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Ted Simons: Good evening and welcome to "Horizon." I'm Ted Simons. Joining me tonight are Mike Sunnucks of "The Business Journal." Howard Fischer of Capitol Media Services. And Dennis Welch of "The Arizona Guardian." Sheriff Joe Arpaio admits to making mistakes after a report finds misconduct in the sheriff's office, an office described as, quote, dysfunctional, and having, quote, lost its moral compass. My goodness, just the fact that sheriff Arpaio admits to making mistakes, that's news.

Mike Sunnucks: Absolutely, you know, Sherriff Joe is known for standing by his finances so it's a big sea change and shows what's going on with the county and the sheriff's office.

Howard Fischer: What was he going to do? The fact is that the report was damning and whether you consider this an admission, well, I guess things were going on. Excuse me, you're a sheriff. You're not a new sherriff, you've been running the department for years. Why didn't you know this? He says I'll be more in touch with the commanders from now on. What the heck were you doing for the last couple of years?

Dennis Welch: It shows how damning the report was. If he's going to come out and say I fell asleep at the wheel. I should have been paying attention to the finances, the administrative stuff. He should have. It was always the administrative stuff and --

Howard Fischer: Why did it take a report -- why did it take this report? He heard from deputies and lots of people there were problems. Why did it take Paul Babeu's report for him to look at his own FRIGGing department?

Ted Simons: But he said, when people came to him, he told them, take it to Hendershott, that's his job responsibility.

Howard Fischer: But that's the problem, when people complain about Hendershott, you don't say take it to Hendershott. That's the management side.

Ted Simons: That may have been the quote unquote, quote/unquote mistake that he said he will not make again. As Dennis kinda pointed out is this a sense of losing control and being oblivious to what's going on in your office or perhaps knowing what's going on in your office and not doing anything about it.

Mike Sunnucks: It's a Watergate question. You see this -- the feds looking into the things going on, at indictments being thrown out against supervisors and he's stepped back and not as aggressive and he's taking hits here. The key is how much he knew and how much was on Hendershott, you'll see the MCSO try to put it on Hendershott.

Dennis Welch: And shows you who is running the show over there. If he was that oblivious, this was an issue. There's been sheriff Joe's sheriff's department. This calls into question it's been his department for a long time. If all of these abuses were going on and he's saying I didn't know it was happening.

Mike Sunnucks: You do protect the boss every once in a while in these things.

Howard Fischer: But you're still --

Mike Sunnucks: Absolutely, but you do protect the boss. It happens in all kinds of places and fall on the sword and scooter Libby, all kinds of cases, in reality, it's not just the sheriff's office.

Howard Fisher: I'm sorry, Mike, if the publisher of the business journal didn't know what was going on, you fire the publisher. That's the facts. He heard the complaint, he was so busy getting his mug on TV, standing outside of a restaurant rounding up illegal immigrants, he didn't care what was going on, that's what's going on.

Mike Sunnucks: Well I understand that's the reality of politics and business is sometimes people fall on the sword for their boss. There's a fall guy and sometimes the boss doesn't know everything for the reason. That's the reality, whether you like the reality is another question.

Dennis Welch: The interesting thing, if this was anybody else, at the very least, this would make them politically vulnerable. Can you imagine, in a couple of years, he's going to have to decide if he's going to run for election. He hasn't been in charge for a long time and neglected his financial duties to the county.

Ted Simons: Before we go further, let's explain a little what the report said. It said the chief deputy Hendershott lied and intimidated used his office for personal gain. Used the anti-corruption unit against enemies, and wanted to get the enemies names in the media and pulled over county employees for -- apparently for harassment. And yet, Paul Babeu, who led this report, he says he thinks Arpaio was unaware of these problems.

Howard Fischer: Which is damning in and of itself. That's the problem. I'm sorry. If he had just walked in there, it would be one thing. You just need to read the headlines of the paper. If you're the sheriff and this is a man who -- look, he calls me and says, how come you're saying something about me on the "Horizon." He's watching the show, he's watching the media. If he can't figure out, something is going on and go around Hendershott and what's the heck is going on here, that's his fault.

