In January, the Federal Bureau of Investigation confiscated the financial records of the Posse Foundation as part of the U.S. Attorney's probe of misdeeds in the Maricopa County Sheriff's Office. Evidence from that probe is currently being presented to a federal grand jury.
Posse Foundation board member and treasurer Jerry Robertson, who has announced his intention to run for sheriff in the year 2000, tells New Times that FBI agents took the foundation's records under order of subpoena.
At the time, the foundation was itself attempting to audit its books to learn whether money from the sales of souvenir pink underwear was missing. Robertson says the foundation has put its audit on hold while the FBI has its records.
From the beginning of the underwear sales in late 1995, deputies have complained that hundreds of thousands of dollars in cash passed, unaccounted, through the office of Sheriff Joe Arpaio's principal aide, Dave Hendershott, before it passed to the foundation, and that much of it was missing. Twice, those concerns were brought to Arpaio by his former aide Tom Bearup. Bearup has testified in sworn depositions that each time, Arpaio refused to investigate.
The FBI has apparently decided those concerns are worth investigating.
In November, former lieutenant Robert Wetherell came forward with accusations that Arpaio and Hendershott ran a crooked internal investigation to fire a deputy, Mark Battilana, whom they suspected of talking to New Times. That same month, County Attorney Rick Romley announced that other deputies had come forward with information to corroborate Wetherell's accusations, but Romley forwarded the information to U.S. Attorney Jose de Jesus Rivera, who acknowledged that his office was beginning a probe into Arpaio's office. (Rivera was already handling three other investigations of the death of jail inmates.)
At the time Romley made his announcement, deputies told New Times they believed the feds would be interested not only in Wetherell's accusations about Hendershott and Arpaio's gestapolike use of internal investigations, but that FBI agents would be looking into the missing pink-underwear money.
Since then, several sources have told New Times that when they were interviewed by FBI agents, they were asked repeatedly about pink-underwear money, Hendershott's handling of it, and other questions about Hendershott's use of funds.
Robertson's report about the FBI's confiscation of Posse Foundation record is the latest confirmation that Hendershott's handling of the funds is a focus of the federal probe.
Meanwhile, Arpaio has struck upon a new strategy to keep certain records out of the hands of state auditors and the press--by not keeping them in the first place.
Three years ago, Arpaio was criticized by the state auditor general after New Times found that he had abused a little-known source of state money, the Jail Enhancement Fund. Claiming that the fund was not taxpayer money, Arpaio used it to pay $39,350 for a private attorney in a constitutionalist lawsuit against the county and $11,969 for videotapes of his own television appearances. The auditor general reported that not only was the fund taxpayer money, but Arpaio had misused a total of $122,419. Despite its discovery of that malfeasance, the state did nothing more than send Arpaio a strongly worded letter.
New Times recently asked for records of what Arpaio has been doing with the fund in the time since that slap on the wrist.
Arpaio's answer: He's not telling. Arguing that the state itself requires only a yearly accounting of the fund broken down into vague categories, Arpaio employee Jack MacIntyre claimed that records of individual expenditures aren't being kept and can't be turned over.
In other words, Sheriff Arpaio spent $706,988 in fiscal 1997-98 on what he believes to be enhancements to the county jails, broken down into broad categories such as advertising, automobile leases, computer software, seminars and "other," but he claims to have no records more detailed to determine which checks were written for what purpose.
Sheriff Arpaio continues, however, to claim to national and international press--which he knows doesn't generally have the time or patience to ask for such records--that he has an "open-door policy" and that he invites scrutiny into what goes on in his office.
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That theory is not only being tested by the local press but by some of Arpaio's own employees.
Ken Gerberry, secretary-treasurer of the Maricopa County Deputies Association, says that his organization, which represents about 350 of Arpaio's deputies and detention officers, is a step away from filing a lawsuit to force Arpaio to turn over financial records.
Gerberry and the Deputies Association's attorney, Rachel Bacalzo, have already sent letters to Arpaio requesting that he turn over various records, including expenditures from the Jail Enhancement Fund.
Gerberry says this week the organization is sending one more letter to the embattled sheriff. "If he fails to respond to us in a reasonable time, we'll file a lawsuit to get that information," says Gerberry.