Arizona House Speaker Demands Answers— Says AG Kris Mayes Omitted Alleged Bribery Offer In Hobbs Pay-to-Play Investigation

Arizona House Speaker Steve Montenegro (R-LD29) is challenging Attorney General Kris Mayes’ decision to decline prosecution in the Hobbs-Sunshine pay-to-play investigation, accusing her office of omitting an alleged 2022 offer by Sunshine Residential Homes CEO Simon Kottoor to influence a state official.

In an Aug. 27 letter to Mayes, Montenegro said the Attorney General’s publicly released findings failed to address critical evidence gathered during the House’s parallel investigation into rate increases awarded to Sunshine by the Arizona Department of Child Safety.

He wrote that Mayes’ Memorandum on her office’s investigation “cannot remain unaddressed.” 

“That Memorandum reflects serious deficiencies that call into question whether the investigation was conducted in good faith and for legitimate purposes. 

The Memorandum suggests that your Office failed to pursue critical issues and reached conclusions that directly conflict with reliable evidence—including information provided by the very witnesses your Office claims to have interviewed. 

Those failures raise the specter that your Memorandum was intended to influence the November election by attempting to inoculate the Governor from a perceived political vulnerability.”

Montenegro demanded written answers to five areas of concern by 5 p.m. Sept. 4.

Mayes announced Aug. 21 that her office had found insufficient evidence of the quid pro quo required to support a bribery charge. According to the attorney general, the two-year investigation included multiple interviews and a review of campaign-finance records, procurement documents, bank records, emails and internal communications totaling more than one terabyte of data and 100,000 documents.

The investigation examined allegations that political contributions benefiting Hobbs and the Arizona Democratic Party were connected to substantial rate increases awarded to Sunshine, a major operator of group homes for children in state care.

Alleged Offer to DCS Director

The most serious issue raised in Montenegro’s letter concerns an alleged conversation between Kottoor and former DCS Director Michael Faust during Hobbs’ transition into office in the fall of 2022.

Faust told House investigators that Kottoor offered to recommend that Gov.-elect Hobbs retain him as DCS director if Faust approved Sunshine’s pending request for a rate increase, according to the letter.

Faust said he rejected the proposal and reported it to then-Deputy DCS Director Robert Navarro. Montenegro wrote that another senior DCS employee, Alex Ong, had contemporaneous knowledge of Faust’s report.

The Attorney General’s public memorandum did not describe the allegation.

Mayes subsequently confirmed that her investigators heard Faust’s account. Kottoor denied making the offer and gave investigators a conflicting version of the conversation, saying Faust wanted to remain DCS director and had indicated support for a congregate-care rate increase.

Mayes characterized the dispute as a “he said, he said” situation unsupported by an eyewitness to the conversation. She also questioned Faust’s credibility because he did not report the alleged offer to law enforcement at the time. Montenegro’s letter states that Faust immediately reported it internally to Navarro.

Faust disputed that characterization in an interview with The Arizona Republic, saying he had nothing to gain by fabricating the allegation.

A Sunshine spokesman said Kottoor stands by his account and called Faust’s allegation politically motivated and untrue. The spokesman also said the House has not requested an interview with Kottoor.

Montenegro asked Mayes whether her office investigated potential criminal conduct by Kottoor or Sunshine arising from the alleged offer and why that allegation was excluded from the publicly released findings.

Conflicting Accounts Inside DCS

The House Speaker also challenged Mayes’ reliance on statements from former DCS Director David Lujan, who approved Sunshine’s May 2023 rate increase.

Mayes’ findings said Lujan relied on recommendations from agency staff, including Ong and Navarro. Montenegro said interviews and internal records gathered by House investigators show both officials initially opposed the increase.

Ong testified that “consistently, our recommendation was to deny it,” according to Montenegro’s letter. The speaker said Navarro likewise opposed the increase and was fired several weeks after it was approved.

The letter also cites internal messages exchanged on May 18, 2023, in which Ong and Navarro expressed concern about their employment while the decision remained pending. Montenegro presented the messages as evidence that staff believed Lujan had already decided to approve Sunshine’s request.

Montenegro further disputed Lujan’s reported claim that Sunshine submitted the only provider rate request he received as Director. The letter identifies a separate request from Power House Youth Facility that DCS rejected in July 2023.

Another conflict involves Kottoor’s claim that Faust had previously promised Sunshine a rate increase. Faust told House investigators that the assertion was false.