Dennis Welch: And that report clearly shows that Hendershott was running the office with the two F's, fear and favoritism. This was not just something, we've been talking about this a long time, I don't know how he could be oblivious. There's no win for Arpaio on this one. If he really didn't know about this, where were you? And if you did know about this, you've got a whole new set of problems.

Mikes Sunnucks: His opponent, the critics out there for all of these years they've been saying this for years. That they've been intimidated, these wellness checks, pulling people over and interviewing county employees and intimidating them. The critics have been saying this for years.

Mike Sunnucks: But let's go in terms of the ignorance thing, when the question came up about the indictments and the investigations to county official, there was Joe standing next to the county attorney, saying, hey, I'm aware of this, I'm part of this, my deputies did the investigation. You cannot claim ignorance while claiming credit. It doesn't work.

Ted Simons: Ok, what do we know about the U.S. attorney getting this investigation and other materials -- what's happening? We've heard, I think for -- what? -- two years now, or close to two years, about federal investigations, federal probes and grand juries here and there. What -- what?

Dennis Welch: This is just more with them, you know, getting more information on Arpaio. This is nothing new. From my perspective, I look at this and say, what point are you going to produce something? You keep leaking stuff out into the media, we're looking into this guy, well, produce something.

Mike Sunnucks: The end game for the feds and opponents is to get him not to run for reelection. They don't want to indict him or fight him in court and have him walk up to the federal courthouse every day and do that theater and say they're indicting me because of what I do on immigration and my law and order stuff. That's a tough game for the Obama administration to take on. They don't want to do that. If he didn't run, they win and he doesn't get indicted.

Howard Fischer: What makes you thinkg… look, you've met the man, you've met his ego, it proceeds him by two hours into a room. What makes you think we'll not see his name on the ballot.

Mike Sunnucks: He's going to run.

Dennis Welch: He's got millions of dollars he's raised from all over the country and wants to use the money to get people in the county seats that's been favorable to him, because he's been, as we all know, at odds with the county supervisors.

Ted Simons: Let's close it out with an idea, what kind of image and first of all, what does it do to Arpaio's image and his stature as someone every Republican politician within earshot runs to to get an endorsement?

Mike Sunnucks: I think it's a cumulative weakening of him, I think it's starting to hurt him. They're trying to put some of this on Hendershott and other people and I think it's sticking now to him. There's enough where you're saying he knew it or incompetent and wasn't a good manager and didn't know. Whether it hurts him politically with Republicans, he's not as popular and weakened and probably could win reelection right now.

Howard Fischer: Well that becomes the question, who gets put up against him in the primary and assuming he could win --

Mike Sunnucks: No democrat is going to beat him--

Howard Fischer: That's the point. Is -- you know, he'd have to be so weakened for a democrat to take him on, and that becomes the issue.

Dennis Welch: I'll tell you what though, you start getting rid of some of these people have been known to play hard ball politics, it may make it a little bit easier for someone considering a run to jump in there. Because, one of the things that's kept people from running is, the question is was it worth it? If I'm going after this guy, these guys play winner take all, it's a zero sum game. Go talk to Dan Saban how they run a campaign, and this is a really serious consideration for people who want to take Arpaio on, if you get rid of Hendershott and some of these otherr people, it may make it easier.

Mike Sunnukes: I think it'd have to be in the Republican primary. You have to run a Republican against it and have people in the Republican party that's not been able to stand up to Joe and support these people. Not tacit support like for McCain, you know really go after them and fund it.

Ted Simons: Were you surprised that Don Stapley, asked the Obama administration, the attorney general's office, asked both of them in Washington, please support whatever happens --

Mike Sunnucks: Well Howie said in the green room, he has an 118-count indictment. But MCSO arrested Stapley in the parking garage. So there's probably not the best blood there, so it's not a shock. And really, they take leadership from folks to move forward.

Ted Simons: Mary Rose Wilcox put MCSO in receivership. The stories, Howie, the stories never end.

Howard Fischer: Mary Rose, the same as Don Stapley, the wrong end of sheriff Joe and Andy Thomas and each of them saying it's payback time.

