Arizona Attorney General Kris Mayes announced Friday that her office will not pursue criminal charges against Governor Katie Hobbs following a state‑level investigation into alleged pay‑to‑play dealings with Sunshine Residential Homes. The probe centered on a $100,000 contribution to the governor’s inaugural celebration and a subsequent 30% rate increase granted to the group‑home operator.
Background of the allegations
Sunshine Residential Homes, a large provider of foster‑care beds in the Phoenix metropolitan area, contributed $200,000 to the state Democratic Party in the months leading up to the 2022 gubernatorial election. After Hobbs won a narrow victory over Republican Kari Lake, Sunshine donated an additional $100,000 to the governor’s inaugural fund and another $100,000 to the party in August 2023. The company’s founders, Simon and Elizabeth Kottoor, each gave $10,000 to Hobbs’ campaign.
In May 2023, the Arizona Department of Child Safety approved a rate increase for Sunshine, raising its per‑bed payment from $149 to $195. The agency later noted that Sunshine threatened to reduce its bed capacity and shift to housing unaccompanied immigrant children for the federal government if the increase was not granted. The federal reimbursement rate for such children was nearly double the state rate.
Attorney General’s findings
Mayes, who is also a Democrat, said the investigation did not uncover the “necessary quid pro quo” to support a bribery charge. She emphasized that while the conduct did not meet the criminal standard, it highlighted a need for legislative reform to increase transparency of political donations made by state contractors. Mayes urged both Governor Hobbs and the GOP‑controlled Legislature to adopt stronger disclosure rules.
Governor Hobbs denied any wrongdoing, stating she was not involved in the decision to grant the rate increase. The Department of Child Safety indicated that then‑Director David Lujan approved the increase and that the governor’s staff were not part of the process.
Broader context and ongoing investigations
The issue has become a political focal point as Hobbs seeks a second term. Republican U.S. Representative Andy Biggs has run advertisements highlighting the investigation. A separate inquiry led by Republican Maricopa County Attorney Rachel Mitchell and the state auditor general continues, though details about its scope and timeline remain unclear.
Sunshine Residential Homes also faced scrutiny after the death of 9‑year‑old Jakob Blodgett, who died in a Sunshine home in Glendale in December 2022. A lawsuit alleges the provider failed to manage his Type 1 diabetes properly. While no criminal charges have been filed in that case, the incident underscores concerns about the quality of care in some group‑home facilities.
Implications for Arizona’s child‑welfare system
Sunshine operates 28 homes with roughly 290 beds, providing about 70% of sibling placements in foster care across metropolitan Phoenix. Losing those beds would strain the state’s ability to keep siblings together, according to the Department of Child Safety. All providers that held contracts with the agency received rate increases in a 2024 contract round, including Sunshine, which saw its per‑bed rate rise to $234.
Mayes concluded that the investigation, while not resulting in criminal charges, serves as a catalyst for policy changes aimed at safeguarding the integrity of state contracting and protecting the welfare of Arizona’s children.
Original reporting: KOAT Albuquerque — read the source article.
