Arizona Governor Katie Hobbs is under formal investigation by the state’s Attorney General following allegations that a politically connected group home operator made large political contributions and later received a substantial financial benefit from the state.

We first broke this story in June 2024 (you can read that article here). More than a year later, the investigation is still ongoing, but with a twist. Hobbs and Attorney General Kris Mayes have joined forces to launch a PAC promoting their reelection efforts, which raises a serious question:

How can Attorney General Mayes credibly investigate Governor Hobbs while simultaneously partnering with her for reelection?

The controversy centers around Sunshine Residential Homes, a private group home provider that donated approximately $400,000 to Hobbs’ inaugural fund and the Arizona Democratic Party. Records indicate that the company donated $200K to the party shortly before the election. In addition, the company’s CEO served on Hobbs’ inaugural committee after donating $100K to the inaugural fund.

Months after those contributions, Sunshine was awarded approximately 60% in daily rate increases by the Arizona Department of Child Safety, an increase not extended to any other providers. That rate hike raised alarms among lawmakers who questioned why one vendor, so closely tied to Hobbs’ political team, received preferential treatment during a time of capped reimbursement rates.

Republican Senator T.J. Shope formally requested that Attorney General Kris Mayes investigate the situation, citing concerns about possible bribery, misuse of public funds, procurement violations, and conflicts of interest. In June 2024, Mayes confirmed that her office’s Criminal Division had opened a formal investigation. The Maricopa County Attorney’s Office is also reviewing the matter in coordination.

A spokesperson for Governor Hobbs called the investigation partisan and stated that the governor had no involvement in DCS rate decisions. “We expect a full review will clear the governor of any wrongdoing,” the spokesperson said.

While no charges have been filed, the investigation raises serious questions about transparency and ethics in state government. The outcome could have significant implications not only for Hobbs’ administration but for how Arizona oversees political contributions and government contracting.

This is an ongoing story that The Arizona Globe is closely monitoring.