The day before she resigned from the Arizona State Legislature last week, just an hour before she showed up at the Capitol for the second day of her ethics evidentiary hearings, Representative Sue Laybe was picking at a peach cobbler at the Golden Rule Cafe and recalling the afternoon when four police officers arrived at her house in connection with the political scandal that would become known as AzScam.

She remembered that she was standing in the kitchen with two of the officers when she caught sight of the tiny barrel of a rubber-band pistol being aimed at the police by her eight-year-old daughter, Adrian.

"She was going to protect her mom," Laybe said. "And I said, `No, Adrian, the police are our friends. These are not bad men.'" She added, "I still think the police are fine people."

Later in the interview at the Golden Rule, Gary Peter Klahr, Laybe's outspoken attorney, pointed out that Laybe has never hoped to "die rich, like that witch Carolyn Walker." When he said it, Laybe smacked him in the arm.

"Gary, be nice," she said. "I don't like you talking against the other members."

She left the cafe in reasonably good spirits, willing to undergo the ordeal of evidentiary hearings rather than resign because, she said, "I am not afraid of the truth."

Within 24 hours, Laybe had resigned, and had accepted the plea bargain proposed by Deputy County Attorney Myrna Parker. Laybe's political career was over.

Afterward, her voice coming through the telephone was indescribably tired and thick with tears. "I could not afford to fight anymore," she said of the hearings that, only the day before, had not seemed to frighten her. She said that the monetary risk was too great. Sources close to her revealed that Laybe had changed her mind about holding out against charges when Michael Crusa, former aide to Senator Dennis DeConcini, had testified at her hearing the day before. Crusa had downplayed the history of his friendship with Laybe. He'd also said that she'd turned over to him $10,000 of the nearly $25,000 she took from undercover police agent Joseph Stedino, saying that she needed him to funnel it through the national Democratic party to create an "alibi" for her.

The word "alibi" was damaging since it seemed to communicate that Laybe knew she had broken the law and scurried to cover her tracks as news of AzScam began to fill the newspapers.

Insiders said that Laybe denies having ever used the word "alibi," but that--more important--she had considered Crusa an intimate and felt he had lied about her and then abandoned her. For Laybe, who is characterized by those who know her well as "loyal to a fault," the blow was devastating, and she felt her fate was sealed. "Who would you believe in this situation--Mike Crusa or Sue Laybe?" asked a source.

Her reactions to the tornado ripping through her life--her faith in the police department that engineered her fall, her lack of cynicism about her peers, her ability to be wounded by someone she considered her friend who was, after all, only a politician--were not those of a hardened officeholder, and that is the truth about her. Laybe never ran for public office before 1988, and she spent her entire life before the legislature in what she always refers to as the "hospitality industry," which means that she was a waitress and a bartender.

She is an average woman, a wage earner, who has perhaps been most remarked upon at the statehouse on the basis of her unfortunate wardrobe.

"The House is run by a rich doctor's wife [Speaker Jane Hull], and a lot of the Republican women are always showing off their clothes," says Representative Peter Goudinoff. "There was cattiness about Sue. She wore simple cotton dresses, she smoked, she had been a carhop. If we were English, the social discrimination would have been easier to understand."

But if her appearance is unimpressive, the story of her election is positively inspiring. It was Laybe who, for the first time among Arizona politicians, milked the voting influence of the gay constituency in such a high-spirited way that she became, according to one insider, "the darling of the gay club circuit." Laybe found an untapped source of power and entered the political arena against all odds.

And if she seems to be just a dishonest dupe these days--someone shady but naive who was brought justly to her knees by the righteous agencies of law enforcement--behind the scenes of her public dishonor, her colleagues are clamoring about the motives of the County Attorney's Office and police department as they engineered the "sting."

Such concerns are no longer unusual. As the shock of the AzScam videotapes wears off, more and more insiders realize that by releasing to the public the graphic images of legislators stuffing payoffs into gym bags and, in Laybe's case, shuffling expertly through stacks of bills, the police department distracted everyone from concerns about how the "sting" was conducted. Memories of other police department investigations during the Eighties, when the members of police and firefighters unions who were targeted turned out to be critics of Police Chief Ruben Ortega, are flooding into the minds of those close to this investigation who think they may have something to fear.

Some of these fears are a little ridiculous. You hear suspicions, for instance, that the police were trying to upset the delicate abortion vote in the legislature by targeting legislators who are pro-choice. You hear it even though Ruben Ortega has no public history of opposition to abortions, and although three of the seven indicted legislators cast their votes with the anti-abortionists every time.

Other fears seem more plausible, such as when observers have worried that Representative Don Kenney, the former head of the House Judiciary Committee, was singled out for his willingness to evaluate anew the way slush funds for law enforcement agencies are administered. The police department and County Attorney's Office have vigorously denied such theories. Yet through the years they have, at the least, created an atmosphere of anxiety in Arizona that these days has ordinary citizens worrying about telephone taps and watching their backs.

