State prosecutors declined to file criminal charges against Arizona Gov. Katie Hobbs over allegations that she took part in a pay-to-play scheme with a group home company that received a rate increase from the state after contributing $100,000 to her inaugural celebration, Attorney General Kris Mayes announced Friday. The Democratic governor has been accused of giving preferential treatment to Sunshine Residential Homes after the Arizona Republic revealed the company contributed to the inaugural fund and Arizona Democratic Party and later received a 30% payment increase.
Only Sunshine and one other company were given increases during the 2022-2023 contracting period. The investigation has turned into a political millstone for Hobbs as she seeks a second term as governor. Her Republican opponent, U.S.
Andy Biggs, has run an ad underscoring the investigation into Hobbs. Hobbs denies wrongdoing, saying she wasn’t involved in the decision to grant the increase. While the situation did not meet the standard for criminal charges, Mayes said her investigation “shows there is a need for legislative reform" around the transparency of political donations.
Mayes, like Hobbs, is a Democrat. A separate investigation by Republican Maricopa County Attorney Rachel Mitchell and the state auditor general is continuing. It’s unclear when the latter investigation will be completed and how it differs from the attorney general’s examination.
The company gave $200,000 to the state Democratic party in the months leading up Hobbs’ November 2022 showdown against Republican Kari Lake. After her narrow victory, Sunshine gave another $100,000 to Hobbs’ inaugural fund weeks before she took office in 2023 and another $100,000 to the party in August 2023, according to records. The company's founder, Simon Kottoor, and his wife, Elizabeth Kottoor, each contributed a total of $10,000 to Hobbs’ gubernatorial campaigns.
Sunshine sought an increase in 2022, but it was denied about a month after Hobbs took office. The company tried again and was approved in May 2023, raising its rate from $149 to $195 per bed. The Arizona Department of Child Safety said Sunshine told the state it would reduce its bed capacity if it didn’t get a rate increase and instead would use such beds to house unaccompanied immigration children for the federal government.
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