Arizona Attorney General Terry Goddard Arizona Attorney General’s Office | | 1275 West Washington Street Phoenix, Arizona 85007 602.542.5025 | | | 400 West Congress South Building, Suite 315 Tucson, Arizona 85701 520.628.6504 | Outside the Phoenix or Tucson metro area 800.352.8431 www.azag.gov 2010 Annual Report Message from Attorney General Terry Goddard I am proud to present the Office highlights from a very productive 2010 fiscal year included: lenders, alleging deceptive business and Attorney General’s Office • A $94 million settlement with Western Union. This historic recovery will debt collection practices. provide substantial resources for law enforcement agencies in the four • Effective efforts to stop deceptive 2010 Annual Report. This Southwest border states to combat illegal activity along the U.S.-Mexico advertising and marketing. Cases report shows the scope border. The agreement also will give law enforcement ongoing data on included a $12 million settlement with money transactions to help disrupt the flow of funds to the Mexican drug and depth of the work LifeLock, Inc., of Tempe, resolving cartels. The settlement resolved seven years of litigation over money allegations that the company overstated the effectiveness of its identity of this Office and its transfers, some of which were used for criminal purposes. theft protections, a $175,000 settlement with a Tucson company over talented staff during the fiscal year July 1, 2009 through June 30, 2010. • An aggressive campaign against mortgage fraud and predatory lending. With Arizona hard hit by foreclosures and loan defaults, our Office developed a multi-pronged strategy to fight predatory lending practices deceptive marketing of nutritional supplements, and a pair of deceptive advertising settlements with auto dealers. • Dismantling two major drug-trafficking organizations. Operation Vaqueros and scams. We worked to stop deceptive marketing of mortgages, led to the indictment of 39 people and brought down a Mexican drug- deceptive practices of servicing loans and fraudulent “mortgage rescue” smuggling organization that moved at least 40,000 pounds of marijuana scams. We’ve also sought to educate homeowners about how to avoid through southern Arizona. Operation Los Tusa led to 21 indictments and scams and how to work with lenders to avoid foreclosure. knocked out a violent organization that smuggled thousands of pounds of • A crucial agreement to protect Luke Air Force Base. Our Office played the leading role in gaining a settlement with the Maricopa County Board of Supervisors to resolve a two-year legal fight over residential encroachment near the base. The settlement greatly improved Luke’s chances of being chosen as a training site for the F-35, the next generation of Air Force fighter jets. • Ending high-interest payday loans in Arizona. Our Office worked to ensure that the State’s payday loan law “sunset” as scheduled on June 30. We created an Operation Sunset Enforcement Team to make marijuana from Mexico into Pinal County. • Several major recoveries from international drug companies, including a $33 million deceptive marketing settlement with Pfizer, Inc. • The highest award given by the National Association of Attorneys General. I received the Kelley-Wyman Award, the association’s highest honor, this past June. The award is a clear reflection of the excellent work done by the hard-working attorneys and staff in our Office. It is an honor to serve as your Attorney General. sure payday loans, with annual interest rates of 400 percent or more, were no longer marketed. We also filed a lawsuit seeking $5 million in restitution against Quik Cash, one of the nation’s largest payday A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 2 2010 Arizona Attorney General’s Annual Report Table of Contents About the Attorney General’s Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Office Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-12 Historic settlement with Western Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A Major Assault On Mortgage Fraud . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Agreement Bolsters Luke’s Bid for F-35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 Costly Payday Loans Ride into the Sunset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Taking Action to Stop Deceptive Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Pair of Drug-Trafficking Organizations Dismantled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 High-Dollar Settlements With Drug Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Goddard Receives Top NAAG Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Working Hard to Cope With Large Staff Cuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Producing Money for the State. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Criminal Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Public Advocacy Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Child and Family Protection Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Civil Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Civil Rights Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Solicitor General’s Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Finance Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 Employee Services Division . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 3 About the Attorney General’s Office Attorney General serves as Arizona’s chief legal officer. The Attorney General oversees the Office’s seven divisions: Criminal, Civil, Civil Rights, Public Advocacy, Child and Family Protection, Solicitor General and Finance. The Attorney General’s criminal jurisdiction for the most part is limited to complex crimes that have statewide significance, while the State’s 15 County Attorneys have primary jurisdiction to prosecute violent crimes. However, the Attorney General’s Office handles all Attorney General Terry felony appeals, even if the Goddard’s management team crime was prosecuted by one is led by Chief of Staff Terry of the County Attorneys. Fenzl and Chief Deputy Tim Nelson, who returned to the Attorney General’s Office near the start of the fiscal year after having served as General Counsel to former Governor Janet Napolitano. On the civil side, the Office provides comprehensive legal services for its many clients across state government. For example, the Office is committed by statute to representing more than 150 The Office handles a variety state agencies, boards and of criminal cases that involve commissions. organized crime, complex financial frauds, drugs, human smuggling, identity theft, public corruption, money laundering, illegal enterprises, computer crimes and criminal appeals. Attorney General Terry Goddard with Chief Deputy Tim Nelson (left) and Chief of Staff Terry Fenzl (right). Meeting Law and Civil Rights Office also brings actions to During this challenging Laws. Additionally, the Office collect taxes and debts owed economic time, the Office acts in conjunction with its to the State. has maximized operational agency clients to pursue The Office also enforces a violations of various laws and wide variety of civil statutes, regulations, including those including Arizona’s Consumer affecting child welfare, the Fraud Act, Antitrust Act, Open environment, state elections and professional licensing. The Finally, the Office defends the State, its employees, and its agencies when they are sued for damages. efficiently and costeffectiveness, while bearing in mind our statutory, ethical and professional duty to represent the State and protect its people as effectively as possible. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 4 Office Highlights Historic settlement with Western Union Arizona Attorney General’s Office, After seven years of legal battles Arizona Department of Public with Western Union over its Safety and U.S. Department money transfers, some of which of Homeland Security. This were used to facilitate human- prestigious award honors smuggling and other illegal exceptional collaborations of law activity, a $94 million settlement enforcement agencies working to was reached in February. The combat organized crime nationally ground-breaking agreement and internationally. Phoenix Police Department, enforcement agencies in Arizona, Key players in gaining the Western Union settlement included, from left, Assistant AG Alex Mahon, Chief Deputy Tim Nelson, Financial Remedies Section Chief Steve Lepley, Attorney General Terry Goddard, Senior Litigator Cameron Holmes, Criminal Division Chief Don Conrad and Paralegal Carol Keppler. Goddard is holding the “Outstanding Financial Investigative Effort Award.” California, New Mexico and Texas the largest provider of money up of 10-12 prosecutors and stronger federal efforts to reduce to combat illegal activity along the transfers in the nation. investigators. It will work with the the flow of cash to the cartels and U.S. Department of Homeland fight human smuggling. provides a $50 million fund for law U.S.-Mexico border. The agreement also will give law In June, grant applications Security, using state-of-the-art A Major Assault On Mortgage Fraud Our Office developed a multipart strategy to fight predatory lending practices and scams The Arizona Financial Crimes Task that have hurt homeowners. Force received the “Outstanding With Arizona among the states Arizona’s pioneering work in Financial Investigative Effort hardest hit by the mortgage new initiatives that will increase tracking and disrupting money Award” on April 8, 2010 from the meltdown, we worked to stop the drug cartels. Intercepting the border security. The settlement transfers was highlighted in a federal Office of National Drug predatory lending, deceptive illicit transfer of money to the specifically set up a $50 million report by the U.S. Government Control Policy and High Intensity practices in servicing loans and cartels is a key strategy to weaken fund for these projects. Money Accountability Office (GAO). The Drug Trafficking Area program fraudulent “mortgage rescue” the Mexico-based cartels, which from the agreement will also report commends the investigative for its efforts leading to the $94 scams. control most drug-smuggling finance the new Border Crime tools developed by the Arizona million settlement. and illegal immigration into the Enforcement actions included Prosecution Team of the Arizona Attorney General’s Office and United States. Western Union is three dozen investigations, 12 Attorney General’s Office. Based recommends them as a model for The Task Force is a cooperative organization made up of the cases referred for possible were sent to law enforcement enforcement ongoing data on agencies in the four southwest money transactions, which will border states to help pay for help disrupt the flow of funds to in Tucson, the unit will be made intelligence to fight border crimes. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 5 Office Highlights (continued) Attorney General Goddard speaks at conclusion of a mortgage fraud meeting in Phoenix. Behind him are U.S. Attorney Dennis Burke and U.S. Attorney General Eric Holder. At a March meeting in Phoe- hiring of counselors and staff nix, Attorney General Goddard to provide free assistance to Agreement Bolsters Luke’s Bid for F-35 and U.S. Attorney General Eric homeowners at risk of losing After a two-year legal fight Holder pledged an intensified their homes. against residential encroachment fight to prevent, prosecute The Office also organized near Luke Air Force Base, and punish mortgage fraud in community forums that offered the Attorney General’s Office Arizona. Holder said Arizona information about fraudulent put together an out-of-court would receive an additional mortgage operators. The Attor- agreement with Maricopa County $1.7 million in federal funding ney General took part in a Uni- to resolve the dispute. The to support the effort. The Office vision call-in program to reach settlement significantly increased also joined with the U.S. Federal the Hispanic community, and Luke’s chances of being selected Trade Commission, U.S. Depart- a record number of 858 calls as a training site for the F-35, ment of Justice and 18 other were received. Outreach efforts the next generation of Air Force states in “Operation Loan Lies,” also included live webcasts to fighter jets. Luke contributes a nationwide crackdown against reach distressed homeowners more than $2 billion a year to deceptive mortgage practices. in rural parts of the State. the Arizona economy. criminal prosecution, a half- Glendale, which charged hom- dozen lawsuits, warning letters eowners a $3,195 upfront fee sent to 55 mortgage-related and made fraudulent claims of companies, and settlements a high success rate in modifying The Office stepped up its that produced millions of dollars mortgages. outreach efforts to educate in restitution and civil penal- In addition, our Office has been ties. They included a $540,000 examining the lending practices settlement with Taken Care of of several national financial in- Investments of Tempe, which stitutions to determine whether was accused of defrauding their origination or servicing some 270 Arizonans, and a practices violated the Arizona $580,000 settlement with Hope Consumer Fraud Act. for Homeowners Now, based in borrowers about how to avoid scams and how to work with lenders to avoid foreclosure. Using funds from a consumer fraud settlement, the Office gave a total of $1.3 million to 12 nonprofit housing counseling organizations in Arizona. The money will pay for the F-16s fly over Luke Air Force Base. An agreement to ensure adequate buffer zones around the base was brokered by the Attorney General’s Office. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 6 Office Highlights (continued) The Luke controversy goes lived, enabling the company to back to 2004 when the Arizona obtain a large number of default Legislature passed a law to judgments. Goddard said the ensure adequate buffer zones practice “made a mockery of around the State’s military Arizona’s Justice Court system.” bases. All local governments Taking Action to Stop Deceptive Advertising in Maricopa County followed the law except the county itself, which continued to issue High-interest payday loans are no longer legal in Arizona after the law “sunset” on June 30, 2010. One of the Office’s priorities health and safety of nearby Team to monitor compliance and Our Office opposed that effort, continues to be standing up for residents and strengthens Luke’s make sure payday loans were and Arizona joined the growing consumers by coming down on bid for the F-35. It shows what no longer marketed in Arizona. list of states outlawing this form companies that use deceptive can be accomplished when a Consumers were urged to report of high-interest lending. advertising and marketing tactics. When the county refused to commitment to serve the greater any violations to the Office. comply with the new law, our good prevails over political and Office filed a lawsuit to stop the policy differences.” residential building permits in areas with high accident and noise potential surrounding Luke. Six months earlier, the Office Cases this year included: The loans, with annual filed a lawsuit seeking $5 percentage rates of 400 percent million in restitution against settlement with LifeLock, Inc., Costly Payday Loans Ride into the Sunset or more, became legal in Arizona Quik Cash, one of the nation’s of Tempe, resolving allegations in 2000. Voters overwhelming largest payday lenders with that the company overstated Despite strong lobbying efforts rejected a ballot initiative in nearly 600 stores across the the effectiveness of its to extend the state law allowing 2008 to extend the payday loan country, alleging a pattern identity theft protections. The Goddard, who has been a high-interest payday loans, exception to the legal interest of deceptive business and agreement was reached with leading advocate for maintaining the Office worked hard at the rate maximums beyond 2010, debt collection practices. The 35 states and the Federal Trade Luke’s premier status for Air Legislature to make sure the law but the industry lobbied the suit accused the company of Commission. LifeLock was Force pilot training, hailed the “sunset” as scheduled on June legislative for a bill that would engaging in deceptive litigation accused of making a number agreement as “a major victory 30. The Consumer Protection override the will of the voters. tactics by suing consumers in of deceptive advertising claims for the citizens of Arizona. It Division then set up the courts distant from where they that encouraged customers to upholds state law, protects the Operation Sunset Enforcement encroachment. The court ruled in the State’s favor on nearly every point in the suit, which helped bring about the settlement. • A $12 million, multi-state A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 7 Office Highlights (continued) believe that its $10-a-month company also falsely informed service was a “proven solution” consumers they could cancel that would protect against all by simply calling a toll-free forms of identity theft, which phone number, when in fact was not true. LifeLock agreed consumers often could not get to pay $11 million in restitution through to a representative or to consumers and $1 million to were disconnected. cover the costs of the states’ investigation. • A $175,000 settlement with • A $100,000 settlement was reached with Avondale Automotive over deceptive Amir & Sanchez Nutraceuticals advertising and sales practices. of Tucson over deceptive The company was accused marketing of various of failing to sell specific nutritional supplements. The vehicles at advertised prices, advertising. More specifically, company used the Internet advertising vehicles that were to advertise “14-day risk- not available for sale, and free” trial offers of various Attorney General Goddard announces Operation Vaqueros, which dismantled a Mexican drug-smuggling organization, at a Tucson press conference. drug-smuggling organization the dealerships were accused Pair of Drug-Trafficking Organizations Dismantled of using contradictory and con- The Office stepped up the pounds of marijuana through using the Manufacturer’s fusing disclaimers in footnotes fight against border crime and southern Arizona, primarily in supplements, purportedly for Suggested Retail Price (MSRP) buried at the bottom of adver- played a key role in breaking Cochise County. Thirty-nine only a nominal cost for shipping as a reference price for used tisements, using misleading up two major drug-smuggling people were indicted. The and handling. But the offers vehicles. Violations were headlines that applied to only organizations. In both cases, our organization used advanced did not adequately disclose alleged from 2005 to 2009. one vehicle and falsely claiming Office partnered with federal, counter-surveillance equipment guaranteed credit approval in state and local law enforcement and ramp trucks to overcome reached with Steve Coury advertisements. Violations were agencies. fences and other border dealerships in Cottonwood and alleged from 2006 to 2008. material terms and conditions that rendered the trial offers far from “risk-free” and led to significant, unauthorized charges to consumers. The • A $95,000 settlement was Camp Verde over deceptive • Operation Vaqueros, a 36-month investigation brought down a Mexican that moved at least 40,000 barriers. The name “Vaqueros” refers to the cowboy attire worn by members of the group. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 8 Office Highlights (continued) accused of deceptive practices when it promoted Geodon for “off-label” uses not approved by the U.S. Food and Drug Administration. Pfizer agreed to change how it markets the drug and not promote any unapproved uses. Although physicians may prescribe drugs for off-label uses, federal law prohibits pharmaceutical companies from actively promoting their products for Bundles of marijuana and weapons seized in Operation Los Tusa are displayed at a press conference where Attorney General Goddard announces the takedown of a violent drug-smuggling organization. any off-label use. Geodon is the brand name for the One of those indicted was of pounds of marijuana individual walkers who carried an employee of the Cochise a year from Mexico into backpacks filled with 50 to High-Dollar Settlements With Drug Companies County Attorney’s Office, who Pinal County for at least 100 pounds of marijuana. Large, multi-state recoveries was accused of providing three years. Twenty-one Among those arrested was from international drug compa- Abbott Laboratories, Fournier confidential information to one people were indicted. The the man believed to be the nies included: Industrie et Sante, and of the drug traffickers. marijuana was distributed organization’s leader, Robert • A $33 million settlement with Laboratories Fournier over their from Pinal County stash Hernandez, 38, of Arizona City. Pfizer, Inc., regarding the efforts to block generic compe- houses to cities across the The case also resulted in the company’s improper market- tition for TriCor, a drug used to nation. The organization seizure of $418,000 in cash ing of Geodon, an antipsy- reduce high levels of triglycer- used both vehicles and and 21 vehicles. chotic drug. Pfizer was ides and cholesterol. The • Operation Los Tusa, a 10-month investigation, knocked out a violent organization believed to have smuggled thousands prescription drug ziprasidone. • A $22.5 million settlement with companies were accused of A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 9 Office Highlights (continued) cheaper, generically available and with Dey, Inc., and drug. Although the clinical related companies for trial ended in May 2006, a $250,000. Litigation against partial reporting of negative several other defendants in results did not come until the suit is ongoing. January 2008, and complete results were not published until the following April. Prior to the study’s release, Vytorin had been heavily promoted in direct-to-consumer advertiseHigh-dollar settlements were reached with several leading drug companies. thwarting competition by •A  $5.4 million settlement with ments. annual summer meeting. The award is given to the Attorney General who has done the most to advance the organization’s objectives. Goddard Receives Top NAAG Award Goddard was chosen in The National Association of together the Western Union Attorneys General (NAAG) settlement and his leadership presented Attorney General on several law enforcement Goddard with its highest honor, initiatives, including mortgage the Kelley-Wyman Award, at its fraud and fighting border crime. recognition of his work in putting • The Office continued to obtain making clinically insignificant Merck & Co., Schering-Plough significant settlements in the changes in the dosage and Corp. and MSP Singapore Average Wholesale Price form of TriCor in order to Co., over the companies’ long (AWP) lawsuit filed in 2005 maintain patents, engaging in delay in releasing negative against 42 drug companies. sham litigation over patents results from a clinical trial for The suit alleged deceptive they knew were invalid, and Vytorin, a cholesterol-lowering trade practices, including manipulating drug codes drug. In the study, Vytorin, a manipulation of prices of needed to facilitate generic combination of the drugs prescription drugs, causing substitution. As a result, Zetia and Simvastatin, was no buyers to overpay. Settle- pharmacists were not able to more effective reducing the ments were reached in the dispense less costly generic formation of plaque in carotid 2010 fiscal year with Bristol versions of TriCor. arteries than Simvastatin, a Meyers Squibb for $900,000 Terry Goddard receives the Kelley-Wyman Award from Jon Bruning (right), Attorney General of Nebraska and President of the National Association of Attorneys General. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 10 Office Highlights (continued) At the same time, the workload pat-on-the-back for the hard- Working Hard to Cope With Large Staff Cuts working men and women of Like many state agencies, the increased as a result of the the Arizona Attorney General’s Attorney General’s Office has growth of fraud and other crimes Office and our law enforcement been severely affected by the spawned by the economic partners,” Goddard said. Paul recession and state budget downturn. These layoffs have Charlton, former U.S. Attorney deficit. On two occasions, budget been painful for our Office, but for Arizona, was among many cuts imposed by the legislature the hard-working lawyers and law enforcement figures who forced staff reductions. In staff continue to do all they can congratulated Goddard. addition, when employees have to maintain their high quality retired or otherwise departed, of work while coping with their vacant positions often have workforce reductions. “This award is a welcome “AG Goddard very much deserves this prestigious award,” Charlton said. “Terry in many parts of the Office has not been filled to save dollars. has taken on the drug cartels, The combined impact on the human smugglers and border Office has been a decrease of crime in effective and creative almost 25 percent in the number ways. He is a thoughtful of employees since I took office prosecutor whose good work has in 2003. Going back nine years now been recognized nationally to FY2001, the Office has lost by his peers.” 32 percent, or nearly one-third, of its fulltime positions. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 11 Office Highlights (continued) Producing Money for the State. The Attorney General’s Office provides value to the State and citizens in many ways that are hard to measure financially – from breaking up criminal organizations to stopping deceptive business practices to protecting children from abuse. But each year the Office generates hundreds of millions of dollars in recoveries for the State and the public. For fiscal 2010, the total came to more than $170 million. The largest categories of money generated are listed on the right. The Office also has an excellent track record defending against high-dollar claims in liability lawsuits. Claims against the state last year totaled more than $1.87 billion, while only $4.68 million (less than one-quarter of Examples of how the Attorney General’s Office generated over $170 million for the State and the Public in 2010: $105.4 million from the diligent enforcement of the tobacco master settlement agreement $21 million from the settlement with Western Union $13 million in restitution for Arizona victims from complex financial and high technology crimes $12.4 million in delinquent receivables collected on behalf of State agencies $9.9 million in penalties from drug, money laundering, and other trafficking and racketeering enterprises $3.9 million in penalties and costs from antitrust and consumer litigation $1.7 million for environmental protection removal actions and penalties $1.14 million in penalties and costs for state boards $1.1 million recovered for Arizona consumers in response to complaints $0.8 million for victim relief and civil rights training and monitoring $0.8 million for equal employment opportunity and fair housing enforcement 1 percent) was paid to settle or discharge such claims. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 12 Criminal Division Division Summary The Criminal Division is made up of Capital Litigation, Criminal Appeals, Criminal Prosecutions, Financial Remedies, Special Investigations and Victim Services. Chief Counsel Don Conrad Mission: To protect the citizens of Criminal Prosecutions Section Mexico for offenses committed The Criminal Prosecutions The Drug and Violent Crimes Section consists of four units: Unit charged 621 criminal Arizona by successfully The Fraud Unit charged 519 investigating and criminal defendants with felony aggressively and fairly offenses including fraudulent prosecuting criminal schemes and artifices, illegal cases within the State of enterprise, participating in crim- Arizona. To promote and inal syndicates, money laun- facilitate safety, justice, healing and restitution for all of Arizona’s crime victims. To continue to effectively represent the State in capital and noncapital appeals filed by convicted felons. dering and numerous violent crimes. The cases of fraudulent schemes involved losses to victims in the millions of dollars. The unit assisted nearly 30,000 victims and obtained restitution in excess of $13,441,000. The Fraud Unit handled 43 foreign prosecutions, including many extraditions and prosecutions of Mexican citizens being tried in in Arizona. defendants. The Phoenix Drug Unit was involved in six wiretap Attorney General Terry Goddard is pictured with the FBI Phoenix Division’s Squad C-4 after they were presented with the Distinguished Service Award for Service Coordination. investigations which resulted in The Medicare Fraud Control departments and the Attorney three indictments charging 63 Unit received 128 allegations/ General’s Elder Abuse Project. defendants. The Tucson Drug complaints regarding fraud, Following preliminary inves- Unit was involved in one wiretap misuse of funds and patient tigation, 96 new cases were investigation. The Drug Unit also abuse in the Arizona Health- opened for full investigation. prosecuted cases involving the care Cost Containment System They included 84 fraud cases manufacture of methamphet- (AHCCCS) program. Of these, and 12 patient abuse/financial amine in clandestine laborato- a total of 108 fraud, 12 misuse exploitation cases. The Medic- ries. A number of these involved of funds, and eight abuse/ne- aid Fraud Control Unit recovered the presence of children, glect cases were investigated $1,298,253 for AHCCCS and resulting in the filing of child by the unit in conjunction with $358,090 in restitution for abuse charges against the meth the Arizona Department of victims. manufacturers. During this year, Health Services, Arizona Adult the Office opened cases involv- Protective Services, the AHC- ing 10 children endangered by CCS Administration, local police meth manufacture. The Criminal Prosecutions Section is also responsible for handling probation violation cases A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 13 Criminal Division (continued) throughout the year. This fiscal final and who are awaiting final commerce. FRS focuses primar- analysts. During the last fiscal 7,631 victims last year. The year the section prosecuted 89 resolution of that issue. ily on money laundering in drug year, SIS provided 1,943 assists Victims’ Rights Ombudsman and fraud cases. FRS supports in specialized areas of expertise received and investigated 283 statewide efforts to deprive to law enforcement agencies complaints of violations of rights racketeers of the profits that throughout Arizona. and audited 14 agencies. We defendants who had violated their terms of probation. Criminal Appeals/Capital Litigation Section The Section provides unique benefits to the State. By representing the State in all non-capital felony appeals, the Section maintains consistent The section works to uphold the and uniform positions regarding convictions and sentences of issues of criminal law, which al- criminal defendants in Arizona. lows for the orderly and consis- The section filed 781 briefs, tent development of criminal law habeas answers, petitions for in the state and federal courts. review, and responses to petitions for review, in addition to other substantive pleadings. Members of the section also provided education and training on a variety of criminal law and procedure issues to prosecutors throughout the state. The section also successfully litigated in The Capital Litigation Section keep them operating. During this fiscal year FRS seized approximately $8,212,861 in racketeering proceeds. Attorneys in FRS also advise and provide training to law enforcement statewide in the areas of supported 60 criminal justice Office of Victim Services The office provides services to victims of fraud, identity theft and other crimes. Advocates provided services to more than agencies with grants from the Victims’ Rights Program totaling $2,689,000 and provided 55 trainings in victims’ rights programs to more than 1,460 professionals statewide. forfeiture, money laundering and racketeering. handles all appellate and postconviction proceedings involving the 133 death-row inmates in Arizona. Financial Remedies Section Special Investigations Section The section provides investigative support to prosecutors across the Attorney General’s Office as well as to law enforce- state and federal courts on the The section enforces Arizona’s ment agencies throughout the question of whether Arizona’s civil racketeering remedies to State. SIS opened 297 inves- lethal injection protocol is con- combat the effects of organized tigations in the last fiscal year. stitutional. Arizona has several criminal conduct on legitimate SIS employs Special Agents who death-row inmates whose con- are state-certified peace officers victions and sentences are now as well as forensic auditors and Attorney General Terry Goddard presents the Honorable Judge Roland Steinle with the Distinguished Service Award for Innovative Practices during the 2010 Attorney General’s Crime Victims’ Rights Week Celebration. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 14 Criminal Division (continued) The office continues to serve as a leader statewide on victims’ issues. Activities included the Major Cases Criminal Appeals/Capital Litigation Section Victims’ Rights Week program Temple during the robbery. Doody was subsequently questioned by the police for about 13 hours and made some statements which included the Attorney Doody v. Schriro that tended to incriminate him General presenting his Distin- In 1991, Doody, then 17, and (though he denied any partici- guished Service Awards to six a 16-year-old friend robbed pation in the murders). Doody outstanding professionals and a Buddhist Temple west of Phoe- was convicted and sentenced to agencies in the criminal justice nix. Doody shot and killed seven nine consecutive life sentences. field. Buddhist monks, a nun, and an Following direct appeal, Doody older boy who worked at the filed a petition for writ of habeas corpus in federal district court that was denied. He then appealed to the Ninth Circuit. Attorney General Goddard presents Bobbi Sudberry with the Public Policy Distinguished Service Award for her work as a volunteer with the Arizona Coalition Against Domestic Violence and her work with “Kaity’s Law”. Attorney General Goddard recognizes Northland Family Help Center in Flagstaff for its service to victims of domestic violence and honors the 10-year anniversary of Haven for Advocacy and Learning Opportunities (H.A.L.O.) House Domestic Violence Shelter. With Goddard are, from left: Sonja Burkhalter, Northland Family Help Center Executive Director, Erin Callinan, Women’s Shelter Manager, and Dan Levey, Attorney General’s Office Victim Services Director. In November 2008, a three- conclusion, particularly in light a petition for writ of certiorari judge panel of the Ninth Circuit of the fact that it upheld Doody’s with the United States Supreme held that Doody was entitled to waiver of his Miranda rights. Court. The petition is currently a new trial because the Arizona In May 2009, the Ninth Circuit Court of Appeals’ holding that granted rehearing and the case Doody’s statements were volun- was argued to an 11-judge tary was an unreasonable ap- panel in June 2009. On Febru- State v. Landrigan plication of Supreme Court case ary 25, 2010, a majority of the law. In December, the section On December 15, 1989, Ches- panel, over a spirited three- filed a petition for rehearing en ter Dean Dyer was found dead judge dissent, held that Doody banc, asserting that the panel in his apartment by a co-worker was entitled to a new trial. On failed to give adequate defer- who went to Dyer’s residence May 25, 2010, the section filed after he failed to show up at ence to the state court’s legal pending and the Supreme Court will decide whether to take the case in October. work. Dyer died by strangula- A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 15 Criminal Division (continued) process. He subsequently chal- chair and began beating him finished, he woke Matzke and lenged Arizona’s lethal injection with their fists and a metal pipe. the two men strangled Swaney protocol in a petition for post- Cook also cut Cruz-Ramos with a bed sheet. Matzke plead conviction relief filed after the with a knife, sodomized him guilty to second-degree murder U.S. Supreme Court addressed and burned his genitals with and testified against Cook. the constitutionality of Ken- cigarettes. After several hours tucky’s lethal injection protocol of torture, Matzke and Cook in Baze v. Rees. The Maricopa crushed Cruz-Ramos’ throat County Superior Court upheld with the pipe. Arizona’s protocol, and in 2010 the Arizona Supreme Court denied Landrigan’s petition for review from that decision. The Todd Lawson, centered, received an award of appreciation from the U.S. Department of Education Office of Inspector General in recognition of his prosecution of their cases involving the use of stolen identities to obtain student loans. With Lawson are Jon Greenblatt and Natalie Forbort, from the Inspector General’s Office. State’s request for an execution warrant will be addressed by the Arizona Supreme Court in tion and he was found with an charges. He was wearing a September. electrical cord at the front of his shirt that belonged to the victim. State v. Cook throat. He also had lacerations Landrigan’s fingerprints were at about his face and puncture the crime scene and blood on wounds in his back. Dyer had his shoe matched blood from telephoned a friend at work two the victim’s shirt. days earlier to tell him he had talked someone named Jeff into coming to his apartment to have sexual relations. On December 20, 1989, police arrested Jeffrey Landrigan on unrelated Like Landrigan, following the denial of state and federal appeals, Cook challenged the constitutionality of Arizona’s lethal injec- When Kevin Swaney, another tion protocol in a post-conviction co-worker, arrived at the apart- proceeding in Mohave County. ment, Cook forced him upstairs The Mohave County Superior and showed him Cruz-Ramos’ Court rejected Cook’s claim, and body. Cook and Matzke then the Arizona Supreme Court will tied Swaney to a chair. Matzke address his petition for review in slept while Cook sodomized September 2010. Swaney. When Cook was Daniel Cook, John Matzke, and Carlos Cruz-Ramos worked at a restaurant in Lake Havasu City and shared an apartment. Landrigan’s appellate and On July 19, 1987, Cook stole post-conviction arguments were money from Cruz-Ramos. When rejected in state and federal Cruz-Ramos began searching courts during an 18-year appeal the apartment for the money, Cook and Matzke tied him to a AG Goddard announces the Western Union settlement at a Phoenix press conference. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 16 Criminal Division (continued) filing his eighth post-conviction relief petition challenging Arizona’s lethal injection protocol. (With other death row inmates, Beaty had also challenged the protocol in federal court. That civil case is pending before the Ninth Circuit.) In March 2010, the trial court dismissed Beaty’s eighth petition for post-conviction relief. Beaty has asked Money and guns were found in a home in Manlius, NY, as a result of a search warrant executed in cooperation between the Arizona Attorney General’s office and Manlius Police Department for a fraud investigation. Defendants Gordon and Majda Deibler were charged with fraud schemes, insurance fraud and theft. They had fled to New York and attempted to hide assets. Both Gordon Deibler and his wife pleaded guilty to felonies. Gordon Deibler was sentenced to five years in prison and ordered to pay more than $1 million in restitution. Majda Deibler was placed on probation. Bible v. Ryan rant of execution in the Arizona Tempe. Two days later, Donald His case was litigated for the Richard Bible was sentenced Supreme Court based on Bible’s Edward Beaty, the resident next two decades in the state to death for the kidnapping, exhaustion of his appeals. The maintenance manager for the and federal courts during which molestation and murder of a Court continued the motion complex, was arrested. On June time the trial judge died and the 9-year-old girl in Flagstaff in based on Bible’s last-minute 20, 1985, jurors convicted him victim’s parents aged waiting for 1988. After 17 years of litiga- request for DNA testing. of first-degree murder and finality. In 2009, for the third sexual assault. Judge Rufus C. time, the U.S. Supreme Court Coulter, Jr. sentenced Beaty to refused to review Beaty’s case. On May 9, 1984, 13-year-old death. The Arizona Supreme After DNA testing, the State re- Christy Ann Fornoff disappeared Court affirmed his convictions quested a warrant of execution. while collecting for her Phoenix and death sentence. The Arizona Supreme Court tion of Bible’s claims in state and federal court, the Ninth Circuit affirmed the district court’s denial of Bible’s habeas corpus petition. The U.S. Supreme Court denied Bible’s petition for certiorari. We requested a war- State v. Donald Edward Beaty Gazette newspaper route at denied the request after Beaty the Rock Point Apartments in responded that he would be the Arizona Supreme Court to review that decision. State v. Eric John King On December 27, 1989, shortly after midnight, Eric John King, recently released from prison, robbed a U-Totem convenience market at 48th Street and Broadway in Phoenix. He killed both Ron Barman, the store manager, and Richard Butts, the security guard. The robbery and murder of Ron Barman was captured on two video cameras. Jurors convicted him of two A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 17 Criminal Division (continued) counts of first-degree premedi- State v. Cayeros body was found in the desert; State v. Guillen aggravated assault, two counts tated murder. Judge Michael D. Johnny Daniel Cayeros was nearby was a shell casing identi- The case involved a canine sniff of endangerment, and violating Ryan, now on the Arizona Su- a gang leader in the Grant fied as having been fired from conducted on the exterior of a safety standard or regula- preme Court, sentenced King to Park neighborhood of South Spears’ gun. He was convicted Jose Guillen’s residence which tion that caused the death on death for each of the murders. Phoenix. In March 2001, he of murder and sentenced to uncovered the presence of an employee. The convictions The Arizona Supreme Court af- shot John Flores multiple times death. Spears raised 17 claims marijuana. The police searched arose out of an incident at a firmed his convictions and death with a shotgun. In addition to in his federal habeas petition. the residence after getting the sewage collection and treatment sentences. killing Flores, he injured two On September 14, 2009, the consent of his wife. The case facility owned and operated by For the next decade and half, other people, Ray Osuna and district court denied Spears’ presented an issue of first Far West in which two people the King case was appealed Mark Barehand. The State was requests for evidentiary develop- impression in Arizona, whether died and a third suffered serious through the state and federal unable to take the case to trial ment, denied all of his claims, the state right to privacy in the injuries after being overcome by courts. Finally in March 2009, until an additional eyewitness and dismissed the habeas circumstances of this case af- hydrogen sulfide gas. The court the U.S. Supreme Court declined came forward five years ago petition. The case is currently forded greater protections than also affirmed the convictions of to hear the case for the second and placed the shotgun in pending in the Ninth Circuit. the Fourth Amendment to the Brent Weidman, the president time. When the State moved Cayeros’ hands. The Court of Poyson v. Ryan U.S. Constitution. Ultimately the and chief executive officer of for Warrant of Execution shortly Appeals has not decided his State won the case because the Far West, on two counts of neg- afterwards, King responded that appeal. court found the wife’s consent ligent homicide and two counts he would file a post-conviction Robert Allen Poyson’s federal to have been valid. of endangerment arising out of Spears v. Ryan In 1991, Anthony Spears came habeas corpus petition. Poyson State v. Far West Water & to Arizona to visit Jeanette received three death sentences Sewer, Inc. State v. Soliz Beaulieu, who considered herself in connection with the brutal The Arizona Court of Appeals Article 2, Section 23 of the Spears’ girlfriend (although killings of Leta Kagen, Robert affirmed the convictions and Arizona Constitution requires Spears was actually living with Delahunt, and Roland Wear sentences of Far West Water that “juries in criminal cases in a woman in San Diego). Spears in 1996 in Mohave County. and Sewer, Inc., an Arizona Cor- which a sentence of imprison- returned to California with items Poyson’s appeal is currently poration, for negligent homicide, ment for 30 years or more is that belonged to Jeanette and pending before the Ninth Circuit authorized by law shall consist was driving her truck. Jeanette’s Court of Appeals. of 12 persons.” Given the com- relief petition challenging Arizona’s lethal injection protocol. The trial court dismissed King’s petition in March 2010. King recently asked the Arizona Supreme Court to review that decision. On January 20, 2010, District Court Judge Neil Wake denied the same incident. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 18 Criminal Division (continued) plexity of Arizona’s sentencing imposed. This rule protects the ous criminal street gang. In State v. William Veach guson, who was also ordered scheme, trial courts are some- defendant’s constitutional rights, return for payment, he received The unit obtained a manslaugh- to pay $3,105,000 in restitu- times not aware that a particular while at the same time ensuring contraband in the Maricopa ter guilty plea from William tion, arising out of his elabo- defendant is potentially subject that defendants do not engage County Jail from Jason Keller, a Veach arising out of the death of rate investment schemes that to a sentence of 30 years or in game-playing at the expense former attorney. The defendant Cassandra Castens, a 17-month defrauded at least 42 people. more. For over 25 years, our of the Arizona taxpayers. Be- was sentenced by Judge Sam old daughter of the defendant’s The defendant pleaded guilty to Supreme Court consistently cause this had been a recurring Myers on June 4, 2010, to 18 girlfriend. Veach was then two counts of theft. The defen- ruled that the failure to empanel issue with a half-dozen or so years in prison. serving with the United States dant solicited seven individuals a 12-person jury when a sen- automatic reversals a year, the Marines. This case was inves- to invest amounts ranging from tence of 30 years was theo- ruling will result in substantial State v. Robert Reed tigated as a “cold case” by the $5,000 to $50,000 in a project retically possible was reversible savings to Arizona. Naval Criminal Investigation to purchase a Mesa apartment Section (NCIS) of the U.S. Navy. complex and convert it into Prosecution had been previously condominium units which he declined by a county attorney’s said would then be sold, but office, and NCIS brought the which never occurred. To cover case to the AGO, which ac- it up, Ferguson made numerous cepted the difficult challenge verbal and written misrepresen- of prosecuting a decade-old tations to investors, including murder case. The defendant falsifying documents purported was sentenced on November to be from Washington Mutual 13, 2009, to 10 years in prison. Bank and the City of Mesa. prison sentence on October 13, error, even if the defendant did not object in the trial court and even if the defendant received a sentence substantially less than 30 years. Under this rule, criminal defendants had no incentive to request 12-person juries because they were assured an automatic trial on appeal. The unit obtained a 10-year Major Cases Criminal Prosecutions Section 2009, against Robert Reed, who was convicted in absentia with a jury verdict in January 2009 on charges of arson of an occupied Fraud Unit State v. John Farinas The unit obtained a jury conviction on May 6, 2010 in State In State v. Soliz, the section was v. John Farinas, on charges of able to convince the Arizona Su- assisting a criminal syndicate preme Court that, if the parties and conspiracy to commit pro- allow the case to proceed with moting prison contraband. The less than 12 jurors, a sentence defendant was a member of the of 30 or more years may not be New Mexican Mafia, a danger- structure, fraudulent insurance claim and endangerment. Reed set fire to his townhouse on April 28, 2007, at a time when 12 people (including six children) were sleeping in two other Victims did not receive any of town homes attached to Reed’s. State v. Charles Ferguson the promised returns, and most He was recently arrested in The unit obtained a five-year lost their principal investment as Yavapai County and returned to prison sentence, followed by well. Ferguson was not licensed Maricopa on the bench warrant. seven years probation, against to sell securities. Charles Bruce Ferguson. Fer- A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 19 Criminal Division (continued) State v. Douglas Ross Zuber brought in more than $2 million The unit obtained a six-year in revenue. He was sentenced prison sentence on January 12, on February 23, 2010, to four 2010, against Douglas Ross years in prison, followed by five Zuber, followed by seven years years probation. of probation, after his guilty State v. Hilario Vasquez plea. Zuber was also ordered to The unit obtained a convic- pay $6,196,985 in restitution tion on April 26, 2010, against to Harvard Investments, Inc., in Hilario Vasquez on charges of Scottsdale. Between 1999 and 2006, Zuber embezzled approximately $11 million from Harvard Investments, Inc., where he was employed as an executive vice president, directing the company’s investments in real estate. At the time Zuber’s theft was conspiracy and transportation Attorney General Goddard testifies at a congressional hearing in Washington, D.C., on Arizona’s efforts to intercept illegal money transfers to the Mexican cartels and reduce human-trafficking and drug-smuggling. of marijuana over the statutory of Trust”, which described how to defendant was sentenced on to be khat. Hamza was sen- in June 2009 of 300 pounds embezzle from your employer. October 7, 2009 to five years in tenced on February 24, 2010, to of marijuana for $135,000. A prison. 18 months probation. search warrant of the residence State v. Mohamed Hamza State v. Lawrence Runke Drug Unit threshold, arising out of the sale uncovered the 300 pounds of marijuana being broken down uncovered, his lifestyle included State v. Terri Schade a multi-million-dollar Paradise The unit obtained a jury convic- The unit obtained a jury convic- The unit obtained a jury convic- into smaller bundles by the Valley home; a Los Angeles tion on December 21, 2009, tion on January 14, 2010, in tion against Terri Schade on defendant, more than $24,000 condo; several luxury automo- against Mohamed Hamza for Yavapai County against Dr. Law- September 3, 2009, on the in cash and rented vehicles that biles, along with jewelry, art and possession of khat (a dangerous rence Runke on 12 felony drug charge of possession of chemi- were to be used to transport the other collectibles. Along with nu- drug), which was Arizona’s first and racketeering charges. Dr. cals and equipment to manu- marijuana to Virginia and Florida. merous documents found when khat trial. The defendant was Runke was operating an illegal facture methamphetamine. After waiving a jury trial, the the scheme collapsed, investiga- stopped by DPS, and a consent pharmacy, Global Medicines, The case was investigated by defendant was found guilty in a tors discovered a draft of a book search of the truck uncovered in Cottonwood, where he was the Meth Lab Task Force. The bench trial. Vasquez was sen- a bag of a green plant material shipping drugs to people all over tenced to 15.75 years in prison. inside the cab, which turned out the country. In two years, he had Zuber was writing, titled “Deeds A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 20 Criminal Division (continued) podiatrist was orchestrating. Hollander and seven other defendants were indicted on June 28, 2010, by the Pima County Grand Jury. Hollander was indicted on charges of conspiracy, participating in a criminal syndicate, fraudulent schemes and artifices, trafficking in the identity of another person, forgery and acquisition Greer used this scheme to class 4 felony. Sentencing was create approximately 400 fake set for September 8, 2010. vouchers that caused CIGNA to issue more than 100 checks to redeem the vouchers. These checks, totaling over $700,000, were deposited into fake business accounts that belonged to Donn L. Dove and Towan Butler. Many of the checks were then routed from the fake business Defendant Dove entered a plea of guilty to theft and fraudulent schemes and artifices. Her sentencing was set for August 23, 2010. Defendant Butler pleaded guilty to theft. His sentencing hearing was set for September 22, 2010. accounts into Tekisha Greer’s State vs. Olena Kulakova personal account at Arizona From approximately May, 2006, Federal Credit Union. Dove and through September, 2007, de- State vs. Tekishia Scroggins Butler also withdrew money fendant Olena Kulakova owned prescriptions for oxycodone. Between February 2004 and from the fake business ac- and operated a medical facility Evidence shows that the podia- November 2005, Defendant counts. named “We Care Clinic,” which State vs. Dr. Corina Hollander trist and her staff were filling Tekishia Kale Victoria Scroggins, On March 18, 2009, all three A Tucson podiatrist orchestrated fraudulent prescriptions under aka Tekisha Greer, worked as defendants were indicted on a large-scale fraud involv- the name of at least four of her an administrative secretary for charges of theft, fraudulent ing prescription drugs for the elderly patients and some of her CIGNA Medical Group. During schemes and artifices, and past four years. The podiatrist that time period, she embezzled Balikian, a licensed osteopath, staff’s family. Interviews were money laundering. became romantically involved approximately $700,000 from and Kulakova, who was not a li- conducted with these “acquain- with the two young men who are CIGNA by submitting fraudulent On November 16, 2009, Scrog- censed physician in the State of tances,” and they all admitted also charged in this case. She that this was a scam that the invoice information that resulted gins pleaded guilty to theft, a of narcotic/dangerous drug by Mesa Police Sgt. Bryan Soller, Gilbert Police Chaplain David Land and Attorney General Terry Goddard lead the Memorial Procession at the 37th annual Peace Officer Memorial Service at Wesley Bolin Plaza in Phoenix. Medicaid Fraud Control Unit began giving the men fraudulent fraud. in the issuance of a voucher. was located at 3620 West Bethany Home Road in Phoenix. At the “We Care Clinic,” patients were treated by Dr. Paul Arizona or anywhere else in the United States. Kulakova exam- A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 21 Criminal Division (continued) from the Tucson Museum of Art ined and treated patients, wrote (TMA), where she was employed prescriptions using Balikian’s as a bookkeeper and accoun- name, signed off on visit notes tant. TMA is a local treasure of patients she had seen and for Tucson and was brought generally practiced medicine. to the brink of bankruptcy and Kulakova originally purchased closure by of Sons’ embezzle- the “We Care Clinic” from ment scheme. In August 2009, Balikian in May, 2006, and re- she pleaded guilty to theft tained Balikian as a contracted and fraudulent schemes and staff physician. Both Kulakova artifices. and Balikian examined and On September 14, 2007, Special Agents from the Attorney General’s Office conducted a search warrant at the “We Care Clinic” doctor’s office in Phoenix where business owner Olena Kulakova posed as a physician. Ms. Kulakova would bill the AHCCCS program for those patients that she would see while posing as a physician. Sons’ position as an accountant tered into a plea agreement and restitution to the Arizona Health lent schemes and artifices, seum’s payroll, museum shop was sentenced to six months Care Cost Containment System theft and forgeries against a deposits, and petty cash ac- in jail, five years probation, and pay $1,000 in investiga- Medicaid patient. On August counts. For more than five years and 300 hours of community tive costs to the Medicaid Fraud 7, 2009, Phillips entered into she conducted an elaborate Both Balikian and Kulakova service. She was also ordered Control Unit. a plea agreement where she embezzlement scheme. were indicted on January 14, to pay $5,000 in investigative treated the patients, and wrote controlled substance prescriptions. When Kulakova wrote the prescriptions, she signed Balikian’s name. State vs. Nakesha Phillips pleaded guilty to forgery and 2009. Kulakova was indicted on costs to the Medicaid Fraud charges of conspiracy, assisting Control Unit. On July 31, 2009, Nakesha Phillips was stealing a criminal syndicate, fraudulent Balikian pleaded guilty to secur- funds from a patient’s per- schemes and artifices, theft, ing the proceeds of an offense. sonal bank account and left the money laundering in the second He was sentenced on Jan. 25, patient alone for over a week. degree and illegally conducting 2010, to six months proba- Shortly after these alleged tion, ordered to pay $25,000 in incidents, the patient died. On Between 2003 and 2008, Ruth June 16, 2009, Phillips was Sons embezzled $973,010 an enterprise. On July 14, 2009, Kulakova en- indicted on charges of fraudu- was sentenced to two and a half years in prison. Tucson Unit gave her access to the mu- The unit indicted Sons, and she pleaded guilty to two class 2 felonies. She was sentenced to five years in prison and ordered to pay $973,010 in restitution. State v. Ruth Sons State v. Calvin Ingram Marana Police Department Officer Calvin Ingram was A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 22 Criminal Division (continued) State v. Franklins d/b/a Hurricane Motors d/b/a Riteway Financial five years they were in business, vehicle. The wholesale value 42 people of more than $3 defendants made more than of the methamphetamine alone million. The section anticipates 500 sales, and just in prohib- exceeded $800,000. The obtaining a final civil judg- system for personal purposes. Defendants were John David ited transaction fees and taxes vehicle had crossed the U.S.