No sources from the gay community would allow their names to be used for this story, primarily because of a perception that it behooves them to keep Ruben Ortega unaware of them. Right or wrong, they felt that the macho police department would like to punish gay men. "I believe that Ortega has all the thought processes that attempt to take anyone that does not agree with him and make them more suspect and closely watched," says one prominent gay man.

That is one of the stories behind the story of Sue Laybe: As the list of the indicted grows, their friends are wondering whether colleagues were targeted for their involvement in liberal causes, and are themselves ducking for cover.

And Laybe was friendlier with the gay community than gay activists themselves have wanted you to know. LAYBE HAS PUBLICLY credited her elections to the gay and lesbian population in District 25. Gay activists estimate that perhaps 40 percent of the city's gay people live in Laybe's district, which takes in all of central Phoenix. Laybe says that 19 of the city's 22 gay bars were located there when she began campaigning in '88.

Nonetheless, it was not a given from the beginning that this group would support her. One member of that community remembers that when Laybe first stood up in a committee meeting and announced that she intended to run, he nearly fell off his chair. And his disorientation wasn't the result of delight. "She was the most inarticulate, unpoised, poorly groomed person," he remembers. "And that hair!"

She was also the only Democrat willing to run in a district that had been dominated by Republicans throughout the Eighties. Although she wasn't a complete political novice, having been bitten by the political bug while working on Linda Nadolski's city council campaign and then the presidential effort of Bruce Babbitt, she was so unpresentable that gays didn't think she had a prayer of winning.

They resisted working on her campaign at first. But she persisted in asking for help, and to pacify her, one organizer finally invited her to come along to a gay club on a voter registration drive.

The idea that there was any political influence to be gained at gay clubs was still a very new one. Gays had gotten behind a candidate in an organized way for the first time in '87, when they had campaigned for Representative Bobby Raymond as a way of defeating Trent Franks, who had proposed a quarantine law for AIDS patients. Raymond had visited the clubs, which are the hub of gay society. But even he had lacked Laybe's easy style, a style that surprised everyone.

"Bobby Raymond was the first politician to ever go into a gay club and ask for a vote, but Sue Laybe turned it into an art form. She can work the clubs better than any faggot," says the source, who introduced her around on the registration drive. (He refers to himself easily as a "faggot," and even suggests that Laybe learned to use the term from himself and others like him. Although much of the gay community was outraged when it was revealed that Laybe referred glibly to "faggots" in the AzScam transcripts, this source isn't entirely sure she was insulting anyone.)

It was in the clubs that her way with repartee first surfaced as a campaign tool. One observer remembers a heckler interrupting her vote-for-me spiel, crying, "Shut up! You were here last week, and you were wearing that same dress!"

Without missing a beat, Laybe shot back, "Yes, and you were drunk then, too!"

Laybe became so active in the clubs that some gay organizers worried about it, for her sake and their own. They were worried that, brave as it was for her to champion their community publicly, the backlash would harm everyone. If a candidate's support of homosexual issues undermines her reputation with other voters, it will cause the next candidate to think twice before becoming allied with gays.

A source says he told Laybe that everyone would understand if she took a more conservative approach to campaigning, but that her response was unqualified: "She said she was perfectly willing to take that gamble." She spent every Friday and Saturday night at the clubs for two months before the election.

The response she received for doing so was practically adoring. "If you have been told all your life that you are going to burn in hell for being gay, have been disowned by your family and kicked out of your apartment, seeing someone of almost untouchable stature asking for your vote basically legitimizes your life," says the source.

Still, there was considerable question whether gay voters could put her in office. Gay activists estimate that perhaps more than 10 percent of District 25's population is gay, but it was a group that had never perceived itself as powerful. "I think when it started out she would have explored any legitimate avenue to get a legitimate vote," says one observer. "I don't think anyone could have expected that it would exert the influence that it did."

She came in first in her district, against everyone's predictions and two Republican candidates, by about 400 votes. "I don't think there's any question in anybody's mind that she got a lot more than 400 votes from the gay community," says a supporter.

And Laybe never questioned it, either. As soon as the election was over she was regularly back in the clubs on weekends, according to observers--this time with updates on the civil rights and AIDS-related legislation that interests gays, and inside information on the mindsets of certain legislators that could help her friends to help with strategy. "I would say that virtually every good thing that has come to the gay community as far as politics goes directly back to Sue Laybe and Bobby Raymond," says an insider.

And yet gay backing wasn't the only reason for victory. She is admired among knowledgeable stumpers in the Democratic party as an expert grassroots campaigner, someone who knows the value of going door-to-door and does it tirelessly. She acknowledges that one-on-one contact put her over the top, and says, "Everything I learned about grassroots campaigning I learned from Mike Crusa."