Montenegro asked Mayes to explain how her office reconciled those conflicting accounts and whether investigators considered possible fraud-related violations arising from allegedly false representations made to DCS.

Contributions and Perceived Political Influence

Mayes’ memorandum concluded that Sunshine’s leverage as one of Arizona’s largest providers of group-home beds explained the rate increases. Investigators reported finding no evidence that political donations influenced the decision.

The House investigation reached a different interim assessment of what DCS employees believed at the time.

Ong testified that agency employees knew about Sunshine’s political contributions and the company’s relationship with Hobbs, according to Montenegro’s letter. The Speaker also cited social-media photographs, Hobbs’ appearances with Sunshine officials and the timing of a $100,000 contribution to Hobbs’ inaugural fund.

Sunshine personnel met with Gov.-elect Hobbs on the morning of Dec. 15, 2022, the same morning her transition team interviewed candidates for DCS director. Sunshine also made a $100,000 contribution to Hobbs’ inaugural committee dated Dec. 15, according to Montenegro’s letter. Sunshine representatives were later seated in the VIP section at the Jan. 5 inaugural ceremony, and Hobbs posed for photographs with Sunshine leadership at the Jan. 7 inaugural gala.

Montenegro acknowledged that those circumstances “do not establish any illegality on their own.” He argued that they were relevant to whether agency employees believed Sunshine possessed political influence over the incoming administration.

Federal Beds and Contract Rules

The two investigations also differ over Sunshine’s ability to move beds from the state foster-care system to the federally funded Office of Refugee Resettlement program.

Mayes’ office concluded that Sunshine held considerable negotiating leverage because it controlled approximately 20 to 25 percent of Arizona’s non-developmental-disability group-home capacity and had threatened to move beds to higher-paying federal placements.

Montenegro said DCS had heard similar threats from Sunshine since at least 2021 without seeing a substantial transfer of beds. The company’s state contract extended through April 2024, and Sunshine was not licensed as an ORR provider when the May 2023 increase was approved, according to his letter.

The speaker also questioned whether DCS had authority to grant the increase in the middle of Sunshine’s contract. The contract allegedly allowed rate requests during extension negotiations, and no extension occurred in May 2023.

DCS informed Kottoor on May 26, 2023, that the agency was not opening rate adjustments to other providers, the letter states. Montenegro asked why Sunshine received an opportunity that was not made available across the provider network.

The Speaker concluded, 

“The fact that the May 2023 rate increase violates the contractual terms and conditions—and that no other provider was offered that unprecedented opportunity—raises serious questions about the increase. But your Office appears not to have even considered those serious questions.”

Questions Extend Beyond Mayes’ Declination

As California Globe previously reported, Sunshine’s reimbursement increased from $149.99 to $195 per bed in May 2023 and rose again to $234 during a 2024 contract renewal. Sunshine and individuals connected to the company contributed hundreds of thousands of dollars benefiting Hobbs, her inaugural activities, a legal-defense fund and the Arizona Democratic Party.

Republican state Rep. John Gillette (R-LD30) said he separately referred the matter to the Department of Justice and the Department of Health and Human Services Office of Inspector General. Gillette requested a trace of Sunshine payments from 2022 through 2025 to determine what portions involved Arizona’s General Fund, Temporary Assistance for Needy Families, Title IV-E foster-care money, Medicaid or other federal reimbursement.

Publicly available records have not confirmed that either federal agency opened an investigation in response to Gillette’s referral.

The Attorney General’s findings addressed potential state criminal charges and did not identify the funding streams used to reimburse Sunshine. Montenegro’s letter focuses on the evidence and methodology behind Mayes’ decision, leaving the federal-funding questions Gillette raised unresolved.

Mayes’ spokesman Richie Taylor accused Montenegro of selectively presenting evidence to advance a partisan narrative. The Attorney General’s office said it will release its investigative records after a legal review, including consideration of related investigations still underway at the Arizona Auditor General’s Office and Maricopa County Attorney’s Office.

In an Aug. 28 statement reported by The Arizona Republic, Montenegro said, “Her memo said her office did not find ‘any evidence’ of potential bribery. We now know that statement was not true.”

“Her office knew about the allegation, investigated it, and chose not to include it in the memo she released to the public,” Montenegro continued. “The remaining question is whether those omissions were deliberate and whether her investigation was designed to give Governor Hobbs political cover before an election.”

The House investigation remains active and has issued subpoenas. Montenegro said lawmakers intend to release supporting records when doing so will no longer compromise the inquiry.