Dennis Welch: Speaking of payback time, there's going to be a cleaning house of elected officials in the next election cycle in the county because you're seeing this stuff week in and week out, it's going to have some sort of an effect, I would think.

Ted Simons: Speaking of the next election, Governor Brewer -- [Laughter]-- is making noises about running again and again.

Howard Fischer: And this was a surprise because this came up and Ginger Rough from the "Republic" was talking to her, a post-session story. We did ours, now that you don't have to run again, does it free you up: And the governor suddenly piped up, what does it say I can't run again. Well, let's see: 1992, voters adopted a measure that says two terms in office and any portion of a term counts as a term. I'm not an attorney but it seems to me to be pretty straightforward.

Ted Simons: But the quote is shall include any part of a term served.

Howard Fischer: And look, you know, maybe we're four non-attorneys sitting around a table, but we can figure out what it says, but the governor for some reason, when I talk to the her again yesterday, oh, yeah, there's widely misinterpreted and I'm sure I can run again. Wait a second, does this make it seem like you're not a lame duck.

Ted Simons: And, Dennis, isn't that the point here?

Dennis Welch: If you look beyond all of this and I was talking to a political consultant, schooled in the executive arts, and said, look, this is a shot across the bow, a warning shots to the Republicans who have been chirping maybe she's not conservative because she's vetoed gun pills, and hey, I may not be going anywhere -- gun bills so watch what you say, I may not be a lame duck.

Mike Sunnucks: The spirit of the law is you're not supposed to serve more than two terms. Eight years. How long has she been elected? Way more than eight years. So she can't even argue that.

Dennis Welch: She's free to challenge that law and take the chances in court.

Howard Fischer: But here's the fun part. As we were talking about a little earlier. Let's see, what office decided if someone is qualified for the ballot? That would be the secretary of state, Ken Bennett. Guess who announced or let it be known that he has an exploratory committee for governor in 2014? Ken Bennett. Tell me what the position of the Secretary of State's office is going to be on this.

Mike Sunnucks: I think he's probably not going to want to put her on the ballot but that's just a guess.

Ted Simons: All right. So basically, we'll watch this and see where it goes but this is a little bit of jockeying and a little bit of make sure you remember I'm still the governor and I can --

Dennis Welch: But the fact is didn't remember what the veto -- I can fight the veto -

Ted Simons: I can veto as much as I did this time.

Mike Sunnucks: Maybe she's saying she's not done politically, too, after this. If she wanted to run for the senate seat that's sitting out there, she would be formidable. She's a woman, she's a Republican in a Republican state, she's very popular with the base --

Howard Fischer: But she's not interested in running.

Mike Sunnucks: She could run for something else if she wanted to at some point.

Howard Fischer: But what? In 2014, she's going to be 70 years old. I'm not saying -- as someone rapidly approaching that, I'm not saying that's old. But I've been in government since I was elected to the legislature in 1982, at what point do I say, hey I got a nice retirement coming.

Mike Sunnucks: We've got a sheriff who's 78 and a senior senator who's what, 73? And they're not going anywhere.

Howard Fischer: And… having discussed the sheriff, you see a problem there? Never mind.

Ted Simons: Alright, we won't go there but we'll go on to the Fiesta Bowl and the county attorney is investigating, this whole… cleared out an office for an whole investigative team.

Mike Sunnucks: This was a state investigation that Goddard started and took slowly throughout the campaign last year. Horne inherited and Horne comes out and says there could be a conflict because of the lawmakers and state officials involved and passes the football to Bill Montgomery who of course gets all the county stuff with Andrew Thomas and Joe, and now the Fiesta Bowl. So they're going to look into this and I think it's more of a tax issue for Junker and these guys for having to pay taxes on the things they've gotten improperly.

Ted Simons: But isn't this also the campaign donations, wasn't that a major factor?

