Yvonne Wingett Sanchez

The Republic | azcentral.com

Elections officials have concluded it is likely Arizona Attorney General Tom Horne violated campaign-finance laws and say the allegations of wrongdoing by a former employee warrant further investigation.

The Secretary of State's Office determined Horne failed to report as in-kind campaign contributions the time Attorney General's Office employees spent working on his reelection campaign.

The Secretary of State's Office reviewed the accusations, submitted May 12 by Sarah Beattie, and Horne's subsequent response. Beattie alleged the Attorney General's Office has doubled as Horne's campaign headquarters, with top staff working on state time to raise money for Horne's re-election, plan campaign events and discuss talking points to deploy against his challengers.

After completing their analysis, elections officials forwarded a reasonable cause letter Wednesday morning to Solicitor General Robert Ellman informing him their findings.

Ellman reports to Horne, but since Horne is a target of the probe the attorney general is not informed of developments in the investigation.

Stephanie Grisham, speaking on behalf of the Solicitor General's Office said Ellman will now select an outside entity to examine Beattie's allegations.

"Because of a clear conflict of interest, the Attorney General and Executive staff have been walled off from any decisions as to who will be leading the investigation due to the Reasonable Cause Letter issued by the Secretary of State," Grisham said in a written statement. "No one in the Executive Office has knowledge or input into the agency or firm that will be tasked with this investigation."

The Secretary of State's eight-page reasonable cause letter states that officials only examined allegations within their jurisdiction as overseers of the state's elections, but "support efforts for the proper authorities to fully investigate all the allegations."

Elections officials concluded that Horne's executive staff were not volunteering for his campaign, but "instead were being compensated by the State of Arizona while conducing campaign activities for Mr. Horne." The letter states Horne presented no evidence to support his claim that staff implemented or followed state law or guidelines laid out in an attorney general memo to prevent campaign activities from occurring during work hours.

"Since the campaign activities are not volunteer hours, they are no longer exempt from the contribution definition," the letter states. "These non-monetary services are in-kind contributions and Mr. Horne has not reported these in-kind contributions in ... campaign finance reporters."

The reasonable cause letter cities heavily from Beattie's complaint to support its finding.

A statement from Horne provided to the Republic through Grisham in her role as spokeswoman of the attorney general, said he expects to be completely vindicated. He stated he has instructed his staff to cooperate with the new investigation.

"These allegations are brought by a woman who has a history of making claims when she leaves employers," the statement said. "I have filed 11 witness statements indicating there is nothing to these allegations. I therefore look forward to this investigation being a complete vindication."

The statement said an internal investigation into Horne and his staff is being terminated "as there is no reason to have two investigations at the same time." Horne's Chief Deputy had selected two attorneys -- and Horne donors -- to conduct that investigation. The Attorney General's Office did not plan on making the results of that investigation public.

Horne has previously denied all of Beattie's allegations, saying any significant campaign work by employees was done off state time. He has also said Beattie is targeting him for political purposes.

Beattie told The Arizona Republic Wednesday that she is not surprised by the Secretary of State's finding. "Everything I turned in is valid and true and backed up," she said.

It is unclear who Ellman will select to oversee an investigation of Horne. Typically, a law enforcement agency is selected.

The new inquiry comes as Horne is in a fight for his political career, facing primary challenger Mark Brnovich for the Republican Party's nomination, and just three weeks before early ballots will arrive in voters' mailboxes.

Beattie's affidavit and its accompanying exhibits, including e-mails, calendars and metadata such as time-stamps on cellphone photos, paint a portrait of an attorney general and executive staff openly working on his re-election efforts from the Capitol, with no regard to state laws banning politicking on state time.

Horne and his staff directed others to do campaign work on state time, Beattie said. Named in her complaint are Margaret Dugan, Horne's chief of staff, Vanessa Deatherage who works in community outreach, Brett Mecum, the office's legislative liaison, former policy adviser Garrett Archer, Kathleen Winn, director of community outreach and Debra Scortado, Horne's executive assistant.

Beattie provided examples in her complaint of illegal activity.

For example, she stated, during work hours Horne, Mecum, Archer and Beattie discussed the best location for a Horne fundraiser with the former Virginia attorney general; Horne reviewed a list of donors and he, Mecum and Beattie called potential donors. Horne called Donald Tapia, a donor, and asked him to host the event. Staff then prepared an event flier and sent it to most executive office members for review and editing.

Horne's office said two employees recalled that Beattie borrowed Mecum's laptop to draft the flier.

Beattie's complaint also states Horne kept a white binder, deliberately mislabeled "BORDER PATROL," that contained his fundraising activities, which occurred inside and outside of the office on state time. Beattie said Horne used the binder "daily" to solicit donations in his office, using his private cell phone.

Horne's office said the notebook was stored at the office, but was not used there.

Beattie's attorney, Tom Ryan, gave the binder to the FBI, which also interviewed Beattie. That notebook has been given to the Maricopa County Attorney's Office, which will not confirm or deny that it is separately investigating Beattie's allegations. A top county investigator attended a recent Clean Elections Commission meeting, where the commission discussed and voted to move forward with an investigation of its own into Horne and staff.

Horne is challenging the commission's authority to investigate him; a court hearing is set for Friday.

Separately, Yavapai County Attorney Sheila Polk is pursuing another campaign-finance case against Horne, stemming from Horne's 2010 run for office.

An administrative judge earlier this year concluded there was not enough evidence to prove Horne illegally coordinated with an independent expenditure committee during the race.

Polk disagreed and the case is now in Superior Court.