Petersen pleads guilty to fraud
Former county assessor scammed AZ welfare system in adoption scheme
Paul Petersen, who made dozens of illegal adoption deals over the past decade, tried to turn a guilty plea on Thursday into a deal of his own.
Whether he succeeded will be measured on how much time he spends in prison.
The former Maricopa County assessor faces state and federal charges in Arizona,
Utah and Arkansas for using his private adoption business to transport pregnant women from the Republic of the Marshall Islands to the United States.
Petersen told a Maricopa County Superior Court judge he intends on parlaying three guilty pleas into a universal deal to reduce his sentence and land him in a federal penitentiary rather than state prison.
“Your honor, I can tell you now, I would not be here in front of you if I wasn’t going to resolve all of these cases,” Petersen said in his only statement.
Petersen, during a closed hearing, admitted cheating the state’s health care system for the poor out of more than $800,000 and forging documents to jack up the fees he charged adoptive parents.
Petersen also faces state charges of human smuggling in Utah and federal charges of smuggling, fraud, conspiracy and money laundering in Arkansas.
Petersen’s lawyer told the court that Petersen is expected to plead guilty in Utah during a telephonic hearing on Friday and in Arkansas the week of June 21.
“Mr. Petersen is also going to enter pleas of guilty in those two cases,” Scottsdale lawyer Kurt Altman said in court. “The agreement’s been done. Everybody’s in that understanding.”
As part of a plea agreement with the Arizona Attorney General’s Office, Petersen pleaded guilty to three counts of fraud and one count of forgery, all felonies. He faces up to 16.5 years in prison on the Arizona charges alone.
Altman said the goal is to get Petersen sentenced in federal court in Arkansas before being sentenced on state charges in Arizona or Utah. That way, he does his time in federal prison, “whatever time that may be.”
Altman said state prosecutors in Utah and federal prosecutors in Arkansas have agreed to sentence Petersen concurrently with whatever sentence he is given in Arizona.
“There has been an agreement with the ... three different prosecuting agencies that Mr. Petersen would be sentenced ... in the federal court in Arkansas first,” Altman said. “That way, the primary custody of him would be in the (federal) Bureau of Prisons.”
Despite Petersen’s assurances that all three cases were tied together as part of one deal, the Attorney General’s Office confirmed Thursday there is no such agreement stipulated in his plea agreement, which covers only Arizona.
Officials said sentencing will be up to the court. “While Paul Petersen enjoyed a position of respect and trust in the community, he manipulated adoptive families and bilked Arizona taxpayers for his own profit,” Attorney General Mark Brnovich said in a statement on Thursday.
“Mr. Petersen must now answer for his crimes. It doesn’t matter if you’re politically connected, wealthy, or an elected official, the rule of law applies equally to everyone.”
At the beginning of Thursday’s hearing, Brnovich’s office charged Petersen with two additional fraud and forgery charges that were part of his guilty plea.
Prosecutors said Petersen submitted false documents in Maricopa County Juvenile Court to increase the fees he got from families looking to adopt children.
Prosecutors said in one case he billed a family $11,000 to pay for a birth mother’s living expenses. Petersen told the adoptive family the birth mother had lived in Arizona for months when he had actually flown her to the U.S. a day before her pregnancy, then flew her out of the country a few days after she gave birth.
The plea deal was a reversal for Petersen, who for months has proclaimed his innocence and vowed publicly to fight the charges.
Petersen was arrested in October. He and co-defendant Lynwood Jennet originally were charged in Arizona with 32 counts related to Medicaid fraud. Jennet served as Petersen’s liaison for the Marshallese women and lived with them in a Mesa fourplex.
Authorities said Petersen created a pipeline to bring Marshallese birth mothers to the U.S., fraudulently enroll them for Medicaid benefits and arrange adoptions of their children to American families for up to $40,000 each.
Marshallese citizens are not eligible for Medicaid unless they have lived in the U.S. for five years. According to state investigators, Petersen and his associates lied about the residency status of birth mothers so they could illegally access the health-care benefits.
Between November 2015 and May 2019, the Arizona Health Care Cost Containment System, the state’s Medicaid agency, paid for at least 29 births.
Adoption contracts show Petersen attempted to use the Medicaid system in other states as well.
As part of his plea agreement, Petersen agreed to pay $679,000 in restitution and fees. He will repay $650,000 to the Arizona Health Care Cost Containment System. He will also pay $18,000 to the Attorney General’s Office and $11,000 to the adoptive family he overcharged.
Petersen’s adoption practice was rooted in his 1998 mission to the Marshall Islands for The Church of Jesus Christ of Latter-day Saints. A top church official said he was disgusted and sickened by the details of Petersen’s case.
Petersen remains free on his own recognizance while awaiting court appearances in Utah and Arkansas.