trying to control her life, Diane Wendt, a former sheriff's employee herself, says she went in desperation to chief deputy Jadel Roe in 1994. Roe initiated an internal investigation.
Wendt argues that his ex-wife is motivated by their bitter custody battle, and that the investigation exonerated him. The business is owned by his present wife, Wendt says, and she's its primary operator.
But people not involved in the custody battle confirm many of Diane Wendt's charges, and some of them say they were ignored when the Sheriff's Office investigated the allegations against Wendt in 1994.
County health worker Tom Dominick, for example, has no interest in the Wendts' custody battle. So far in 1996, he's inspected Cowpunchers five times. Coincidentally, all five inspections occurred on weekdays. And, says Dominick, Larry Wendt was present each time.
"I don't think I was present at all five," Wendt tells New Times, offering vacation chits and a copy of his schedule to show that he took vacation days to work at barbecues.
But there's no vacation chit dated April 12, 1996. Wendt had not only been served by Diane Wendt's attorney that morning, Tom Dominick also says Larry Wendt was present when he made an inspection of Cowpunchers, and that Wendt remained there throughout the day.
Wendt explains that he had gone to the Legislature to attend a Senate Judiciary Committee meeting that morning, just as his calendar indicates, but that when he arrived, he found that the lawmakers weren't considering bills. So he left early, having already notified Roe that he'd be taking half a day off.
There's also no vacation chit for February 7, 1996, another weekday that Dominick inspected Cowpunchers. The health inspector says he remembers that day vividly, recalling details about the location of the inspection and that another health worker was with him. And he distinctly remembers that Larry Wendt was present, working the barbecue.
Wendt founded the business in 1990 with a fellow deputy, Bill Williams, and their wives. Williams says that at first, the business grew slowly, taking up perhaps one or two weekends every month. But then, as word of mouth got around, business picked up rapidly. The barbecuers were so busy, Williams says, that he was using his vacation days for weekday events and had little time with his family on the weekends. So he got out. Wendt still owes him $2,000, Williams says, but he doesn't expect to get it. "You shouldn't go into business with friends," Williams says.
He doesn't know how Larry Wendt was able to grow the business and still maintain his busy work schedule.
Diane Wendt says her ex-husband did it by lying about his whereabouts to the Sheriff's Office and making illegal use of his county vehicles. She says his pattern of abuse of county property started years ago. On weekdays, she says, Wendt would go to barbecues in his personal truck, so Diane, who didn't own another car, had to take the Wendt's county car to work--something that wasn't supposed to happen.
Sheriff's spokesman Lieutenant Tim Campbell tells New Times that deputies, including chiefs, aren't supposed to use their county vehicles during off-duty hours, nor should spouses or others drive their cars.
But Larry Wendt admitted to as much when he was investigated by the Sheriff's Office in 1994. Although the Sheriff's Office refused to turn over a report on the internal investigation of Wendt, he acknowledges telling investigators that his present wife had driven his county car.
But Diane Wendt says investigators didn't bother to contact another woman who had worked for Cowpunchers and who could corroborate Diane's claim that Larry Wendt made extensive private use of his county vehicle.
Dixie Lauko, a former county employee who used to see Diane and Larry Wendt socially, confirms that she was never contacted by sheriff's investigators.
Lauko says she saw Wendt use his county-supplied unmarked Ford Bronco for personal use "many, many times." On Friday and Saturday nights in 1994, Larry Wendt would show up at youth bicycle races, always, Lauko says, in the county vehicle. "We even had a tailgate party on it once," she says. "I don't think I ever saw him drive his personal car to the bike races. In fact, I know I didn't."
Lauko also helped occasionally as a Cowpunchers worker. And she says that on at least one occasion she saw Wendt's Cowpunchers trailer hooked to his county-owned Bronco.
Wendt denies using the Bronco to tow the trailer, and he says anyone who says so was simply confused because the Bronco--which he admits taking to the barbecues--and the trailer were simply in the same location.
But Lauko is adamant. She says she clearly saw the two hooked together.
Diane Wendt, meanwhile, agrees that her ex-husband often used the Bronco to pull his trailer, but that again, sheriff's investigators failed to take her accusations seriously or interview Lauko, who would have backed up her claims.
A woman who coached Wendt's children says Wendt frequently drove his county vehicle while off-duty.
"Larry Wendt's kids were on my soccer team [in 1994] and every Saturday he would come in his sheriff's car," says Kathy, who refused to give her last name because members of her family work at the Sheriff's Office.
"He also came after school to pick his kids up in the sheriff's car," Kathy says, echoing a charge made by Diane Wendt, who says that her ex-husband would travel great distances in his county vehicle to transport his children on afternoons and weekends.
Kathy says that other sheriff's employees are told they can't make such use of their cars.
"My uncle is higher than Larry Wendt, and he can't do it. So I know you're not supposed to do that," Kathy says. "I mean, it's for work only, and I know on Saturday mornings [Wendt] would come pick his kids up and he lived 55 minutes away, and he's not even working."
Eileen Hicks, Diane Wendt's mother, says her evidence that Larry Wendt misused his position at the Sheriff's Office was also ignored by investigators.
She remembers being uncomfortable when her son-in-law gave her a bicycle for Christmas in 1982. Wendt was in charge of a sheriff's program to benefit disadvantaged children at the time, and one of the program's activities was to repair discarded bicycles and give them to children. Eileen Hicks says Wendt gave two of those bicycles to her and her husband. Hicks says when she expressed reservations about accepting the bike, Wendt told her, "They'll never miss it."
Hicks says she received a call from a captain investigating Wendt, but after hearing their accounts and taking down the serial numbers of the bicycles, the captain never contacted her again. "We offered to bring the bicycles down there, but they refused," she says.
Wendt denies that he stole the bicycles. He says that the sheriff's program collected bicycles, refurbished them, and gave them to disadvantaged children. But an abundance of larger bicycles were left over, and Wendt says the department encouraged employees to purchase them to raise funds. Which is what he did, Wendt says, when he gave two of them to his in-laws.
Hicks says they were told by investigators that the Sheriff's Office didn't believe their version of events. She and her husband asked to take polygraphs, but were told that Arpaio and chief deputy Roe had decided not to polygraph anyone in the investigation.
(Meanwhile, Arpaio employees tell New Times that several deputies have been polygraphed in a search for people who leaked information that triggered a series of New Times articles about the Sheriff's Office.)
Diane Wendt says Roe told her that the report on the internal investigation had gone to Arpaio, who had the final decision. "You know how things work around here, Diane," she says Roe told her.
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Roe tells New Times that the evidence she'd seen supported Larry Wendt's side of the story, and she didn't think a polygraph test was necessary. She notes that Larry Wendt was eager to take a polygraph himself.
Sheriff Arpaio fended off questions about Wendt and his barbecue, saying that Roe knew more about it.
Wendt says he was the subject of a thorough and rigorous investigation. "Seriously," he says, "this organization pursues rumors and leaks and allegations made by the public harder than most you will see."
The public must take Wendt's word for it. Because of the sheriff's increasing secrecy, the public seldom sees the results of such investigations.