Arizona: Bribery and fraud indictment of former utility commission chair, larger investigation by feds

From Arizona Republic:

Roberts: Is a bombshell about to be dropped on Arizona’s power elite?

by Laurie Roberts
July 5, 2017

We now have public acknowledgement that the FBI is continuing its investigation, presumably into possible funny business involving the Arizona Corporation Commission.

It seems the case against former Commissioner Gary Pierce is small potatoes when viewed against the larger federal investigation under way.

Well, if charges that the then-chairman of the commission that regulates utilities took a bribe and committed fraud – with a powerful lobbyist who is a close friend of many of Arizona’s powers-that-be serving as a conduit– are small potatoes, then…


Look for who’s shaking in their shoes

Me? I’m wondering who in Arizona’s hallways of power are shaking in their Salvatore Ferragamos (or maybe their Manolo Blahniks?).

It’s long been known that the FBI was interviewing Pierce, among others, last summer. The agency at the time acknowledged that it was conducting “a long-term investigation related to the financing of certain statewide races in the 2014 election cycle.”

Many people in political circles thought the FBI investigation would go nowhere, given the players, once Donald Trump was elected president.

Then in May, Pierce, a Republican, was indicted, along with his wife, Sherry. Other indictees: Pinal County developer George Johnson and lobbyist Jim Norton, whose clients included the Arizona Chamber of Commerce and Industry and Arizona Public Service, a partner of “dark money” maestro Sean Noble and a friend of Gov. Doug Ducey since their days at Arizona State University.

The indictment alleges that then-Commissioner Pierce in 2011-12 led a successful drive both to raise rates for Johnson’s water and sewer company, Johnson Utilities, and to force utility customers to pick up the tab for income taxes owed by Johnson. This, after opposing both requests in 2010.

In return, the indictment says, Johnson via Norton handed over $31,000 to Pierce’s wife, Sherry, and was planning to buy Pierce a $350,000 piece of property.

Email confirms ‘much larger’ investigation

In the course of preparing a defense, the Pierces’ attorneys ran into a roadblock.

It seems the feds are refusing to provide any of the usual “discovery” material that prosecutors must supply to the defense – stuff like FBI reports and witness statements and financial and tax records “of third parties.” Prosecutors won’t turn over the goods unless the defense attorneys first agree to keep the stuff secret.

The facts that resulted in the indictment of your clients were discovered during a much larger and more intensive investigation,” Assistant U.S. Attorneys Fred Battista and Frank Galati wrote last month in an email to Pat Gitre, attorney for Gary Pierce, and Ashley Adams, attorney for Sherry Pierce. “Mr. Pierce, Mr. Norton and many others have been interviewed by the FBI concerning that larger investigation.”

ROBERTS: Is the Arizona Corporation Commission corrupt?

The prosecutors’ email came to light in court documents filed earlier this week. Gitre and Adams are asking a judge to force the feds to hand over the requested material. Prosecutors say that request could have “serious negative effects’’ on its larger case, should the information become public.

We do not want persons who are unrelated to this case getting their hands on evidence that the FBI has gathered in an on-going investigation,” Battista and Galati wrote.

Who shouldn’t see the information?

The question is: what persons?

Might those persons be at Arizona Public Service/Pinnacle West Capital Corp? Maybe CEO Don Brandt and/or certain of his top staffers?

The FBI investigation began shortly after a whistleblower/former aide to Pierce, claimed, among other things, that Pierce dined privately with Brandt or his predecessor 14 times while on the commission – seven of them while APS was seeking a rate hike.

Or might the investigation have to do with concerns that APS secretly poured $752,000 into an independent dark-money campaign for Justin Pierce, who was running for secretary of state in 2014? This, as some sort of thank-you gift to his term-limited father Gary, who frequently carried APS’s water while on the commission?

Or might it have to do with the widespread belief that APS secretly pumped $3.2 million into independent dark-money campaigns to get Republicans Tom Forese and Doug Little elected to the Corporation Commission in 2014? Then again, that, alone, wouldn’t be illegal – just ethically challenged.

ROBERTS: Corporation Commission rushes to defend APS (again)

Here’s what we know: the FBI has interviewed Pierce and Norton as part of its investigation. It has subpoenaed documents from the Corporation Commission and it has contacted officials at APS.

And now it has acknowledged that criminal charges of bribery and fraud against the then-chairman of the commission that sets your utility rates are just a piece of “a much larger and more intensive investigation.”



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