Howard Fischer: That's problem is proving tit for tat on any of this stuff. I mean, ASCAM was real easy, you had hidden cameras, you had Chewie Higuera saying I want to buy a shrimp concession in exchange for my vote. You don't have that here, you cannot necessarily link it. If that was the case, every business contribution is linked to some --

Dennis Welch: That's what I've been saying about this all along, there's going to be -- going to be indictments but I don't think you'll see elected officials wrapped up in this stuff. A lot of the stuff they did wasn't necessarily illegal or anything like that, a lot of them are just in trouble for not reporting.

Mike Sunnucks: They reimbursed the employees. So it will be on the Fiesta Bowl folks, Junker and those guys for reimbursing them. You may see fines for the elected folks, but that's it.

Howard Fischer: What would be nice to see and we haven't had this kind of grand jury for a while. It would be nice to see recommendations for changing the laws in reporting and contributions and the linkage and that's what this state need dollars somebody to say here's why we got this way. Because there's no clear requirements for who reports to whom in making the match.

Mike Sunucks: If the sheriff is an indication, the grand jury will be done in 2020, 2025.

Ted Simons: We had Ken Bennett on the program for explaining what you can and can't do and what you can accept and how much, by the time he left the table I --

Dennis Welch: And a lot of it, and I don't defend state lawmaker, but a lot of it is left up to the lobbyists in this whole case and a lot of stuff they failed to do in this case. I'm thinking at the end of the day, you're not going to see a lot a whole lot of elected officials --

Mike Sunnucks: Bill Montgomery, playing such a important role, right now, in the county, the sheriff, and now this Fiesta Bowl thing which is very essential to our economy here and this guy that people don't know a lot about, very low key, has his fingers in this.

Dennis Welch: I think, at the end of the day, he's a straight shooter, he's not going to play politics like some people worried about with Horne because of the conflicts inherent with that and that's another story but I think by all indications Bill Montgomery is a straight shooter and if he does a good job, he's going to have good name recognition.

Ted Simons: Let's move on. Howie, the story goes to you, the U.S. attorney is warning anyone involved with medical marijuana, remember there are federal laws that apply -- that apply to marijuana.

Howard Fischer: This is no surprise. U.S. attorneys from other states sent basic the same advice to their elected officials and health departments and said, look, we have a policy under the Obama administration we're not going to go after sick people using medical marijuana for their legitimate purposes and using it in accordance with state law. However, to the extent you're involved in distribution and transportation, we're going to keep an close eye on you. Now, that doesn't mean even though we have warnings in other states that all the distribution facilities have been closed down and the cultivation facilities but what's happened in some states like Montana and California where they've had raids, is they said watching is not good. That you really need to make sure that the marijuana grown is winding up here and I think that's why Will Humble, who's our state health director said we don't need to change anything, we have a strict program. So, what does this mean? Sure, Dennis Burke fired a warning shot. Will we see indictment? I'm not expecting it. If I'm a landlord and want to rent a building to someone who's going to be selling--

Ted Simons: That's the chilling effect isn't it, I mean, what landlord is going to say, I think I'll give this a shot.

Dennis Welch: I think the message people are thinking about this is grow it at your own risk. Is the simple message and it's going to scare off lot of people thinking about getting into this burgeoning industry. I could myself in a whole lot of trouble for growing this stuff. It will bottom line, chilling effect.

Mike Sunnucks: I think it's a shot across the bow for the large scale producers and dispensary, they don't mind the mom and pop stuff. I don't think the feds want to see these big warehouses full of things. In terms of landlords, some will turn them down and some are desperate. They need tenants and if there's someone willing to pay, I think they'll take them.

Howard Fischer: The problem becomes under federal law and the RICO statutes if you're a landlord and know omebody is committing a crime you could lose your building.

Mike Sunnucks: I don't think we've seen any other state where they've gone after landlords. Not one.

Howard Fischer: But that becomes the problem, that comes back to the chilling effect and if you have a nice building, maybe even Class A office space and somebody wants to have a storefront there, you're going to be careful.

Mike Sunnucks: If they're going to go after someone, it would have happened in California. They've had the worst abuses because they don't have the limits we do.

