Audit: Pinal profits misused
Officials ignored rules in handling $2M, state says
The Pinal County Attorney’s and Sheriff ’s offices, under their former leaders, distributed more than $2 million in profits from seized assets to community groups without proper oversight, in some cases not even maintaining paperwork that showed how the money would be used, according to a state audit released Monday.
In addition, some employees of former Pinal County Sheriff Paul Babeu’s office “appear to have violated” state conflict-of-interest laws by helping to award money to an organization that was managed in part by employees of the office, some of whom decided how money was spent, the audit found.
The audit urged both offices to make immediate changes that would assure the money seized as part of criminal investigations under antiracketeering laws is handled appropriately. Much of the money comes from assets seized in drug investigations.
The state Auditor General’s Office also submitted its report to the Arizona Attorney General’s Office for further review.
The audit covered a period between 2013 and 2016, when Babeu and former County Attorney Lando Voyles were in office. Both no longer are in office.
The audit said that under Voyles, the County Attorney’s Office did not follow established procedures to make sure community groups receiving money followed guidelines to make sure the money was properly used.
The report says the county awarded $2.4 million in anti-racketeering funds to 225 community groups during the three-year period.
The audit found that for 39 of 82 awards reviewed, the county could not provide an application or written proposal from the organization that received the money. Of 43 groups that did provide one, documentation was incomplete, the audit found.
In addition, in 77 of the 82 awards reviewed, the county could not provide a memorandum of understanding showing how the money would be used by the group receiving the award.
The audit further found that some employees in Babeu’s office “appear to have violated conflict-of-interest laws” by participating in awards to organizations while failing to “disclose their level of control over the organization’s disbursement of those awarded monies.”
The audit highlighted 31 awards, totaling $683,406 that went to the Arizona Public Safety Foundation. The amount was the largest to any single group over the three years, the audit said.
Auditors said sheriff ’s employees traditionally were involved in the foundation’s business, including serving on boards and handling accounting functions. Of the total amount awarded to the foundation over the three years, $230,000 was initiated by Babeu or one of his employees, the audit found.
The audit also found that $151,645 of the community-outreach money awarded to the foundation went to unauthorized uses benefiting the County Attorney or Sheriff ’s Office programs.
For example, nearly $88,000 went to programs designed to boost morale or provide recreation for the Sheriff ’s Office — such as, golf outings or tickets to sporting events and banquets. Another $63,772 distributed from the foundation went to public service announcements for both offices.
The audit said those expenditures effectively bypassed the county’s purchasing procedures, which require various levels of approval.
The audit noted that both current officeholders, Pinal County Attorney Kent Volkmer and County Sheriff Mark Lamb, have already taken steps to address these issues.
Volkmer, in a response included with the audit, said his office has established new procedures for awarding the antiracketeering monies and monitoring how they are being used. This includes requiring detailed documentation.
The audit noted that as of May, no Sheriff or County Attorney’s Office employee is on the Arizona Public Safety Foundation’s board of directors.
Lamb, in a separate response, said that his office will adhere to county procedures for declaring potential conflicts of interest and requiring employees to disclose in writing any such conflicts.
A federal grand jury in May 2017 launched a probe of how Babeu’s office had handled distribution of the antiracketeering funds. Lamb’s office later responded to a subpoena to turn over documents left from Babeu’s administration.
Volkmer last year requested the state Auditor General’s Office conduct the audit of how the money was handled.
The audit found that for 39 of 82 awards reviewed, the county could not provide an application or written proposal from the organization that received the money.