Arizona: Is the bribery trial of an ex-utility regulator just a warm-up?

The Arizona Corporation Commission is that state’s utility regulatory commission. Supposedly.

From Arizona Central

by Laurie Roberts
May 30, 2018

Let the warm-up show begin.

If, in fact, you call the bribery and fraud trial of a former corporation commissioner, a Pinal County developer and a powerhouse lobbyist a warm up.

As for the main event – possible funny business involving a certain utility out to curry favor with utility regulators — we are still waiting.

For now, we are left to watch the curious case of former Corporation Commission Chairman Gary Pierce who prosecutors say sold out his reputation – and his vote – for $31,000 and the promise of a piece of land.

A brazen scheme to defraud

Pierce and his wife Sherry are on trial along with developer George Johnson and lobbyist Jim Norton, all charged in a brazen scheme to defraud Arizona ratepayers.

According to the federal indictment, 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 Johnson’s income taxes. This, after opposing both requests in 2010.

In return, prosecutors say Johnson via Norton handed over $31,000 to Pierce’s wife and was planning to buy Pierce a $350,000 piece of property. Norton is a well-connected lobbyist who has represented many of the state’s power players, including Arizona Public Service.

Everybody involved has claimed their innocence.

Here’s the most interesting part of the case: the U.S. Attorney’s Office last summer acknowledged that it stumbling across the bribery case while working a larger investigation.

“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 summer in an email to the attorneys for the Pierces. “Mr. Pierce, Mr. Norton and many others have been interviewed by the FBI concerning that larger investigation.”

This week, Battista disclosed in court that both Pierce and Norton were offered plea deals if they cooperated in other potential criminal matters. For Pierce, it was the chance to plead guilty to a single felony and get probation. For Norton, it was the possibility of all charges being dropped if he provided “extraordinary” help. Both declined.

The question is, what is that other potential criminal matter?

What are we waiting for?

Three possibilities come to mind:

1.   The FBI investigation began shortly after a former aide to Pierce blew the whistle on his activities, claiming, among other things, that Pierce dined privately with Arizona Public Service CEO Don Brandt or his predecessor 14 times while on the commission. Of those 14 private tête-à-têtes, seven came while APS was asking for a rate hike.

“I knew this because I was asked to arrange most of the covert meetings,” the whistleblower wrote in his 2015 complaint.

2.   It’s widely believed that APS secretly poured $752,000 into an independent dark-money campaign for Pierce’s son, Justin, who was running for secretary of state in 2014.

This, as some sort of thank-you gift to Commissioner Pierce, who was term limited and couldn’t seek re-election in 2014. While on the commission, Gary Pierce often carried water for APS. The previous year, it was Pierce who led the move to suddenly shelve discussion of electric deregulation, eliminating a major threat to APS.

3.   There is also a widespread belief that APS secretly pumped $3.2 million into dark-money campaigns to get Republicans Tom Forese and Doug Little elected to the Corporation Commission in 2014.

After joining the five-person commission, Forese and Little (who has since resigned to take a job in the Trump administration) became reliable supporters of APS.

They approved APS’ request to raise its rates and opposed Commissioner Bob Burns’ dogged efforts to get APS and its parent company, Pinnacle West Capital Corp., to open their books to determine whether the regulators owe their seats to the utility.

Then again, that wouldn’t be illegal – just sneaky and ethically questionable.

It does seem likely that whatever investigation is under way involves the state’s largest utility.

This is definitely a ‘long-term investigation’

In 2016, the FBI confirmed that it was conducting “a long-term investigation related to the financing of certain statewide races in the 2014 election cycle.” As part of that investigation, FBI agents contacted Gary Pierce and subpoenaed documents from both the Corporation Commission and Pinnacle West.

As I said, we don’t yet know what the FBI is investigating.

But if charges that a state official took a bribe – with a powerful lobbyist who is a close friend of many of Arizona’s powers-that-be serving as a conduit – are the warm-up show, then …

Reach Roberts at laurie.roberts@arizonarepublic.com.

MORE FROM ROBERTS:

https://www.azcentral.com/story/opinion/op-ed/laurieroberts/2018/05/30/bribery-trial-ex-utility-regulator-just-warm-up-show/653830002/

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