Story highlights The two sides had been in the midst of settlement talks

The Justice Department wanted Arpaio to allow an independent monitor

Arpaio: "This will not happen, not on my watch!"

The government alleges the sheriff's office has committed constitutional violations

The Justice Department is preparing to sue Arizona Sheriff Joe Arpaio, known internationally as "America's toughest sheriff," saying talks between the two sides have fallen through.

The Obama administration and Arpaio's Maricopa County Sheriff's Office had been in the midst of settlement talks, after the Justice Department accused it of systematically discriminating against Latinos.

As part of the settlement, the department wanted Arpaio to allow an independent monitor to oversee reforms at his office. The Justice Department called it a "key, non-negotiable requirement."

The two sides were scheduled to meet Wednesday, but Arpaio called off the meeting at the last minute, the Justice Department said.

"We believe that you are wasting time and not negotiating in good faith," said Deputy Assistant Attorney General Roy Austin Jr. in a letter to Arpaio's legal counsel.

JUST WATCHED Arpaio: Obama documents probably forged Replay More Videos ... MUST WATCH Arpaio: Obama documents probably forged 01:16

JUST WATCHED A conversation with Sheriff Joe Arpaio Replay More Videos ... MUST WATCH A conversation with Sheriff Joe Arpaio 04:45

It added: "MCSO's refusal to engage in good faith negotiations requires us to prepare for civil action."

Arpaio shot back, saying he would not "surrender" his officer to the federal government.

"Appointment of an outside monitor essentially usurps the powers and duties of an elected Sheriff and transfers them to a person or group of persons selected by the federal government," he said in a statement Tuesday.

"And so to the Obama administration, who is attempting to strong arm me into submission only for its political gain, I say, 'This will not happen, not on my watch!'"

A federal Department of Justice investigation into Arpaio's office made public in December described "a pervasive culture of discriminatory bias against Latinos at MCSO that reaches the highest levels of the agency."

Arpaio dismissed the allegations as a politically-driven "witch hunt."

He pointed out how President Barack Obama opposed Arizona's controversial anti-immigration law and how the president mentioned Arpaio as the person pushing the law, the sheriff said.

"By the way, I don't want to say it's all politics, but everyone I'm talking about happens to be Democrats," said Arpaio, a Republican.

Arpaio added: "Don't come to use me as a whipping boy for a national, international problem."

The 22-page Justice Department letter alleged the Maricopa County Sheriff's Office committed federal and constitutional violations.

Detention officers in Arpaio's jail invoked offensive slurs and profanities against Hispanics, calling them "wetbacks," "Mexican bitches," and "stupid Mexicans," the letter said.

"Sheriff Arpaio's own actions have helped nurture MCSO's culture of bias," said the letter, written to the Maricopa County attorney.

For example, the sheriff apparently endorsed one constituent's letter asking for a "round-up" at one Phoenix street corner of "dark-skin(ned)" people: Arpaio told a member of his command staff in a note to "(h)ave someone handle this," the Justice Department said.

Jack MacIntyre, Arpaio's deputy chief, described the Justice Department's allegations as "a sneak attack by the federal government on the citizens of Arizona."

The Justice Department also said it is reviewing allegations that the sheriff's office did not investigate " a large number of sex crimes. "

The sheriff's office has acknowledged to federal authorities that 432 cases of sexual assault and child molestation were not properly investigated over a three-year period ending in 2007, and many of the victims apparently were Latinos, the Justice Department said.

The federal findings also alleged discriminatory policing practices by Arpaio's officers including "unlawful stops, detentions and arrests of Latinos," according to a Justice Department statement.

It also noted that the sheriff's office has discriminated against "Latino inmates with limited English by punishing them and denying critical services."

It further blamed the office for allowing "specialized units to engage in unconstitutional practices" and for a lack of oversight and deputy training.

The initial federal inquiry began in June 2008 and reviewed tens of thousands of pages of documents and more than 400 interviews, including current and former inmates as well as office personnel.

Authorities notified the sheriff's office of a formal investigation a year later, a statement said.

Assistant Attorney General Thomas Perez said the sheriff's office initially failed to cooperate with investigators, prompting federal authorities to take the "virtually unprecedented step" of filing a lawsuit in 2010.

He noted the investigation had uncovered startling levels of racial profiling against Latino drivers, ranging between four and nine times higher than against non-Latino motorists.

Perez added that an independent reviewer involved in the probe described it as "the most egregious racial profiling in the United States" he had ever seen.