Robert Anglen

The Republic | azcentral.com

Federal authorities have launched a probe of Pinal County's top two former law enforcement officials and whether they inappropriately used profits from seized property for personal and professional expenses.

County officials confirmed they are cooperating with FBI inquiries into former Pinal County Sheriff Paul Babeu and County Attorney Lando Voyles over the use of funds from suspects' confiscated possessions.

Newly elected Pinal County Attorney Kent Volkmer said he also has asked the Arizona auditor general to review Pinal County's asset-forfeiture records to determine if monies were properly used. He asked the auditor general to recommend the best way to use those funds.

Volkmer said he and newly elected Sheriff Mark Lamb, who took office in January, have agreed to work with investigative agencies in an attempt to restore "transparency and trust" in Pinal County.

"Both the sheriff and I have been talking to the FBI," Volkmer told The Arizona Republic, adding: "I want the professionals to come in, do their jobs, and report back to me."

FBI agents conducted an informal search of the Pinal County Sheriff's Office last week, taking items related to Babeu and his administration. Agents also approached the County Attorney's Office about financial records kept by Voyles, who oversaw and approved expenditures of the funds.

"This was not an official search; no warrant was issued," Pinal County Sheriff's Office spokeswoman Navideh Forghani said Tuesday. "We can't comment on what was taken because we don't want to jeopardize the FBI inquiry. The FBI is looking into something and we don't want to say anything that could affect that case."

Forghani said Lamb was approached by FBI agents recently about several items used by Babeu and his administration.

"FBI agents asked (Lamb) if he had things belonging to the last administration and if they could have them," Forghani said. "We allowed them to come and collect those items."

Babeu did not respond to interview requests about the FBI inquiry. Voyles could not be reached for comment. Both left office in January.

Babeu, a Republican who made border security a top issue in his two losing attempts to win a seat in Congress, has been mentioned as a potential candidate to lead the U.S. Customs and Border Protection agency in the Trump administration.

The FBI declined comment Tuesday.

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Volkmer said federal authorities are specifically seeking information related to asset seizures, or so-called RICO funds.

"It is about RICO funds and how those disbursements were made," he said. "The FBI is going to allow the auditor general to conduct its audit and work directly with (it)."

RICO refers to anti-racketeering laws that give authorities wide latitude to seize assets in criminal cases — even if charges are not filed —and then fund operations with the proceeds. Arizona's forfeiture laws direct proceeds into the coffers of the prosecutors and law-enforcement agencies involved in seizing the items.

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The FBI issued a subpoena last year to a non-profit agency that received hundreds of thousands of dollars in Pinal County RICO funds.

The Arizona Public Safety Foundation, which for years operated out of the sheriff's office and was staffed by sheriff's deputies, used RICO funds from Pinal County to help support sheriff's office activities and functions.

Foundation executive director Joseph Trasser on Tuesday declined to discuss the subpoena or the FBI investigation. He said the FBI probe of Babeu and Voyles "is not our issue."

The Goldwater Institute, a conservative fiscal watchdog group, raised concerns about the foundation last year and sought records to determine if Babeu was using it to bypass campaign finance laws and promote his 2016 congressional campaign.

2015 lawsuit alleged problems with foundation

Questions about the foundation also were raised in a 2015 federal lawsuit by attorneys from Perkins Coie and the American Civil Liberties Union. They contended the foundation operated as a pass-through for Babeu and Voyles.

"At a minimum, it seems that by funneling money to a private group which buys things for him and his department ... Babeu is able to avoid procurement laws and other transparency regulations which usually apply to government purchasing," the lawsuit stated.

The lawsuit said all but a fraction of the foundation's money came from Pinal County's RICO fund, and the money was used to buy items such as automatic weapons for deputies, supplies, police dogs, horses and feed.

Voyles' office reported to the Arizona Criminal Justice Commission that RICO funds sent to the foundation were used for a “Gang & Substance Abuse Prevention & Education Program," according to the lawsuit.

Non-profit tax forms show the foundation reported $278,000 in revenues in 2015. But scant details are available about where money was spent.

The foundation reported expenses totaling $374,000 in 2015, including $118,449 on "program supplies and equipment." The tax form shows the foundation provided no money or grants to any organizations or individuals. It did, however, spend $25,000 on travel, $67,000 on occupancy and $59,000 on advertising and promotion, all unspecified. Several portions of the 2015 tax form are blacked out.

In 2014, the foundation reported $744,000 in revenues and $274,191 in expenses.

Those expenses, according to the tax form, included thousands of dollars for motels, meals, travel and employee volunteer appreciation. It also spent $23,434 on K-9 training, $22,000 on the county attorney's advocacy center, $16,939 on shirts, uniforms and badges, $10,434 on an event called "shop with a sheriff," $7,628 on patrol and posse services and $4,026 on mounted-unit expenses.

The lawsuit accused Babeu and Voyles of exploiting Arizona's forfeiture laws, which provide little to no oversight on spending, plaintiff's attorneys said. Forfeiture laws, in general, created a multimillion-dollar "slush fund available to (law enforcement) with little or no oversight," the lawsuit said.

Forfeiture money paid for Voyles' personal security system, retirement contributions of employees in his office and fundraising for the sheriff's office, according to the lawsuit.

Perkins Coie lawyer Jean-Jacques Cabou said Tuesday he is glad federal authorities are looking into the way RICO funds were used by Babeu and Voyles.

Cabou said the lawsuit is ongoing. Voyles filed a motion to dismiss it in 2015, which the court has not yet ruled upon.

"It is certainly good that additional scrutiny is being leveled on what appears to be (questionable) spending of RICO funds," he said. "I stand by the allegations in the complaint."

Babeu was tapping RICO funds to pay for sheriff's office travel as early as 2011. Records show Babeu spent more than $53,000 to send 25 people to a weeklong conference in St. Louis where he received a national award.

Babeu defended the expense.

"Not one dime of taxpayer money was used for this incredible training opportunity," Babeu said in a statement. "I am proud that we used seized criminal money and jail enhancement funds to pay all expenses for training, travel and lodging."

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Sheriff Lamb has suspended his office''s relationship with the Arizona Public Safety Foundation. Spokeswoman Forghani said the sheriff is "evaluating every aspect" of how RICO funds were used.

"(Lamb) is not comfortable how RICO money was handled, and that is one of the things we are evaluating," she said.

Babeu left the office facing a budget crisis and staffing shortage, Forghani said. The sheriff is also trying to repair relationships with other Pinal County agencies as well as state and federal agencies that were at odds with Babeu.

"We have a whole new team here," Forghani said. "We are working around the clock to change things and make it better."

Volkmer described a similar situation at the County Attorney's Office. He said the county's financial records are a mess and in some cases don't appear to exist, particularly when it comes to RICO expenditures.

He said he has not reached out to Voyles or Babeu because he does not want to be called as a witness in the event authorities build a case. He said deferring to the auditor general and the federal authorities allows him to avoid a conflict of interest.

"I don't like the situation," Volkmer said. "Right now, it somewhat depends on what (investigators) find."