Ted Simons: I want to get off this topic, but real quickly, it also -- I mean, the PING situation up there in Sunnyslope, you may have other businesses in the region, the area, in the neighborhood, saying I'm not going to renew my lease here.

Mike Sunnucks: Oh, you're already seeing that. You see the neighborhoods come out, the schools and churches, anybody that doesn't like it that's close to it, they're going to come out against it. And you're going to see this big kind of fights over all these things.

Ted Simons: Economic forecast luncheon, ASU economists saying growth yes, big growth, no.

Howard Fischer: Maybe 1% this year. This is a fascinating report because the prediction has been that maybe by 2013, we'd be back on track. They're saying we're not going to be below 7% unemployment until at least 2015 and even at that point when we add 300,000 jobs back, we're still going to be below where we were in 2007. That's how slow it is and the problem still comes down to consumer confidence. If people are unsure if they're going to have a job, if they're under water in their homes and feeling poor, they don't spend. They stop spending on luxury items and nobody is hiring.

Ted Simons: Even the folks, the economists say even those who can afford the luxury items, non-luxury items, because it feels like things are bad, they're not spending.

Mike Sunnucks: Well the big problem is businesses are doing the same thing. Corporations have more cash than ever in their reserves, they have all kinds of money. Banks have money, investors, and everybody is sitting on it because they're scared. We've got to get everybody spending. And housing is a big albatross right now and until we get population growth -- the question is whether the jobs we've lost are replaced with good jobs. Aerospace, solar or biotech. Or whether it's the usual ones - waitresses, bartenders and hotels --

Howard Fischer: The people employed are becoming more efficient and getting more work per employee and so companies are not hiring back as their workload increases.

Dennis Welch: Probably because they're worried about keeping their jobs, Howie.

Howard Fischer: That's the issue. If you had a bunch of fat and lazy people, you could hire the people back, but everyone is scared for their jobs.

Ted Simons: Yeah, there was a poll, I think a democratic firm out of North Carolina. This is one of those -- not a realistic poll, at least not now, but they had -- Gabrielle Giffords against Jeff flake, as far as a senate matchup, seven point edge for Giffords.

Dennis Welch: It was a seven point spread. And there was a lot of headlines, a lot of talk, Giffords holding a big lead. I look at it differently. When you consider publicity, it's only seven points, within a margin of error of 4 percent. That tells me that this could be a race, even if she gets in, you look at flake, he's raised over a million dollars in this state, could erase the seven-point edge quick.

Mike Sunnucks: I think it's a sad state of politics for people to politicize what's gone on with her. She's going through rehab, a horrible horrible injury going on, and people on both sides do this now.

Howard Fischer: That's the point. Her own staff is putting out release after release, and all the constituent services, the staff, C.J. Caramarjen her press agent, all keeping her name out there for a purpose.

Dennis Welch: But you have to talk about her in the political arena at some point. She's an elected official and is going to be up for reelection. You have to start talking about her in that respect. Is she going to be able to run. Who is going to run? Because I think Democrats at some point here real soon have got to have other candidates ready in case Gabby didn't run and that time's coming up soon. Because, again, Flake has raised a lot of money and whoever steps up needs to be able to match that.

Ted Simons: Real quickly, is this the kind of race that a Terry Goddard -- I know there's a metric that he did well on -- a democratic company out of North Carolina, would he come out -- is he ready for this again.

Howard Fischer: Look, at a certain point, yeah, it's the only other name out there that anyone knows, but for the love of god, Terry, hang it up. Put a fork in it, you're done.

Dennis Welch: Well it is a democrat leaning firm but the polling guru of the country says she showed a bias toward Republicans maybe they're overcompensating, and did show that Goddard and flake on a head-to-head match --

Ted Simons: Alright, we've got to stop it right there, sorry to cut you off, but we've got to stop it right there. Monday on "Horizon" -- Homes packed with garbage and full of stuff -- firefighters and crisis responders discuss the hazards of hoarding. And we'll get a progress report on the sky train at Sky Harbor. That's Monday at 7:00 on "Horizon." "Washington Week" is next. That is it for now. I'm Ted Simons. Thank you so much for joining us. You have a great weekend!

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