- ment for more than $3 million ACJIS is a state-managed law Franklin; his son John Jay the fraud scheme netted as Mexico border six days earlier. (all of which, to the extent enforcement database housing Franklin; Hurricane Motors; and much as $1 million. The own- The defendant, Carlos Munoz, ultimately collected, will go to sensitive information relating Riteway Financial of Tucson. The ers and his son were indicted was convicted and sentenced to victim restitution); repatriation to driver registrations, criminal dealership never obtained li- on criminal charges of illegal seven years in prison. of Ferguson’s funds from Isle backgrounds, home addresses, censure from the State and sold enterprise, fraudulent schemes and other pertinent information mostly older and high-mileage and artifices, forgery and money of Arizona citizens. An ongo- cars with high-interest loans laundering. The business and its ing investigation revealed that to unsophisticated consumers assets were seized and a com- Ingram also accessed additional with either no credit or credit plaint filed seeking forfeiture as databases including “Spillman” problems. Vehicles sold were a financial remedy. Litigation is (owned and operated by the seldom registered in the name pending in both the criminal and Pima County Sheriff’s Office) of the purchaser, and the de- and “CopLink” (owned and oper- fendants collected Arizona sales ated by the Tucson Police De- indicted on charges related to his unauthorized access and/or misuse of the ACJIS computer of Jersey; commencement of Financial Remedies Section State v. Ferguson With assistance of the U.S. victim restitution payments of at least $525,000, and liquidation of forfeited personal property. Department of Justice, the sec- State v. Global Medicines tion reached an agreement in In December, 2009, the section principle with defendant Charles obtained an order of forfeiture Bruce Ferguson, and with British for approximately $150,000 tax which was never paid to the State v. Carlos Munoz authorities, for the return of cash and five parcels of proper- partment) that he used without State or refunded to consumers. A routine traffic stop by a funds from accounts controlled ty worth over $1,100,000 plus lawful purpose. The defendant Defendants also collected a ve- DPS canine unit on Interstate by Ferguson in the Isle of final judgment for approximately pleaded guilty to four class 6 hicle license tax with each sale 10 yielded 26 packages of Jersey for forfeiture. Ferguson $1.6 million against Lawrence felonies for unlawful computer which was seldom paid to the methamphetamine weighing pleaded guilty to theft charges Carl Runke, 66, of Clarkdale. tampering, police officer, and his State. Also collected with each approximately 39 pounds and in the criminal prosecution in This case involved Runke’s police officer certification was sale was a “bank fee”, custom- one package of cocaine weigh- September 2009, and three operation of an illegal pharmacy, revoked as a condition of his arily $595, which was prohibited ing approximately two pounds months later was sentenced to Global Medicines, in Clarkdale. plea. Sentencing is pending. by law since defendants did not concealed in sophisticated five years in prison. Ferguson The pharmacy purchased have necessary licensing to sell hidden compartments inside a operated elaborate investment unapproved drugs from suppli- vehicles on credit. During the civil cases. schemes that defrauded at least A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 23 Criminal Division (continued) in cash, three properties, three filing of felony charges and State v. Sonoqui vehicles and approximately 200 the Maricopa County Superior The section filed a notice of weapons. Court’s issuance of a $10 mil- pending forfeiture regarding the lion seizure warrant against a seizure of $516,000 in cash Commercial Interdiction Cases Examples of some of the drugs, grenades, and guns seized by the AGO Task Force on various cases during the 2010 fiscal year as part of our border security efforts. ers in India and resold them to based on information link- consumers across the country. ing Phoenix gun store owner Runke was found guilty on 12 George Iknadosian to a drug- criminal counts by a Yavapai smuggling syndicate operating County jury and was sentenced in Arizona in December, 2009. to four years in prison. The defendant is accused of State v. Iknadosian selling firearms to straw buyers for eventual export to Mexico. The section served a seizure The civil forfeiture case against warrant in December 2009 the defendant involves $50,800 Nevada doctor accused of writ- The Attorney General’s Office and 19 vehicles in this case ing illegal drug prescriptions for partnered with the Phoenix which came out of “Operation patients at a clinic he operated Police Department to handle Tumbleweed,” a year-long in- in Golden Valley, near Kingman three commercial interdiction vestigation that led to the indict- in Mohave County. The doctor cases. The section filed an order ment of 59 defendants and the allegedly collected $3.5 million of forfeiture for two seizures breakup of the Garibaldi-Lopez in fraudulent insurance claims, of cash from couriers at Sky drug trafficking organization. including $2.5 million from Harbor International Airport The binational organization was the State of Arizona. The 14 – one for $110,040 and the believed to have smuggled up to felony counts against Dr. Albert other for $20,000. In the third 400,000 pounds of marijuana Szu Sun Yeh, 44, of Las Vegas, case, $124,800 in cash was annually from Mexico into the included conspiracy, assisting seized that had been sent from United States across the Tohono a criminal syndicate, money Boston to Phoenix by truck in a O’Odham Indian Reservation laundering and administering shipping crate. The money was since 2003. The operation was narcotic drugs. Funds total- seized in a false bottom of the one of the largest takedowns of ing $1.7 million were seized; shipping crate that contained a a drug-smuggling organization fraudulent payments were esti- dishwasher. in Arizona history. mated at more than $3 million State v. Yeh In July of 2009, the section and the U.S. Drug Enforcement Administration announced the and an additional $7 million in State v. Angulo treble damages is being sought. This case came to the attention Settlement negotiations are in of the Phoenix Police Depart- progress. ment after a homicide outside of a restaurant and bar owned A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 24 Criminal Division (continued) by Adam Angulo. It was subse- averaging 10 to 15 people per negotiating between attorneys, investigated. She claimed she re-examined and the Attorney quently determined that Angulo, load. The section obtained a fi- a settlement was reached, had not properly been given General’s Office agreed to a former gang member, was not nal order of forfeiture on August satisfying all parties. In their her Miranda rights. After three prosecute. the bona fide owner of the liquor 19, 2009, obtaining $33,230 in victim impact statements, the days and various interviews with license attached to the bar, and cash, several weapons and six victims were able to articulate the media, the victim made it that the bar business had been vehicles. to the court how they were through this very long evidentia- traumatized by this defendant. ry hearing, feeling satisfied after In the end, the defendant was it was over. The judge ruled that sentenced to 20 years in prison, Milke had been given her rights followed by lifetime probation. properly. acquired with the proceeds of marijuana trafficking. In a six-month period, Angulo sold more than 1,000 pounds of marijuana. The final order of forfeiture was obtained March 4, 2010, resulting in the forfei- Office of Victim Services State v. Frederick Sevilla The defendant in this case was originally indicted in 2002 on several counts of The victims said they could finally breathe a sigh of relief. State v. William Veach In November 2009, defendant State v. Debra Milke William Veach was sentenced and molestation of child. After It was almost 20 years since to 10 years in prison for a very emotional trial, the jury the victim in this case had seen manslaughter. The defendant found the defendant guilty and his ex-wife, the defendant. The was convicted of killing an sentenced him to 130 years in last time he saw her, she was 18-month-old child, whose State v. Ibarra-Ramirez prison. On appeal, however, the being sentenced to death for the mother was dating the defen- The Ibarra-Ramirez Enterprise, conviction and sentence were murder of their son, Christopher. dant at the time of her death. investigated by the Phoenix overturned seven years after the In January 2010, the victim sat Though the crime occurred in Police Department, engaged in indictment. The victims were with the victim advocates in 2001, the case was not picked illegal alien smuggling. Serving devastated, as they were faced the same courtroom with the up for prosecution until 2008 primarily as transporters, the with the possibility of testifying defendant for the first time in when a cold case detective with criminal enterprise would on a again, now as young adults. almost two decades. The ap- NCIS pushed to have the case daily basis use vans to shuttle Fortunately, after arduous plea peal issue dated back to when bank accounts, the bar’s liquor license, nine vehicles, jewelry and several weapons. aliens throughout the country, Illinois, so all of the contact was done via telephone and email. Since they were not able to participate in court proceedings, it was the advocate’s responsibility to keep them updated sexual conduct with a minor ture of $1.2 million in cash and The victims in this case lived in on every aspect of the case. Fortunately, the victims were able to come to Arizona for the sentencing hearing to present their victim impact statements in person. It was difficult for everyone involved to come to terms with the fact that a young child had been killed. The AGO victims advocate worked effectively to keep everyone as calm as possible. Being able to assist this family through such a tragic life event was very much appreciated by the family. the defendant was originally A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 25 Public Advocacy Division Chief Counsel Susan Segal Division Summary thousands of dollars of refunds The Public Advocacy Division is made up of the Consumer for consumers who paid upfront Taken Care of Investment is a Protection and Advocacy Section and the Environmental fees, investigated several com- foreclosure rescue operation Enforcement Section. panies and sent warning letters that promised to help hom- to dozens more. eowners by purchasing their Consumer and Public Advocacy (CPA) Section Highlights Mission: Consumer Litigation Unit To pursue those who As Arizona’s housing crisis per- prey upon the public sisted, fighting mortgage fraud and threaten the continued to be a top priority. economic and environmental well-being of Arizonans. Thousands of struggling homeowners sought to modify the terms of their mortgage loans. Mortgage lenders and loan servicers, however, often lost documents, gave contradictory messages to consumers, failed to timely respond to requests and otherwise made the loan modification process extremely difficult for consumers. The Office received numerous consumer complaints against lenders for deceptive practices Significant mortgage and in handling loan modification loan modification fraud cases requests, and successfully included: intervened in many cases. In • Hope for Homeowners Now some instances, we were able The unit sued this company to persuade lenders to stop and its principals based on foreclosure proceedings and to misrepresentations regard- offer a loan modification to the ing the company’s home homeowner instead. loan modification services With so many homeowners and its failure to comply with struggling to keep their homes, the Credit Services Orga- many “foreclosure rescue nizations Act. We obtained consultants” sought to capital- default judgments against the ize on their difficulty. Promising company, awarding $424,935 homeowners they could prevent for consumer restitution and foreclosure by negotiating with $155,000 for civil penalties. lenders to obtain a loan modifi- The court also issued an cation, they charged thousands order prohibiting the defen- of dollars in upfront fees then dants from engaging in loan often failed to deliver on their modification or loan origina- promise or went out of busi- tion activities in Arizona. ness. The Office also obtained • Taken Care of Investments home, allowing the homeowners to rent the home for a year, and then allowing the homeowner/tenant to repurchase it. The rental terms were so onerous that the tenants were often evicted, foreclosing repurchase options. The properties were sold to investors, further limiting the repurchase ability of the original homeowners. After suing last year, the Office secured a settlement requiring the defendants to pay $391,000 to consumers as restitution plus another $300,000 in civil penalties to the State. • Discount Mortgage Relief The unit filed a complaint against Discount Mortgage Relief on June 4, 2010, and A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 26 Public Advocacy Division (continued) obtained a temporary re- address consumer refund sumers. We filed a complaint working with to obtain a loan ers with little or no chance straining order prohibiting this requests. Litigation is con- against Asset Creation and its modification. Those consum- of being able to qualify to loan modification company tinuing. principals in January 2010. ers will receive a full refund purchase the property due The defendants appear to if Santoya is unsuccessful in to their poor credit and low from making misrepresenta- • Asset Creation, LLC tions to consumers and from This loan modification have gone out of business obtaining a loan modifica- income, factors which AZI receiving any money from company targeted Spanish- and have failed to comply tion for them. The consent deliberately ignored. Settle- consumers. Since the TRO speaking homeowners. It with discovery requirements. judgment includes injunctive ments totaling $120,000 was issued, the defendants advertised it could obtain a Litigation is continuing. relief, $30,000 in civil penal- have been obtained against stipulated to a preliminary 50 percent reduction in mort- ties and $5,000 in costs. three defendants so far. injunction that prohibits the gage payment (for upfront company from making mis- fees of more than $3,400) The unit obtained a consent •A  rizona Investments dba AZI Rent-2-Own, et al. representations to consumers and promised it could obtain judgment against this Phoe- Arizona Investments, Silver- In addition to civil and crimi- and requires it to promptly other specific results for con- nix-based company that was stein, Zandonatti (AZI) with nal enforcement actions, the engaged in loan modification the assistance of others, in- Attorney General led the fight activities and misrepresented cluding RE/MAX All Executives for a new law aimed at the its status as a HUD-approved and Tucson Mortgage, de- key factor contributing to the foreclosure counseling frauded or should have known growth of loan modification agency in its ads. Soon after they were defrauding novice scams: the ability to charge we sued the company in July real estate investors, lenders, large upfront fees. SB 1130 2009, it stopped soliciting and rent-to-own homebuyers. makes it illegal to charge consumers for loan modifica- AZI facilitated deceptive loan upfront fees for foreclosure tion services and has since applications in furtherance rescue services. Violations of fully refunded all consumers of a rental-property scheme the new law can – and will – who paid it money, except for and engaged in a variety be enforced under the Arizona a few the company was still of deceptive practices. The Consumer Fraud Act. •S  antoya Financial Company, LLC. • Ending upfront “rescue” fees: deceptive “no qualifying” The Office’s fraud prevention efforts included the production of new brochures and videos, including one on how to avoid charity scams and another called “Smart Seniors” with advice on identifying scams and fraud. advertising targeted consum- A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 27 Public Advocacy Division (continued) State Agency Unit • Title Security Agency of Arizona We represented the Department of Financial Institutions in Title Security Agency’s appeal of the Department’s cease and desist order to compel best practices and payment of a civil penalty. The company is a mortgage broker that agreed to a negotiated $200,000 civil money penalty and to employ best practices with regard to future business. Title Security Agency violated various escrow agency statutes by its failure to maintain internal controls over its business. • Mortgages Ltd. consented to the revocation of its mortgage banker’s Consumer Complaints Fiscal Year 2010 (July 1, 2009 - June 30, 2010) license on July 28, 2009. General Service Mortgages Ltd. was one of 2,213 the largest bankruptcies filed in the state of Arizona. The consent to revocation 1,060 was based upon violations of 1,027 Health Services - Products numerous mortgage banker Loan Modifications 2,171 Business Opportunities 2000 2500 Mortgage Companies 908 Collection Services statutes. 825 Motor Vehicle - Used Vehicle Sales •D  epartment of Insurance Case 573 Telemarketing Fraud 547 Health Services- Pharmaceuticals We represented the Depart- 476 Satellite / Cable ment of Insurance in an emergency action before 3,163 0 500 1000 the Superior Court regarding 1500 3000 3500 Number of Complaints two insurance companies, Thureus Insurance Group, Inc. and Astraea Risk Retention Group, Inc., both owned by Arrow Trucking Company. Astraea provided various We represented the Depart- insurance policies to Arrow. ment of Financial Institutions Thureus provided reinsurance in an action to revoke the to Astraea and wrote direct mortgage banker’s license of surety and employer’s li- Mortgages, Ltd. The company ability coverage for Arrow. On December 22, 2009, Arrow Trucking abruptly suspended contacted us with an urgent 30, we returned to the court operations. The company sent request to file suit for an in a separate action to obtain employees home, let payroll emergency action to protect an order for appointment of checks bounce, stopped pay- defendants’ assets and their receiver and injunction to liqui- ment on fuel cards leaving ability to meet obligations to date the company. As a result drivers stranded at rest stops policyholders and claimants. of the Office’s quick action, throughout the country, and By December 24, 2009, we the department successfully creditors repossessed trucks prepared numerous docu- prevailed at both hearings and and trailers. The department ments and appeared before helped mitigate damages. the Superior Court. On Dec. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 28 Public Advocacy Division (continued) Antitrust Unit • DRAM In June 2010, the Antitrust Unit, along with 32 other states and private class counsel, reached a $173 million settlement that resolved antitrust claims against several international Dynamic Random Access Memory (“DRAM”) manufacturers. The settlement resolved the states’ 2006 lawsuit alleging the DRAM manufacturers had fixed prices and committed other violations of state and federal antitrust laws. DRAM is common form of recover as a result of the years, Pinetop-Lakeside, V settlement, which had not yet Mountain and its predecessor been filed with the court and had restrained trade by enter- is subject to court approval, ing into several contracts had not yet been determined. for road construction, main- The DRAM manufacturers named in the lawsuit include the American companies Micron Technology, Inc. and NEC Electronics America, Inc., as well as foreign companies Infineon Technologies A.G. in Germany; Hynix Semiconductor, Inc. in South Korea; Elpida Memory Inc. in Japan; Mosel- competitive purchasing and procurement policies. These contracts denied taxpayers the benefits of free and open competition and denied other contractors an opportunity to compete for the town’s road services business. As a result of the settle- their American subsidiaries. ment, V Mountain paid a • Pinetop-Lakeside In February 2010, the An- stores and retrieves data at titrust Unit settled antitrust high speeds. It is found in claims against the Town of a wide variety of computer, Pinetop-Lakeside and con- telecommunication and con- tractor V Mountain Construc- sumer electronics products. tion, Inc. For more than 14 and local agencies will without following the town’s Vitelic Corp. in Taiwan; and electronic memory, which  The amount Arizona’s state tenance and snow removal Protecting Seniors •S  tate v. Consumer Benefits Research Group On June 30, 2009, the State filed a lawsuit against Mesabased Consumer Benefits Group (CBG) for deceptively soliciting seniors by phone to sell an “Identity Fraud Program.” Mostly elderly consumers told the Attorney General that CBG telemarketers badgered them during the high-pressure calls to sell identity theft protection. By into thinking their identity was at risk and that they needed to spend $388 for the “Identify Theft” program, and then another $388 for an upgrade. Litigation is pending “Government Notice” Scams Attorney General Goddard went after several companies for deceiving consumers into thinking the companies were part of the government or offering services required by law. Representative cases include: posing as “investigators” CBG • Property Tax Review Board telemarketers scared seniors Goddard filed suit against civil penalty of $10,000. The Michael McConville, a Cali- town paid $5,000 as reim- fornia resident, and Property bursement of the Attorney Tax Review Board for send- General’s investigative costs. ing thousands of letters to The town also agreed to Arizona consumers falsely obtain additional procurement stating that consumers could training for employees and reduce their property tax procure special audits of its assessments through appeal purchasing activities Attorney General Goddard speaks with an attendee at the Senior Anti-Crime University in Sun City West in January. by paying a $189 “process- A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 29 Public Advocacy Division (continued) ing fee.” In fact, the time for by law to submit corporate joined the agreement (“par- In 2010, Arizona received appealing passed long before minutes to the Corporation ticipating manufacturers” or approximately $105.4 million the solicitation was mailed. Commission, according to “PMs”) to make significant in total MSA payments. Since In collaboration with the the complaint. The company annual payments to the settling 1998 Arizona has received U.S. Postal Service, Goddard charged over 550 Arizona states in perpetuity. more than $1 billion in returned over 1,000 checks businesses a $125 fee for to consumers. The Office this entirely unnecessary Community Events also obtained a temporary “service.” The business has Attorney General Goddard, restraining order preventing stopped operating in Arizona. staff and volunteers hosted the defendants from soliciting business in Arizona. Tobacco Enforcement Unit initiated by the State to recover events included Crime and health care costs resulting from Fraud Prevention Forums, tation to small businesses in the use of tobacco products by Senior Anti-Crime Universities Arizona falsely implying that its citizens, Arizona entered into and presentations on top 10 businesses were required the Tobacco Master Settlement consumer scams, identity theft, Agreement (“MSA”) on Novem- Internet safety, civil rights, ber 23, 1998. This landmark settlement agreement also resolved similar actions filed by 51 other jurisdictions against the major tobacco manufactur- Attorney General Goddard talks with WWII Veteran Frank Garcia at the Veteran’s Day Centennial Parade and Celebration in Clifton, Ariz., on Nov. 7, 2009 received by the State from the MSA are dedicated entirely to the Arizona Health Care Cost community events across Arizona during the year. These This company mailed a solici- Under state law, all money and participated in 409 In settlement of litigation •B  oard of Business Compliance settlement payments. protecting seniors, victims’ 9 6 9 3 6 287 rights and life care planning. 1 The map (at right) shows the number of events in each 5 5 8 7 1 county. ers. The MSA requires those More than 200 Fraud Fighter tobacco manufacturers that Volunteers and Senior Sleuths 54 assist the Attorney General’s materials at community events, Office. They help make answer Helpline calls and staff presentations and distribute the Office’s Satellite Centers. 4 4 A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 30 Public Advocacy Division (continued) Containment System (“AHC- Enforcement of public health cation for all tobacco customers to tobacco in retail outlets Arizona in both rural and CCS”). The Office’s Tobacco provisions: The unit has also who appear to be under age by systematically monitor- urban communities. With Enforcement Unit protects Arizo- been charged with enforcing 27, use security videotapes to ing retailer compliance with the assistance of local law na’s MSA payments by diligently the public health provisions monitor compliance by clerks, state laws which prohibit the enforcement agencies, 305 enforcing Arizona’s qualifying of the MSA, especially when eliminate self-service tobacco sale of tobacco products to criminal citations were issued statute. During FY 2010, the violations of those provisions displays and vending machines, minors. The program also to retail clerks who violated unit worked at both the state have a direct impact on Arizona perform random compliance serves to encourage local Arizona law by selling tobacco and national level to ensure that citizens. The public health checks involving youthful enforcement of these laws. products to minors during Arizona will continue to receive provisions contained in the MSA tobacco purchasers, and imple- its full allocated MSA payment. place restrictions on the PMs’ ment other safeguards. Valero These efforts included: marketing practices in an effort also agreed to change the to protect public health. terms of its franchise contracts recover defaulted MSA payments In April of 2010, Arizona, along so that tobacco sales to minors and defend the state’s ability with 39 other states, reached must be reported to Valero, and to enforce the MSA’s payment an agreement with Valero illegal sales could result in loss provisions; (2) Diligently enforc- Retail Holdings Inc., and Valero of the franchise. ing the qualifying statute and Marketing and Supply Com- •A  rizona “Counter Strike” (3) Monitoring the state’s efforts pany, based in San Antonio, Youth Tobacco Program: to receive the maximum recov- Texas. Valero is a large national In partnership with the ery in bankruptcy proceedings oil company that owns 1,000 Arizona Department of Health initiated by PMs. convenience store outlets and Services, the Attorney Gen- has nearly 4,000 franchises. eral’s Office has developed Valero has 92 company-owned and maintained the Ari- or franchise outlets in Arizona. zona “Counter Strike” Youth Under the Assurance of Vol- Tobacco Program. Its goal untary Compliance, Valero will is to reduce youth access (1) Participating in efforts to With the exception of a single NPM which filed for bankruptcy protection, the unit obtained full compliance for sales made in Arizona during the year. instruct clerks to check identifi- During FY 2010, the program conducted 2,561 undercover inspections throughout undercover inspections. This fiscal year, the program reported a three percent The Office held two poster contests during the year. The Meth Poster Contest was co-sponsored by the Arizona Meth Project. The “Why Should I Care about Elder Abuse? Poster Contest was co-sponsored by the Arizona Elder Abuse Coalition and the Area Agencies on Aging. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 31 Public Advocacy Division (continued) •S  tate v. Far West Water And increase in its statewide advises, represents and litigates Asarco which provide more EES successfully defended compliance rate, marking the on behalf of the Arizona Depart- than $25 million to address the settlement agreements Sewer Co., Inc. and De- highest compliance rate since ment of Environmental Quality environmental damage from against the objections of fendant H & S Developers, the program’s inception in (ADEQ) for various programs, several now-closed Asarco Asarco’s parent company Inc.: After years of public 2001. including water quality, safe mines in Arizona; $13 million and other creditors in court. complaints and noncompli- drinking water, hazardous to clean up the contamination In his decision upholding ance of water and air quality waste and solid waste as well in local residential neighbor- the settlements, Bankruptcy control requirements at the as waste management prac- hoods resulting from con- Judge Richard S. Schmidt seven Far West Water And tices. The Tanks and Air Unit tamination from the Hayden stated, “The settlement Sewer Co., Inc. (“Far West”) advises, represents and liti- Smelter, with additional work agreements represent a wastewater treatment plants, Environmental Enforcement Section (EES) Highlights Mission gates on behalf of ADEQ’s air to be done at the facility significant milestone in the EES, on behalf of the Arizona To provide the highest quality and underground storage tank property; and $4 million for nearly four-year history of Department of Environmen- legal advice and representa- programs. The Superfund Pro- construction and mainte- this enormously complex tal Quality, filed a 50-count tion to client agencies for the grams Unit advises, represents, nance of wetlands and other bankruptcy case and in the complaint against Far West fair enforcement of civil envi- and litigates on behalf of ADEQ improvements on the San Pe- history of governmental ef- and a related corporation, H & ronmental law and civil natural involving matters arising under dro, plus the transfer of three forts to remedy environmental S Developers, Inc. Far West, resources law. Superfund laws. ASARCO-owned tracts of land injuries.” On December 9, the current owner and opera- to the Arizona Game and Fish 2009, Asarco’s parent com- tor of the seven treatment Overview Major Accomplishments Commission (one tract has pany consummated its plan plants, which serve 6,500 The Section provides advice, • Asarco Bankruptcy: In water rights) consisting of to reorganize Asarco, and households, constructed and enforcement and representa- 2005, the section filed claims approximately 1000 acres on paid 100 percent of Arizona’s operated the plants without tion activities related to state in the Bankruptcy Court the Lower San Pedro River to claims plus interest. Without obtaining permits, provided and federal environmental and for environmental liabilities benefit wildlife (total value of the settlements, costs for reclaimed water for reuse natural resources law. The stemming from Asarco’s $7-$8-5 million). remediation of the sites would without authorization, dis- Section is divided into three copper mine operations and have fallen to the state. charged wastewater in viola- components. The Civil Unit related activities in Arizona. tion of the Aquifer Protection We reached settlements with Permit Program, and failed A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 32 Public Advocacy Division (continued) to control sewage odors from • Heritage Environmental excess of the allowed hours ity, solid waste and hazardous under Arizona law. Aftermath the plants. Far West also vio- Services: This case arose of operation, and its violations waste laws while operating agreed to pay a civil penalty of lated the Safe Drinking Water from a fire that erupted at included numerous failures its used oil refinery in Parker, $5,000 and provide a Supple- Program at its drinking water the Heritage hazardous waste to conduct observations of Ariz. In connection with the mental Environmental Project facilities. storage facility near Coolidge visible emissions (dust) from case, a defamation action that will train first responders • In June 2010, the defendants in August 2006. Several pal- the facility, and failure to brought by LiquidTitan against in the dangers of blood-borne agreed to a settlement that lets of nitrocellulose-contain- conduct inspections and have the State and the Department pathogens as well as provide included (1) a $150,000 pen- ing waste movie film spon- properly qualified personnel of Weights and Measures was personal protection kits to alty; (2) a $150,000 supple- taneously ignited after being to control dust. A settlement dismissed with prejudice. The them. The project has an esti- mental environmental project stored in direct sunlight. was reached that required enforcement case was settled mated valued of $200,000. for the purchase of equipment Heritage had already settled Meadow Valley to pay a civil for a $55,000 civil penalty. It to remove water from sludge, with ADEQ and the Attorney penalty of $80,000 and file was estimated that settling the bankruptcy): This case and (3) a schedule of injunc- General in March, 2006, for an application for an indi- defamation case saved over stemmed from a release from tive relief for the completion other violations at this facility. vidual air quality permit for its $100,000 in costs and at- a slurry pipeline at the Hayden of a multimillion-dollar project EES reached a settlement asphalt plant, instead of the torney time. LiquidTitan spent mine. The pipeline ruptured to upgrade its treatment with Heritage for a $75,000 general permit under which more than $900,000 correct- and spilled mine tailings plants and sewage collec- civil penalty and a $50,000 it had been operating. The ing its violations and assuring slurry into a state waterway. tion systems. Far West will Supplemental Environmental individual permit will include future compliance with state ASARCO reported the release place a deferred penalty of Project involving the removal more specific emissions con- environmental quality laws, a and performed the required $200,000 in a secured bank of hazardous materials from trols tailored to the Meadow major factor in negotiating the cleanup actions in a timely account pending completion area schools. Valley facility. settlement. manner. Additionally, ASARCO of the injunctive relief. The • Meadow Valley Contrac- • LiquidTitan, LLC: This settle- • Aftermath Solutions: This • ASARCO (unrelated to the spent $1.7 million replacing $200,000 could be refunded, tors: This case involved the ment resolved an environ- case is a biohazardous medi- the slurry pipeline with one in full or part, depending on illegal operation of a hot mix mental enforcement action cal waste enforcement action. that would not be susceptible Far West’s success with its asphalt plant near Buckeye against LiquidTitan for viola- Aftermath failed to register as to this type of failure. The project. in 2007 and 2008. Meadow tions of a number of air qual- a transporter of biohazardous company agreed to pay a civil medical wastes as required penalty of $20,000. Valley operated its plant in A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 33 Public Advocacy Division (continued) AZAG.GOV Recognized as Best Overall Website for 2010 ment sites (www.az.gov) driving The Arizona Attorney General’s presence on Facebook, YouTube website (www.azag.gov) was and Twitter. recognized as the “Best Overall Since the redesign, the hits to Website” by the Conference AZAG.gov site have increased of Western Attorneys General from 55,000 to 165,000 per (CWAG). The Office’s website month along with 4000+ Face- was recognized for its compre- book friends and Twitter followers. traffic to the site along with a hensive use of social media, “Our innovative web team smooth navigation, inviting ap- provided the know-how to suc- pearance and concise presenta- cessfully utilize social networking tion of information. sites to further enhance commu- The website team consisting of nications for the AGO. Dominique Medina, Sarah Acer, The website redesign completed AGO budget to hire a web William Morris, and Jane Irvine in January 2010 was under- designer, our team stepped completed a major update of the taken as part of a state govern- up and enthusiastically taught site last year to make the web- ment initiative with Government themselves new skills and site more efficient and easy to Information Technology Agency forged ahead until the job was use. In addition, Thomas Reade (GITA). The AG site is now linked completed,” Goddard said. worked hard to make our site as user-friendly, reliable and helpful to the public as it can be. With no room in the downsized with all Arizona State Govern- Left to right: Jane Irvine, Director, Community Outreach and Education, Dominique Medina, Web Master/Executive Project Assistant, Terry Goddard, Arizona Attorney General, Sarah Acer, Constituent Services Manager, Thomas Reade, Unit Chief, Crime, Fraud and Victim Resource Center and William Morris, Intern. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 34 Child and Family Protection Division Division Summary The Child and Family Protection Division (CFP) provides comprehensive legal representation to ADES, with more than 320 employees in locations throughout Arizona. CFP is divided into three practice groups, and now includes a newly-formed Division-wide Appellate Team: Chief Counsel Nicole Davis Mission: To provide the • Protective Services Section (PSS) • Child Support Enforcement Section (CSE) • Civil & Criminal Litigation and Advice (CLA) Arizona Department In FY2010, the Appeals team was restructured to streamline of Economic Security and maximize resources. The Appellate Team represents (ADES) with high- ADES in the Arizona Court of Appeals, Arizona Supreme quality representation and timely legal advice that promotes the safety, well-being Court, and the Federal District Courts. During FY2010, the Division saw a 20 percent growth in PSS appellate filings alone with a total of 616 appeals filed. The Division prevailed in 95 percent of all appeals resolved during this fiscal year. and self-sufficiency of children, vulnerable adults and families. Flagstaff, Kingman, Mesa, Phoenix, Prescott, Sierra Vista, Tucson and Yuma. motions and petitions. • filed 362 guardianship motions. In FY2010 PSS attorneys • filed 249 adoption petitions. • helped reunite 1,340 children Protective Services Section branch. PSS shares CPS’ goal: and staff: To protect children, preserve • protected more than 11,344 The Protective Services Sec- families and achieve perma- children from abuse and tion (PSS) of the Child and nency for Arizona’s children. neglect. Family Protection Division The attorneys and staff of PSS provides comprehensive legal provide legal representation representation to ADES and its to CPS throughout Arizona’s Child Protective Services (CPS) 15 counties with offices in with their parents. • placed 540 children with permanent guardians. • filed 3,162 new dependency petitions. • helped 1,619 children be adopted by relatives or foster • filed 1,515 severance placements. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 35 Child and Family Protection Division (continued) Accomplishments In FY2010, caseloads remained F Y 2 0 1 0 AT T O R N E Y C A S E L O A D 110 high while personnel shortages were felt statewide. Despite this fact, the dedicated staff continued their work on Best 105 Practices to ensure high-quality legal work and compliance with legislative and local rule changes. PSS Management instituted a legal writing review 100 process that helps produce the highest quality written work product by its lawyers. In 2009, PSS migrated to the Office’s Legal Files 95 Series 1 July August September October November December January February March April May June 100.25 101.1 101.31 102.01 101.6 103.65 103.54 103.39 105.18 107.43 103.81 101.15 Case Management System. The ABA has recommended that the dependency caseload for an agency attorney should be 60-80. As reflected in the chart, PSS attorney caseloads in FY2010 During FY2010, due to the were significantly higher than this standard. customization of PSS data PSS filings remained constant and attorney caseloads remained high with some minor fluctuations throughout FY2010. tracking in Legal Files, PSS is now able to better track enter and obtain information to the case management system ADES on legal issues arising various stakeholders regarding important aspects of a very regarding their cases and further from court to make the best use from federal and state statutes, Arizona’s child welfare system. specialized juvenile litigation increase productivity. PSS is of attorney time and resources. regulations and court decisions. practice and generate valuable Trial Practice moving towards a paperless reports to identify trends that Policy & Training In addition, PSS lawyers provide PSS attorneys engage in an case management system, and a impact child safety. Attorneys Despite severe budget cuts, significant training and support pilot project is underway in Pima are now able to more efficiently PSS lawyers continued to advise County to expand remote access intense, litigation-focused to CPS caseworkers, supervisors, practice in the juvenile division members of the judiciary and A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 36 Child and Family Protection Division (continued) of the Arizona Superior Court. Child Support Enforcement Civil and Criminal Litigation and Advice Each year trial lawyers in PSS The Child Support Enforcement (CSE) Section of the Child and Family The Civil and Criminal Litigation and Advice (CLA) Section of the Child handle thousands of legal Protection Division seeks to ensure that children receive the financial and Family Protection Division is divided into two units: Civil and actions generally referred to support from their parents to which they are entitled. The Section Criminal. The CLA Civil Unit provides advice and representation for all as “dependency cases”. These provides legal advice and representation to ADES’ Division of Child ADES programs, except Child Protective Services and Child Support actions serve to protect abused Support Enforcement (DCSE). CSE handles a high-volume litigation Enforcement. and neglected children when caseload to establish paternity and to establish, modify and enforce they are removed from their Programs include: Adoption Subsidies, Developmental Disabilities, child support orders. Unemployment Insurance and Tax, Vocational Rehabilitation Services, Because more than 44 percent of Arizona’s children are born to Food Stamps and Cash Assistance, Certification of Child Care and unwed parents, establishing paternity is often the first step in the child Foster Care Providers, AHCCCS Long Term Care Services, Adult support process. After paternity has been established, CSE can take Protective Services, Behavioral Health Services for dependent legal action to pursue child support. DCSE currently has more than children, and collection of public benefit-related debts owed to 210,000 open child support cases statewide. The litigation caseload ADES. CLA also advises and represents ADES regarding its business for the CSE Section is between 7,000 and 8,000 ongoing cases. operations, including hiring and discipline of employees; compliance parents and placed in the legal custody of CPS by the courts. Protective and remedial social services are instituted for the family to help achieve reunification. If attempts to reunite families prove unsuccessful, PSS attorneys In FY2010, CSE helped Arizona children receive the support to represent CPS in actions to which they were entitled by: achieve permanent placement of children through severance of parental rights, guardianship and adoption procedures. • Establishing paternity for 2,249 children. with laws governing workplace conduct and safety; contracts for service providers, and facilities management. The CLA Criminal Unit prosecutes individuals and contractors who defraud the State through ADES programs, as well as parents who • Establishing new child support orders for 5,264 families. willfully fail to provide support for their children or who escape from • Obtaining child support judgments of over $31.1 million. the child support work furlough program. • Resolving 5,112 actions for modification of support. • Representing the State in over 25,000 court appearances. • Assisting DCSE to collect over $360.7 million in support. • In bankruptcy cases, collecting $418,351 in support. • In non-Family Court litigation relating to liens and foreclosures, collecting $471,871. In FY2010, the CLA Civil Unit: • Opened, litigated and/or reviewed 681 administrative litigation and civil cases. • Opened and reviewed 243 contracts, leases and/or amendments. • Obtained 241 civil judgments in civil collections cases totaling $579,094. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 37 Child and Family Protection Division (continued) • Collected $389,435 through wage and provided to ADES. bank garnishments. • Responded to over 916 subpoenas • Filed 249 civil collections cases. and requests for public records. The CLA Criminal Unit: • Opened over 138 “matter” files for tracking significant legal advice • Reviewed over 113 Intergovernmental Agreements and Amendments. Civil Cases By Program Adoption Subsidy Adult Protective Services • Filed 176 criminal cases. • Collected $269,683 in restitution prior to sentencing. • Obtained 168 individual sentences. • Obtained orders for fines totaling $11,400. • Obtained restitution orders totaling $452,279. • Obtained orders for 4,498 hours of community service. Total Civil Collections 1 Program 32 Filed Judgments Entered Total Judgments Arizona Early Intervention Program-AZEIP 8 Cash Assistance 7 8 $13,214.97 Business Enterprise Program (BEP) 3 Any Combination 8 11 $31,960.90 Child Protective Services (use for PSS) 1 Childcare Assistance 10 14 $61,964.21 9 6 $47,649.35 29 32 $51,297.08 Childcare Administration 10 Div. of Developmental Disabilities Comprehensive Medical And Dental Program 4 Employee Related Department of Economic Security (DES/DMR) 1 Food Stamp 6 3 $10,459.80 Division Of Benefits/Med Elig (DFS) 1 Food Stamp Plus Another 7 8 $17,534.00 Division of Children Youth and Families 2 Parental Assessment 2 2 $1,653.00 Unemployment Insurance Benefits 170 157 $343,361.07 Grand Total 249 241 $579,094.38 Division of Developmental Disabilities 192 Equal Employ Opportunity Commission/Office of Equal Opportunity 26 Foster Care Licensing 16 Garnishment Collection Summary Guardian Subsidy 1 Internal Affairs I/A 46 3rd Quarter ‘09 $113,761.37 Mental Health (CYF/CPS Cases) 10 4th Quarter ‘09 $112,350.14 Personnel (all programs) 141 1st Quarter ‘10 $90,186.78 Protective Services Review Team 131 2nd Quarter ‘10 $ 73,137.08 Grand Total $389,435.37 Unemployment Insurance Benefits/ Unemployment Insurance Contributions 37 Vocational Rehab & Blind Services 18 Grand Total 679 A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 38 Child and Family Protection Division (continued) Criminal Cases Program Cash Assistance Cases Filed Cases Sentenced 8 15 3 Child Support Escape Restitution Paid Prior to Sentencing Fines Collected $1,200 Community Svc $16,709 $9,102 $15,736 $10,730 2 $9,203.00 $0.00 155 2 $0.00 $0.00 100 and Food Stamps Child Care Recipient Restitution Ordered 344 Employee DCYF 2 1 $8,565.57 80 Employee JOBS 1 1 $9,920 Food Stamp 7 12 $40,865 $18,831 $1,200 214 UIB 155 135 $351,281.02 $231,020.50 $9,000 3,605 Grand Totals 176 168 $452,279.59 $269,683.35 $11,400.00 4,498 In FY2010... The debtors, after their failure mandated ADES’ Division of dealing with implementation • In Arizona Department of in bankruptcy court, began Developmental Disabilities of ADES cost-saving ADES with substantial advice Economic Security v. Bussell voluntary payments to the to provide a consumer with measures in relation to the and training on Fourth et al., CLA successfully Department in June 2010. about $400,000 in annualized FY2009 budget reduction. Amendment constitutional defeated an attempt by • In Robert Lundergan v. health care services. • With the support of CLA • CLA attorneys provided issues in the wake of the attorneys and paralegals, PSS 9th Circuit Court of Appeals Providers for Persons with passed the Title IV-E Audit, opinion issued in Greene Security, et al., CLA Disabilities v. Mangum, which brings in approximately v. Camreta that materially Department secured its first successfully defeated not CLA defeated a special $140 million in federal impacts the ability of CPS judgment against this debtor one, but two motions filed action brought by plaintiffs foster care funding. CLA caseworkers to conduct in 2001. However, collection by plaintiffs in the Federal in the Arizona Court of will provide PSS attorneys interviews of children on efforts had been thwarted District Court seeking Appeals seeking to reverse with ongoing training to school premises while until CLA secured another extraordinary injunctive the Superior Court’s ruling ensure that Arizona passes investigating allegations judgment against the debtor relief that would have dismissing their “equal the next audit, which will be of abuse or neglect under access” claim in a case conducted in three years. certain circumstances. a longstanding debtor to State of Arizona, Arizona discharge in bankruptcy over Department of Economic $18,000 owed to ADES. The and her new spouse in 2008. • In Arizona Association of A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 39 Civil Division Division Summary Chief Counsel Pam Culwell • Abney v. State: Success- fic signals improperly pro- The Civil Division is comprised of seven sections that focus fully defended a class action on specialty areas of civil law including natural resources; lawsuit alleging the State and tax, bankruptcy and collections; liability management; several employees improp- trict v. Winkelman: School employment; public health; public safety; transportation; erly removed asbestos from districts sued the State alleg- contract review; procurement; licensing and enforcement; a Department of Corrections ing that rights of way granted education, and complex case litigation. facility in southern Arizona by the Land Department prior causing injury to inmates. The to 1967, without financial suit requested $4 million. Fol- compensation, violated the lowing trial, the court granted U.S. Supreme Court’s ruling in the defendants’ motion for Lassen v. Arizona. Following judgment. the Arizona Supreme Court’s Mission: Major Cases Fundamentalist Church of A dynamic team of • United Effort Plan Trust: Jesus Christ of Latter-Day grammed. • Mayer Unified School Dis- legal professionals Continued litigating the admin- Saints, in the Utah Supreme representing Arizona istration of the United Effort Court. In late 2009, we in many areas of Plan Trust, which owns most sought a court order granting civil law with of the property in Colorado discovery into the Trust’s City, Ariz., in Utah state courts. ownership of water rights The Trust has been under the and cooperation of local district court’s administra- government officials, including tion since 2005. The court law enforcement, with trust found the prior trustees were administration and disputes in breach of their fiduciary over rights to trust property. ment of Transportation: Streams Adjudication Com- duties, removed them and The court approved, and we Defense verdict in a wrong- mission’s determination reformed the Trust. expect substantial discovery ful death action in which the that the Lower Salt River is will be completed before the survivors of a 17-year-old non-navigable. The Court of end of the 2010 calendar year. driver alleged an overpass Appeals ruled the Commission on I-19 south of Tucson was misapplied the federal test for negligently designed and traf- navigability. dedication, integrity and innovation. We briefed and argued a case challenging the court’s reformation, brought by members of the • Lopez v. State: Jury verdict ruling in favor of the State, the for the State, finding no fault U.S. Supreme Court denied the for injuries sustained by a plaintiffs’ petition for certiorari. bicycle rider. The jury found • State v. Arizona Navigable the City of Tempe at fault and Streams Adjudication Com- awarded more than $2 million. mission: Successfully chal- • Figueroa v. Arizona Depart- lenged the Arizona Navigable A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 40 Civil Division (continued) • Vertes v. Maricopa County: Amendment guarantee of due and equal protection clauses. volved an $8 million difference University, brought suit alleg- Successfully protected the process. Inzunza also chal- Litigation is ongoing. of opinion for just compensa- ing race discrimination and State’s $7.5 million invest- lenged retroactive registra- • Level 3 Communications: tion. The case settled for retaliation after ASU decided ment in the Spur Cross Ranch tion, arguing it constituted a Represented the Arizona $130,000 above the State’s not to renew his contract. The Conservation Area by defeat- sentence beyond that im- Department of Revenue in anticipated valuation, plus court granted summary judg- ing the efforts of two private posed at the time of original resisting a taxpayer’s refund rental for a temporary con- ment for ASU on all claims. landowners to build a public sentencing. claim based on obsolescence. struction easement. roadway through the area so • Craven et al. v. Horne, The taxpayer argued that the • Barnes v. Arizona Depart- • La Vie Nails v. Arizona State Board of Cosmetology: they could subdivide and sell et al.: Defended the Leg- State’s valuation of its cable, ment of Public Safety: Suit Administrative action enforcing real estate. The court held islature’s funding plan for conduit and switching equip- for false light invasion of the Board’s rule on infection that a private citizen cannot charter schools against an ment unlawfully overstated the privacy and unlawful interfer- protection and safety stan- condemn public land. action, brought by parents and property taxes owed because ence with his anticipated ap- dards requiring that all imple- • State v. Inzunza and State v. students, claiming the plan is the equipment was obsolete. pointment as Chief of Police in ments and tools coming into Bartholic: Defeated two law- unconstitutional. Litigation is The Tax Court found the tax- Williams, Ariz. DPS conducted contact with a client during a suits raising constitutionality ongoing. payer failed to prove obsoles- a background investigation on pedicure be disinfected. The of sex offender registration • Hobday et al. v. Tom Horne, cence, the Court of Appeals Daniel Barnes as part of the licensee performed pedicures laws. Bartholic argued the et al.: Defended the State’s affirmed and the Supreme law enforcement certification using fish in the salon, and State’s retroactive registra- interests in a suit brought Court denied review. The rul- process, ultimately concluding fish cannot be disinfected. tion requirement violated the by Prescott Unified School ing means that Arizona will not he was “unacceptable” for the The licensee stipulated to Fifth Amendment prohibition District and Lake Havasu Uni- refund $13.7 million. position. Barnes sued. The a consent agreement and of double jeopardy, the Eighth fied School District. The suit court granted summary judg- later appealed to the Superior Amendment prohibition of argues that, in allowing school domain action to acquire ment for DPS on all claims. Court, which dismissed the cruel and unusual punish- districts to bond and pass property for SR 179 initially in- ment and the Fourteenth tax levy overrides, the State’s Regents: Plaintiff, a non-ten- education funding system vio- ured lecturer at Arizona State • State v. TLAQ: This eminent • Fuse v. Arizona Board of appeal. lates the general and uniform A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 41 Civil Division (continued) Budget Cases Superior Court’s dismissal. the Administrative Fund to the • Arizona Association of Chi- The Arizona Supreme Court State’s general fund. The su- Conservation District v. Claims served against the State ropractic, et al. v. Brewer, denied plaintiffs’ petition for perior court granted plaintiff’s Brewer, et al.: Plaintiff chal- in FY2010 totaled $1.87 billion. et al.: Plaintiffs challenged review. Plaintiffs will likely file motions for summary judg- lenges fund transfers from the the transfer of funds from a petition for writ of certiorari ment. Arizona Water Banking Fund various medical regulatory with the U.S. Supreme Court. • Arizona Property and Ca- • Central Arizona Water to the State’s general fund. • Arizona Farm Bureau Fed- sualty Insurance Guaranty Plaintiff initially filed a special Defendants prevailed on their eration, et al., v. Brewer, Fund, and Arizona Life and action before the Arizona Su- motion for summary judgment. et al.: Plaintiffs challenged Disability Insurance Guar- preme Court, which declined Plaintiffs have appealed. the transfer of funds from anty Fund v. State, et al.: jurisdiction. Plaintiff then filed state agricultural boards to Plaintiffs challenged legislation an application for special ac- Providers for Persons with the general fund. The Supe- directing the transfer of funds tion and injunctive relief in the Disabilities, et al. v. State, rior Court granted plaintiffs’ from the two guaranty funds Superior Court. The court de- et al.: Plaintiffs challenged motion for summary judgment, to the State’s general fund. nied expedited consideration a reduction to the rates paid and defendants appealed. The The Superior Court entered a and the parties are conducting to service providers by the case has been briefed and is preliminary injunction prevent- discovery. Dispositive motions Department of Economic awaiting oral argument before ing the transfers. The case is are due in October. Security. Defendants suc- the Court of Appeals. still in discovery, due in large boards to the general fund. • Arizona Association of cessfully defended plaintiffs’ request for a temporary restraining order and preliminary injunction. One of plaintiffs’ primary legal claims was also dismissed. On special action, the Court of Appeals accepted jurisdiction and upheld the • Land Title Association of • Industrial Commission of part to discovery disputes that Arizona v. State, et al.: The Arizona, for Itself and as were ultimately resolved in fa- Land Title Association of Ari- Trustee for the Special Fund vor of defendants. Dispositive zona is challenging transfer of of the Industrial Com- motions are due in September. funds from the Arizona Escrow mission of Arizona, et al. Recovery Fund to the State’s v. Martin, et al.: Plaintiff general fund. This case is in sought to prevent the transfer an early stage; no discovery of money from the Industrial has been taken and no mo- Commission’s Special Fund in tions filed. Liability Management Claims paid during that period totaled only $4.68 million. The Liability Management Section provides quality legal representation for the State of Arizona and its agencies, boards, department, commissions, and employees sued for claims, covered by the Arizona Department of Administration Risk Management Division, at a cost-effective alternative to private counsel. Statistical comparisons consistently show that cases assigned to Liability Management cost less, and are disposed of more quickly, than those assigned to private counsel. For example, in FY2010, the average hourly rate per tort lawsuit was $102 for Liability Management and $187 for private counsel. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 42 Civil Division (continued) Money Awards and Savings A. Civil Penalties Awarded C. Restitution for Victims Awarded 1. Accountancy Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $171,232.00 1. Cosmetology Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $850.00 1. Accountancy Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,500.00 2. Dental Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,734.00 2. Barber Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,750.00 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $102,584.00 3. Behavioral Health Examiners Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $500.00 4. Chiropractic Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $16,350.00 D. Savings to Client Agencies 5. Cosmetology Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $40,750.00 1. Appraisal Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $30,000.00 (Superior court’s award of attorneys fees reverse on appeal) 6. Liquor Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $239,750.00 7. Nursing Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $55,400.00 8. Pest Management Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000.00 9. Physical Therapy Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $8,750.00 10. Pharmacy Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $79,400.00 11. Registrar of Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $6,700.00 12. Technical Registration Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $14,000.00 13. Veterinary Medical Examiners Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,000.00 14. Weights and Measures Department . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,600.00 2. Department of Racing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$55,000.00 (Court awarded cost of investigation.) 3. Registrar of Contractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $237,924.94 (Difference between amounts sought by Recovery Fund claimants in administrative and civil actions and amounts awarded.) E. Savings in ADOT Eminent Domain and Contract Cases . . . . . . . . . $23,064,124.00 (Difference between amount of settlements and verdicts paid and amounts demanded as just compensation and damages.) 15. Department of Health Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $670,000.00 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,141,700.00 B. Cost Recovery Awards 1. Accountancy Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $29,185.00 2. Cosmetology Board . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $53,435.00 Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $82,620.00 A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 43 Civil Rights Division Chief Counsel Melanie Pate Mission: To enforce civil rights laws and eliminate discrimination statewide by increasing public awareness of civil rights issues. These goals are reached through investigation, enforcement, education Division Summary Division Highlights captions and descriptions. The Civil Rights Division (CRD) enforces the Arizona Civil Historic Ninth Circuit Victory The Division appealed that deci- Rights Act, which prohibits discrimination in employment, On April 30, 2010 the Ninth Circuit sion to the Ninth Circuit, which voting, public accommodations and housing, by investigating, Court of Appeals reversed the U.S. ruled that closed captions and mediating and litigating civil rights complaints. District Court’s dismissal of State descriptions are auxiliary aids The Division provides conflict resolution services and v. Harkins Amusement Enterprises, and services included under Title mediation programs statewide. It not only responds to Inc., a lawsuit in which the State III of the ADA. complaints, but seeks to reduce discriminatory conduct sought the installation of equip- Captioning provides the text of the through education and outreach in the community. ment to display captions and audio soundtrack of a movie for people CRD is comprised of two sections: Compliance and descriptions for people with sen- who are deaf or hard of hearing. Litigation. The Compliance Section screens and investigates sory disabilities. It was a ground- Audio descriptions provide infor- complaints involving civil rights violations and provides breaking legal decision because it mation about key visual aspects education and outreach to the public. marked the first time that a Circuit of a movie through descriptions of Court of Appeals has ruled on scenery, facial expressions, cos- whether the Americans with Dis- tumes, action, and scene changes abilities Act requires captions or during pauses in dialogue. The Litigation Section is responsible for litigation in state and federal courts involving civil rights violations and provides legal resources for drafting legislation, education and outreach. and the provision of The Conflict Resolution Program, a component of the services to victims, Litigation Section, provides services statewide, including including dispute mediation, facilitation, conciliation and training. The resolution services. mediation programs encompass civil rights, truancy and The Division continues victim-offender issues. to focus on outreach and education involving vulnerable populations. descriptions in movie theaters. The Civil Rights Division received In 2006, the Civil Rights Division support from many disability and filed a lawsuit against Harkins civil rights organizations who Theaters on behalf of Arizonans filed briefs with the Ninth Circuit, with sensory disabilities. The including the U.S. Department of U.S. District Court dismissed the Justice, the Screen Actors Guild, suit in 2008, concluding that the The National Association of the Americans with Disabilities Act Deaf, the American Council of the (ADA) and the Arizonans with Blind and the National Disability Disabilities Act (AzDA) do not Rights Network. require movie theaters to provide A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 44 Civil Rights Division (continued) • The Compliance Section ing parties and for future investigated 1521 discrimina- monitoring and enforcement tion charges and resolved 957 activities, along with a wide cases, including 157 housing variety of injunctive relief charges, 730 employment to prevent future civil rights charges and 70 public accom- violations. modations charges. • The Compliance Section • The Division’s Conflict Resolution Program mediated issued 20 determinations 113 civil rights matters and in cases where the Division facilitated 70 agreements, found reasonable cause to which is a 62 percent settle- believe that unlawful discrimi- ment rate. As a result of the nation had occurred. Many of Conflict Resolution Program’s these cases were successfully efforts, charging parties conciliated before litigation received more than $351,600 became necessary. in monetary relief and also • The Litigation Section resolved 103 charges of discrimination either through mediation, conciliation or litigation and performed work obtained significant injunctive relief to assist the parties in finding common ground in nation filed with the Division. filed with the Division. As tated by the Conflict Resolution a result of these efforts, the Program: in monetary relief for charg- • In an employment matter involving disability discrimi- • In an employment matter to pay the charging party involving allegations of sex $44,000. discrimination and retaliation, • To resolve a charge of employment discrimina- Among the agreements facili- total of more than $838,000 nation, the employer agreed resolving charges of discrimi- on hundreds of other charges Litigation Section obtained a Attorney General Terry Goddard holds a torch and helps lead the annual Martin Luther King Day March in downtown Phoenix. tion involving disability and the respondent agreed to pay the charging party $35,000. • To settle a charge involv- her service animal without unnecessary restrictions. In addition to their civil rights mediations, the Conflict Resolution Program trains volunteers to serve as mediators in various national origin discrimination, ing alleged violations of the Superior Court Alternative the respondent agreed to pay Arizona Fair Housing Act, the Dispute Resolution programs the charging party $40,000. respondent agreed to allow and coordinates mediations for the charging party to keep various courts in the State. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 45 Civil Rights Division (continued) • State v. FGPJ Apartments, • State v. ASARCO, LLC: This The Litigation Section also and training to prevent future the Arizona Fair Housing Act helped parties resolve 24 civil rights violations in housing and the Arizonans with Disabili- et al.: This housing discrimi- sex-based employment charges through conciliation and employment. ties Act. Among the highlights nation case involved a Tucson discrimination case, which of the cases litigated in the landlord who allegedly dis- includes claims for disparate past year: criminated against a disabled treatment, hostile work envi- tenant by failing to provide ronment, sexual harassment, an accessible parking space retaliation and constructive and make necessary repairs discharge, involves allega- to his apartment so that he tions that ASARCO has a could operate his medical history of ignoring complaints equipment. The landlord also of workplace harassment and allegedly retaliated against failing to address employees’ the tenant and his family by use of pornographic graffiti threatening to evict them af- to humiliate, demean and ter they filed a complaint with ostracize co-workers, includ- the Division. The lawsuit was ing the aggrieved party in this resolved through a settlement lawsuit. Defendants have agreement that required the vigorously defended the ac- landlord to pay $100,000 to tion and the case is likely to the tenants and $50,000 to go to trial in early 2011. agreements achieved prior to the conclusion of the Division’s administrative investigation or after a reasonable cause determination was issued but before a lawsuit was filed. Through these conciliation efforts, the Division obtained more than $227,000 in monetary relief for the charging parties and for future monitoring and enforcement activities. The conciliation agreements also resulted in substantial non-monetary relief for disabled persons in the form of physical changes to places of public accommodations, such as the building of access ramps and retrofitting places of public accommodation to ensure disabled persons could access the businesses and their services, and requiring policy revisions One pre-lawsuit conciliation agreement involved a complaint against a national grocery • State v. Hildale-Colorado retailer alleging that its pay- City Utilities, et al.: On June ment policy for home delivery 25, 2010, the Division filed service did not accommodate a lawsuit against the Town of customers with disabilities. Colorado City, Ariz.; the City The grocery retailer agreed to of Hildale, Utah; Hildale-Col- make changes to the payment orado City Utilities; Twin City procedure to allow it to take Water Authority, and Twin City payments from people with Power for alleged violations of disabilities who receive SNAP the Arizona Fair Housing Act. benefits. The complaint alleges that In seeking to enforce housing, employment and public accommodations discrimination laws throughout Arizona, the Litigation Section pursued 23 lawsuits in state and federal trial and appellate courts alleging violations of the Arizona Civil Rights Act, which includes the defendants discriminated against Colorado City resident Ronald Cooke by not providing him with water and other utility services because of his religion and by not accommodating his disability. Mr. Cooke is a former member of the Fundamentalist Church of Jesus Christ of Latter Day Saints (“FLDS”). the Division for future civil rights enforcement and monitoring activities. The settlement is one of the largest the Division has entered into in a housing discrimination case. • State v. City of Cottonwood & Cottonwood Police Department: This employment discrimination case involves allegations that the Cottonwood Police Department made passing a physical A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 46 Civil Rights Division (continued) fitness test known to have a call taker who requested to disparate impact on women use her certified service dog a requirement to promote to • State v. La Paloma: This leged that a manager sexually The employer had less than employment lawsuit involves harassed an employee on 15 employees when the at work as a reasonable ac- an employer that owns and more than one occasion and harassment occurred, so the sergeant in order to prevent commodation for her mobility operates group homes serv- when the employee com- Division had jurisdiction under the only woman ever to have disability. The defendants ing adolescents with mental plained of the treatment, the the Arizona Civil Rights Act otherwise qualified from refused to grant her request health diagnoses. The Divi- employer retaliated against to investigate the complaint attaining that position. The and retaliated against her sion alleges that the employer her by reducing her work (whereas the EEOC did not case includes claims for for engaging in protected failed to hire an otherwise hours, asking her to transfer have jurisdiction under fed- disparate impact as well as conduct. qualified applicant as a to a location farther from her eral law.) The parties entered behavioral health technician home and treating her less into a consent judgment that because she is deaf. The favorably than other employ- required the defendant to pay Division also alleges that the ees. The settlement agree- $15,000 to the employee. employer failed to engage ment required the defendant in the interactive process or to provide fair monetary relief consider available reasonable to the employee, adopt new accommodations that would sexual harassment policies have enabled the applicant to and procedures, expand its perform the essential func- training program, and ap- tions of the position. point a trained employee to disparate treatment discrimination relating to defendants’ implementation of the physical fitness test. As such, the case has implications for female police officers other than the charging party. • State v. Dupnik, et al.: The • State v. Frito-Lay, Inc. and Frito-Lay North America: This case of sex- and racebased employment discrimination involves allegations that the defendants harassed and discriminated against a Caucasian female employee Division filed a lawsuit against after she was promoted to a Pima County Sheriff Clarence position generally occupied Dupnik, Pima County and the by Hispanic males, and then Pima County Sheriff’s Depart- threatened her with termina- eegee’s: The Division settled ment for alleged disability tion and demoted her after a claim against this Tucson discrimination and retaliation she was injured in an indus- employer that owns and against a former employee. trial accident attributable to operates a chain of fast-food et al.: The Division filed a The employee was a 9-1-1 the defendants’ safety viola- restaurants. The lawsuit al- lawsuit against this employer tions. • State v. CEO Foods d/b/a be responsible for receiving and investigating employees’ harassment allegations. • State v. Unique Hair Artistry, for alleged sexual harassment of a female employee. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 47 Solicitor General’s Office Solicitor General’s Office Major Accomplishments The Solicitor General’s Office is responsible for: in Fiscal Year 2010 • Ensuring the quality of the Attorney General Office’s Significant Amicus Briefs appellate practice; funerals of fallen soldiers. The Attorney General’s Office may also file amicus briefs in state court actions on issues The Arizona Attorney General of concern to the State. In the frequently joins with other At- past year, for example, the State torneys General to file amicus filed an amicus brief before briefs in cases pending before the Arizona Supreme Court Secretary of State on election law issue and handling civil the U. S. Supreme Court on addressing the application of Mission Statement: election law and campaign finance enforcements; issues of importance to the Arizona’s public records laws to The Solicitor General’s • Providing independent advice to State government states. During fiscal year 2010, metadata. • Overseeing the preparation and publication of official Solicitor General Mary O’Grady Office provides leadership in appeals, election law, ethics, independent advice, legal opinions, public access laws, and continuing legal education. It is committed to excellence, fairness and integrity. Attorney General Opinions; • Representing the Clean Elections Commission and agencies and boards in administrative proceedings in which Assistant Attorney Generals serve as advocates; • Reviewing constitutional challenges to Arizona state laws and representing the State in selected cases; • Coordinating the Attorney General Office’s continuing legal education (CLE) program; • Providing advice to all attorneys of the AG’s Office involving ethics issues; • Coordinating the work of the Open Meeting Law Enforcement Team and the Public Records Task Force. Arizona and Montana took the lead on preparing a state amicus brief in Citizens United v. FEC, a landmark campaign finance case concerning limits corporate campaign contributions. The multi-state brief supported the constitutionality of state laws that limited direct Defending Arizona’s Election Laws In fiscal 2010, attorneys from the Solicitor General’s Office continued to represent the State in lawsuits challenging the constitutionality of Arizona’s election laws. independent expenditures • Identification at the Polls by corporations and labor and Proof of Citizenship. unions. Arizona joined many Since 2006, lawyers from other amicus briefs in civil and the Solicitor General’s Office criminal cases, including briefs have been defending the supporting Second Amendment State’s requirements regard- rights and supporting liability ing identification at the polls for people who protest at the A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 48 Solicitor General’s Office (continued) and proof of citizenship when • Arizona’s Clean Elections registering to vote. These Act. Attorneys from the requirements were part of Solicitor General’s Office also the Proposition 200 citizens’ continued their defense of the initiative approved in 2004. matching funds provision of challenge, and that case is against a commerce clause SGO reviewed more than 286 currently on appeal. challenge. The district court briefs and coordinated more and the Ninth Circuit affirmed than 30 moot courts. the constitutionality of Arizona’s Election-Year Work. Because laws. the SGO handles the State’s legal work concerning elec- Representing the State in School Choice Litigation the Arizona Clean Elections The Solicitor General’s Office vailed in the federal district Act. Last year, the district continued its work on Winn court. In fiscal year 2010, at- court held that the matching v. Garriott, a challenge to the Improving Tribal-State Agreements torneys argued the appeal of funds violated the require- State’s tuition tax credit law. SGO continued its work with that decision before the Ninth ments of the First Amend- The State successfully peti- lawyers from throughout the Circuit and await the decision ment, but the Ninth Circuit tioned for certiorari from a Ninth Office to address recurring in that case. reversed this decision. A pe- Circuit decision that reversed issues in tribal-state agree- • Disenfranchisement of tition for certiorari to the U.S. the district court’s dismissal of ments. Most of this effort in the Convicted Felons. Two Supreme Court is anticipated the Establishment Clause chal- past year focused on working years ago, the district court in this case. lenge to the State’s tuition tax with lawyers from the Navajo credit law. The Supreme Court Nation Department of Justice will decide the case in its term to develop standard language that begins in October 2010. for contract provisions. This In fiscal 2008, the State pre- upheld the constitutional- • Laws Governing Local tions and campaign finance, each election year brings an increased workload. The 2010 election year began with intense litigation from the district court to the U.S. Supreme Court concerning the constitutionality of the matching funds component of the Clean Elections system. Ultimately, the Ninth Circuit ity of our laws pertaining to Elections. In its 2009 ses- the disenfranchisement of sion, the Arizona Legislature convicted felons. In fiscal approved a bill requiring city 2010, the appeal of the trial and town elections to be Defending Arizona’s Regulation of Wine Sales court’s decision was argued non-partisan and limiting the The Solicitor General’s Office before the Ninth Circuit, and, use of at-large elections. The and the Licensing and Enforce- Appellate Practice. The So- rari in the case. There was in an opinion authored by City of Tucson challenged ment Section collaborated to licitor General’s Office contin- also litigation with the Green Justice Sandra Day O’Connor, this legislation as an invalid successfully defend the con- ued its work preparing, review- Party in federal district court a unanimous panel affirmed infringement on its rights as stitutionality of Arizona’s laws ing, and editing briefs for state concerning the constitutionality the district court’s decision. a charter city. The trial court regulating the sale of wine and federal appellate courts of certain aspects of Arizona’s rejected the constitutional project is near completion. Significant Achievements affirmed the constitutionality of the Clean Elections program, but the Supreme Court enjoined matching funds, pending its review of a petition for certio- and coordinating oral argument preparation. In fiscal 2010, the A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 49 Solicitor General’s Office (continued) process by which new parties Arizona Supreme Court chal- preventing implementation of Continuing Legal Education. Open Meeting Law Enforce- gain representation on Arizona’s lenging several elements of the new law. The federal district The Solicitor General’s Office, ment. In collaboration with ballot. In addition, SGO lawyers the State budget and worked court challenge was subse- together with the Office’s Con- lawyers from throughout the represented the Secretary of with lawyers from the Education quently dismissed. tinuing Legal Education Com- Office who serve on the Open State in 17 nomination petition and Health Section on litigation Attorney General Opinions. mittee, offers continuing legal Meeting Law Enforcement Team challenges that determined related to the budget for K-12 The Solicitor General’s Office education programs to ensure (“OMLET”), SGO assisted with whether candidates qualified education. SGO lawyers also coordinates production of the that lawyers have relevant edu- the processing of more than 60 to be on the 2010 ballot. SGO assisted lawyers from other di- Attorney General’s opinions. In cational opportunities that will open meeting law complaints. has also received more than visions handling budget-related fiscal year 2010, the Attorney fulfill the State Bar’s continuing These complaints involved two dozen referrals from the cases that were pending in trial General’s Office received 48 legal education requirement. In public entities from through- Secretary of State for enforce- and appellate courts. opinion requests and requests fiscal 2010, the Office offered out the State. If a violation is ment of campaign finance laws Litigation Concerning Abor- to review opinions from lawyers 29 continuing legal education found, the remedies typically and submitted more than 40 tion Legislation. In the 2009 for school districts. The Office programs for a total of 68 CLE involve training, monitoring, and changes to elections law to the session, the Legislature passed issued opinions concerning, for hours. The programs covered discussions of the allegations U.S. Department of Justice for a bill making a number of example, the allocation of inter- issues such as legal ethics, and the results of the inves- preclearance, including an ex- changes to Arizona’s laws con- est income on trust accounts to electronic filing, recent rule tigation at a public meeting. tensive update of the Secretary cerning abortions. The legisla- the Arizona Foundation for Legal changes, legislative history Serious violations may result of State Elections Procedures tion was challenged in lawsuits Services & Education, the re- research and notice of claim in civil penalties and removal Manual. filed in state and federal court. quirements for vendor contracts requirements. In conjunction from office. OMLET lawyers also Budget-Related Litigation. The State court granted a pre- for the state’s photo-enforce- with the National Association of participate in training programs The economic downturn led to liminary injunction preventing ment system, and requirements Attorneys General, the Office of- that educate the public and lawsuits challenging various enforcement of major pieces of for reporting applicants for pub- fered an intensive trial practice public officials on open meeting aspects of the State’s budget. that legislation while the lawsuit lic benefits who are not lawfully program for attorneys that of- law requirements. The SGO represented the State is pending. That decision is present in the United States. fered practical experience in all in special actions before the presently on appeal. In con- aspects of trying a case. trast, the federal court refused to enter a preliminary injunction A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 50 Finance Division Division Summary The Finance Division is comprised of four Sections: the Administrative Law Section, Bankruptcy and Collection Enforcement Section, the Chief Counsel Mark Wilson Financial Services Section and the Information Services Mission: The Finance Division Sections. Significant Organizational Change in the Office The creation of the Finance Division marked the first major organizational change in the Attorney General’s Office in the last decade. In FY07, ALS and FSS were moved from other Divisions into the newly created Finance Division. In FY08, ISS was moved into the Division, and in FY09, BCE came aboard. The Division strives to bring the legal and business sides of the Office together to improve the work product of both. By working together as a Division, ALS is better able to observe the effect and consequences of legal advice it may give, thus helping the Section tailor its advice to better serve the business needs of the State. The Administrative Law Security, Department of Housing, State bonding issues, providing The Bankruptcy and Collec- Section (ALS) is comprised Department of Gaming, Govern- procurement advice, and assist- tion Enforcement Section General’s Office with a of lawyers and legal support ment Information and Technology ing agencies with licensing and (BCE) is comprised of lawyers, multidisciplinary team teams. ALS represents ap- Agency, Arizona Exposition and certification issues. Other tasks collectors and legal support of information services, proximately 60 State agencies State Fair, State Retirement and include prosecuting enforcement teams. BCE represents virtu- financial and legal in matters concerning public the State Lottery, to name a few. actions and defending claims ally all state agencies in debt- professionals. We monies, procurement, finance, or actions against the agencies. related matters. In FY2010, provide legal advice, open meetings, public records, ALS’ successes are measured BCE collected $12.4 million that in its partnerships with the client state agencies had been unable agencies and the assistance it to obtain. BCE’s debt collection provides them in performing their responsibilities range from rou- statutory missions in a creative tine collection and bankruptcy and cost-effective manner and matters to complex litigation to its ability to deal effectively with establish debt. For example, in litigation matters when they arise. FY10, BCE collected over $3.5 supports the Attorney litigation, budgetary, contract, accounting and financial control services to the Office general agency advice and any related litigation. Clients include the Judiciary (and its associated programs), Secretary of State, Department of Administration, and to the Executive Department of Commerce, De- and Judicial Branches partment of Corrections, Depart- of State Government. ment of Emergency and Military Affairs, Department of Homeland Because of the number of clients, ALS deals with a wide range of legal issues. ALS’ 60-plus agencies are represented by 12 Assistant Attorneys General. These lawyers are the State’s experts on public monies, procurement, contracting and financial issues. ALS’ responsibilities include negotiating multi-million dollar contracts, assisting in million dollars on behalf of the Department of Transportation in the Flying J bankruptcy case. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 51 Finance Division (continued) The Financial Services provided divisions with timely Section (FSS) is responsible financial information to improve for the financial operational decision-making and reduced services of the Attorney Gen- administrative costs. eral’s Office and is comprised of accounting, procurement and financial management professionals. FSS strives to assure work is being performed in a “private business” appropriate model. During the year, FSS helped redefine roles and responsibilities for all positions to maximize available resources, implemented technological solutions to enhance operations and data integrity, reviewed multiple processes and implemented improved methods to improve efficiency and response times. The section also developed reports to bolster financial management and resource allocation, The Information Services Section (ISS) is comprised of computer engineers, software professionals, trainers and “help desk” professionals. ISS has improved it systems and processes so that it now performs the same services provided in FY07 with 30 percent fewer FTEs. ISS is responsible for overseeing and operating the information technology services of the Office. ISS has been responsible for implementation of the Office’s new debt collection system. This new system is expected to provide better management and insight into the Office’s debt collection activities and result in increased revenue to the State. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 52 Employee Services Division Division Director Susan Schmaltz Mission: To provide customercentered, quality administrative The former Administrative Operations Division has been •O  rganizational develop- reorganized. A portion of the former division was moved ment: We provide training munications service requests to Finance and the remaining sections were renamed the opportunities to equip Office across the Office as well as Employee Services Division. Over the past 24 months, the employees with the shared val- consult with division manage- Employee Services Division has been transformed into an ues, commitment to mission, ment on space planning. energized, performance-oriented staff focused on providing knowledge and skills needed professional administrative services to the Office. •S  afety and security: Our to accomplish extraordinary program development and sys- tasks in service to our State. tem oversight includes physi- Division Summary • Loss Prevention Program oversight: We ensure Office and employee awareness cam- Resources (HRS) and Facilities Management and Planning compliance, including EEO paigns designed to maximize (FMP) Sections. The Division provides the internal support agency plan implementation, personnel safety and security. and administrative services needed to effectively carry out ADA program development, the Office’s mission. employee grievance process coordinate shuttle transpor- oversight and agency-wide tation, mail room operation, health and safety services. receptionist and copy center Human Resources Section retaining a diverse and well- manner that supports The Human Resources Section supportive work environment. the overall mission (HRS) oversees all activities nec- of the Attorney essary to develop, support and work throughout the Office General’s Office. We shape the future of the Office’s in the areas of research and workforce – from recruitment personnel policy development, through retirement. Four work employee relations, perfor- areas drive our activities: mance management and ben- •S  trategic workforce plan- efit program implementation. and cost-effective continually strive to improve our services, value and customer satisfaction. cal security system operations The Employee Services Division (ESO) consists of the Human services in a proactive, responsive, improvement and telecom- ning: Our focus is on attracting, developing, motivating and qualified workforce within a •S  killed consultation: We Facilities Management and Planning Section: The Facilities Management and •C  entral services: We services that support Office needs. •C  ontinuation of Operations Planning Section (FMP) manages Planning (“COOP”): We the day-to-day operations and develop plans and procedures maintenance of the agency’s to ensure that the Office can buildings and office spaces. continue to perform essential Primary areas of focus are: functions in the event of an •D  aily operations: We coordi- emergency. nate the maintenance, tenant A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 53 Employee Services Division (continued) Division Highlights: of Administrative rules and state applicable state, federal and FMP: inspections, ergonomic evalua- HRS: and federal laws. agency regulations. •C  entralized the receptionist tions and Worker Compensation • A ssisted the Divisions in •C  onducted a thorough review of • R eviewed over 10,000 re- services in the Capital Center reports. sumes, recruited and hired 27 building, improving efficiency, and corrected deficiencies attorneys and 47 non-attorneys security and services with limited the AG shuttle, transporting at- an Office-wide implementation resulting in improved safety and in “mission critical” positions. resources. torneys, staff and documents to of a 2010 Reduction- in-Force security of all personnel and (RIF), an involuntary furlough physical assets. implementing the 2010 budget the Office badge access system reduction bill, which resulted in and a voluntary furlough • Implemented health initia- •C  oordinated the Office Blood Drive Campaign. The Office received high recognition with a program. Provided outreach tives such as both annual and “Bronze Award” for 20 percent placement services for affected pandemic flu shots, CPR/AED participation in blood drives employees and training support trainings, and the on-site mobile conducted throughout the year. for supervisors to minimize the mammography program. impact of the RIF. • E stablished and implemented diversity and cultural competency program initiatives across the Office, including the creation of the Accessibility and Accommodation Guidebook. • E xecuted a series of internal audits to ensure Office personnel practices complied with applicable Arizona Department •C  oordinated the agency Travel • Implemented a Pandemic Flu Planning and Awareness Reduction Survey resulting in a campaign which minimized 92% completion rate. the Office’s risk and improved • A dministered the State Employees Charitable Campaign for the Office. The Office exceeded the internal goal for dollars and participation. •D  eveloped and implemented training in the areas of ADA, Ethics, Confidentiality and Con- employee health and safety. One positive campaign result: 350 employees received on-site flu shots and 146 employees received H1N1 shots, reducing the risk of illness to employees across the agency. • P rovided a valuable service with • A udited the Agency COOP pro- the courts and other agencies in gram, identifying opportunities the Capitol Mall area. During the for improvement of services and year, the shuttle carried 7,738 recovery response. passengers and logged 14,170 • A s part of the Loss Prevention miles. The shuttle saved valu- Program, conducted a thorough able attorney time and reduced review of emergency systems agency spending on reimbursed and worked to correct deficien- mileage and parking. cies. Work included fire safety • P rocessed 659 work orders with inspections, review of building ADOA Facilities Operations and access procedures and development of a Violence in the Workplace Prevention Program. •D  eveloped written procedures and cross-trained FMP staff on procedures, improving the consistency and efficiency of services to AGO employees. •C  oordinated loss prevention ducting Performance Apprais- issues with ADOA Risk manage- als to ensure compliance with ment, such as fire and safety Maintenance to repair, maintain and improve working conditions in the state buildings occupied by the AGO. •M  anaged 473 telecommunication service requests during the fiscal year. • P rocessed some 164,500 pieces of mail through the Law Building mailroom. A r i z o n a A t t o r n e y G e n e r a l Te r r y G o d d a r d • 2 0 1 0 A n n u a l R e p o r t 54