Crusa and DeConcini took a special interest in Laybe's first campaign, according to insiders, and she repaid them later by lashing out publicly against DeConcini's critics during the Keating scandal. Says one observer of her relationship with Crusa, then and during her days at the legislature, "I have never seen anyone rely on anyone the way Sue relied on Mike Crusa." Once at the legislature, she distinguished herself primarily in terms of constituent services. She sponsored only one major bill, and she didn't appear to be a climber--somebody jockeying for an eventual position in leadership. But insiders say that she involved herself in her constituents' affairs in an exceptional way, visiting them in person or sometimes spending hours with them on the telephone.

"If you are a committee chairman, you have to sit there with banking commissioners and insurance commissioners," says Laybe. "I would much rather work on constituent issues."

She says that she primarily preferred to work through another legislator, the maverick John Kromko, asking him to carry her bills because she felt he had more influence than any first-term backbencher could hope for. It didn't matter to her that he got the credit. "I wasn't there for the power and the glory," she says. "I just wanted to make sure that good laws were passed.

"I was comfortable with my little office on the third floor. I didn't ask for a bigger office after I got reelected, or a private secretary. I just wanted to serve." She wanted it so badly that she pulled off a second election that, once again, no one thought she could win--this time with the help of Joseph Stedino's $25,000. Because District 25 has a nearly even number of Republicans and Democrats, the Republicans had targeted her seat as one that they could surely win back. Observers generally concur that she faced the toughest statewide race in the legislature last year.

Says Representative Goudinoff, "She knew how to organize, and you have to wonder how [Stedino's] money played into that. She stood out at the legislature as a survivor."

THERE IS NO question that Laybe took a lot of money from Stedino, that she thumbed through it expertly in living color, that she kept going back for more. She explains away her manual dexterity by pointing out that she spent last summer training cashiers. "At Sizzler, I was responsible for thousands of dollars' worth of deposits on a daily basis, as well as at the airport." But there was never any excellent explanation for her willingness to take 100 times more in campaign contributions--and perhaps bribes--than she was entitled to. Even attorney Klahr concedes that.

"Her goal was clear," he says. "She wanted to take all the money that she legally could to help her. She was trying to find ways to avoid but not evade the laws of campaign finance. She may have crossed the line."

He is adamant, though, that the case against Laybe has never been about bribery, and that her plea bargain, in which she concedes a felony count each of bribery and attempted bribery, is unfair. "She was tired, she wanted it to be over, and the County Attorney's Office said this was the price of peace," he says.

He says that Laybe didn't commit bribery, according to Arizona statute, because for money received to qualify as a bribe a legislator's vote must be "influenced." Laybe says she was in favor of legalized gambling in Arizona long before she met Joseph Stedino. She not only trained as a blackjack dealer at Tommy's during the age of Arizona's simulated gambling casinos, but also knew firsthand about the gambling dollars being funneled out of state.

"When I was out at the airport, I would watch the junkets leaving for Las Vegas every Friday, and they were in a partying mood, they were spending money," she says. "Then I would see them again on Saturday or Sunday afternoon and say, `How did you do?' And they'd say, `We left all our money up in Vegas.'

"I think that gambling is great for the state."
While she explains all this, she is thumbing through police transcripts of the "sting" that are so marked up they are hard to read in places. She has been listening to the tapes and comparing them to the transcripts, and she contends that she can translate her soft voice through the background noise better than the police were able to. She says that the transcripts misquote her in ways that make it appear that Stedino's money changed her mind about gambling, when it isn't true. She points to a sentence that has her telling Stedino, in relationship to his proposed bill to legalize gambling, "I won't go out and sponsor the bill." Later in the transcripts, she did agree to sponsor it. As the record stands, it appears that she changed her mind for money. What she really said on that tape, according to Laybe, is, "I won't go out and stump for it," meaning that she wouldn't campaign for the bill. But she says that she agreed to sign on from the beginning.

There are other examples, but she will not share them all. On the day before she has decided to resign, they are important to her as a way to clear her name, and she does at least want the reporter to see all the markings.

"I'm a person of faith, I get through," she says of her ability to withstand. "I get more angry than anything else, at whoever did this. They have killed any legitimate debate about gambling in Arizona. And they have influenced the elections."

She does not mention that one of the elections that was influenced by Stedino's money was her own. She won in District 25 last fall by about 800 votes.

"I could not afford to fight anymore," Laybe says.

"She was the most inarticulate, unpoised, poorly groomed person. And that hair!"

Laybe milked the voting influence of the gay constituency and became "the darling of the gay club circuit."

Laybe says that the transcripts misquote her in ways that make it appear that Stedino's money changed her mind about gambling.

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Deborah Laake