A federal grand jury is investigating how the Pinal County Sheriff’s Office handled profits from seized property under former Sheriff Paul Babeu.

Newly elected Sheriff Mark Lamb was ordered by subpoena to deliver records to the grand jury “evidencing misuse of county, state or federal RICO funds by Pinal County Sheriff’s Office employees.”

The subpoena seeks eight years of files, spreadsheets, accounting documents, emails and any other internal records concerning RICO funds from 2008 to 2016, when Babeu was in office.

The grand jury probe is a criminal investigation, according to a letter from Elizabeth Strange, the acting U.S. attorney for Arizona.

The subpoena comes on the heels of an FBI probe of Babeu and former Pinal County Attorney Lando Voyles and whether they inappropriately used profits from seized property for personal and professional expenses.

The federal grand jury also asked for documents involving funds that were provided to the Arizona Public Safety Foundation, a non-profit agency that received hundreds of thousands of dollars in Pinal County RICO funds.

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.

New sheriff has turned over records

County officials have confirmed they are cooperating with federal investigators.

The subpoena, obtained by The Arizona Republic through a public records request, was issued in the spring and ordered Lamb to provide the RICO documents before September.

Pinal County Sheriff’s Office spokeswoman Navideh Forghani said Friday that the sheriff already has complied with the demand and has turned over the records.

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.

FBI agents conducted an informal search of the Pinal County Sheriff's Office in March, 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.

Babeu is a Republican who made border security a top issue in his two losing attempts to win a seat in Congress.

Babeu and Voyles this month demanded an apology from Volkmer, saying he unfairly maligned them and subjected them to “disparaging statements” over the use of RICO funds.

Attorneys for Babeu, Voyles and his former chief of staff, Dwight Fujimoto, accused Volkmer of making false claims. They said he accused them of criminal conduct.

Voyles said any suggestion that he and Babeu did something unethical or illegal is “unfounded.”

Voyles maintained that he implemented proper controls to ensure RICO funds were not misspent and pointed to audits conducted by the county, the Arizona Attorney General’s Office and the Arizona Criminal Justice Commission. He said none of the audits found problems.

A history of investigations

Babeu's and Voyles’ use of RICO funds has been questioned for years in lawsuits and investigations.

The FBI issued a subpoena last year to the Arizona Public Safety Foundation, which for years operated out of the Sheriff's Office and was staffed by sheriff's deputies. The foundation used RICO funds from Pinal County to help support Sheriff's Office activities and functions.

Foundation Executive Director Joseph Trasser has declined to discuss the subpoena and in March said the FBI probe of Babeu and Voyles "is not our issue."

The Goldwater Institute, a conservative 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.

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 funds for Babeu and Voyles.

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.

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 at which he received a national award.

"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.

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, according to the lawsuit.

Lamb to change RICO spending process

Lamb said this month that he is reviewing every aspect of RICO expenditures before releasing funds and wants to create a new approval and review process.

He said his own review of RICO funds indicated past requests were made in round numbers and did not require itemization. He said requests did not appear to be made for specific dollar amounts and no system appeared to be in place to review where the money went.

Lamb said he wants to release RICO funds quarterly and that he will require recipients to submit a breakdown of expenses, which will be reviewed by a committee before a request is approved.

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