Arizona Attorney General Tom Horne, the state's top law-enforcement official, deliberately broke campaign-finance laws during his 2010 bid for office by coordinating with an independent expenditure committee, Maricopa County Attorney Bill Montgomery concluded after a 14-month investigation. At a news conference Monday, Montgomery said investigators found e-mails and phone records showing Horne, a Republican, was intimately involved with Business Leaders for Arizona, which raised and spent more than $500,000 to run TV ads blasting Horne's Democratic opponent, Felecia Rotellini, in the closing days of the tight race.
"There were contemporaneous e-mails and telephone conversations on how much money was expected from this particular source of funds, and what ... needed to be the message, concerns over the content of the commercial in production, and active communications about why maybe some of the messaging needed to be changed," Montgomery said.
Such committees, which unlike candidates can accept unlimited donations, are supposed to operate independently of candidates and their campaigns.
Montgomery, whose office worked with the FBI, said he will not pursue criminal charges because a civil statute was more applicable.
Montgomery, a Republican, said the investigation also uncovered evidence of a misdemeanor vehicular hit-and-run involving Horne. Records obtained by The Republic show Horne was under FBI surveillance at the time of the accident, which occurred as he drove an employee, Carmen Chenal, to her residence in downtown Phoenix. That case has been referred to the Phoenix Police Department for review.
Horne said Monday that he is not guilty and that investigators got the timing and the facts wrong. He said he has no plans to resign, noting many national politicians have paid fines for civil campaign-finance violations.
"The evidence will show that we did not coordinate (campaign-finance activities)," Horne said.
The political implications for Horne, considered a 2014 gubernatorial contender, remain unclear. Some political observers said Montgomery's findings could damage Horne's aspirations for higher office -- particularly if he does not disprove them.
Horne and Kathleen Winn, a top Attorney General's Office employee who ran the independent campaign, could face civil penalties under that statute. However, Montgomery said he believes the civil sanctions allowed by the law are inadequate. He plans to lobby state lawmakers in the next session to strengthen campaign-finance laws.
Horne and Winn first will be allowed to return to donors the amount of money that exceeded campaign-contribution limits. If they refuse, they could face up to $1.5 million in civil penalties -- three times the amount spent by the independent expenditure committee on ads blasting Rotellini.
Montgomery first said Horne and Winn would not be held personally liable but later changed his position, saying the law allows individuals to be held liable. Montgomery also theorized the independent expenditure committee could be responsible for repaying the money. That committee as of last month had $8.18, according to public records filed with the Arizona Secretary of State's Office.
FBI Agent James Turgal, whose office initiated the investigation, would not talk in detail about his agency's role. He said investigators conducted the inquiry and turned the file over to the U.S. Attorney's Office. A spokesman for that agency said it is not investigating Horne.
Independent campaigns are created to bypass donor-contribution caps imposed on candidate campaigns. In the attorney general's race, for example, donors to the Horne or Rotellini campaigns could contribute only $840 each.
In December 2009, Winn created Business Leaders for Arizona to raise money to oppose former Maricopa County Attorney Andrew Thomas, a Republican who opposed Horne in the 2010 primary. Horne has said that although Winn filed paperwork, there was no independent expenditure during that primary.
Winn volunteered for Horne's campaign in the primary. When it was over, Horne has said, Winn told him she was withdrawing from his campaign to conduct an independent campaign "on her own initiative" in the general election.
State campaign-finance records show her committee raised large contributions in late October 2010 as Horne and Rotellini were running neck and neck. The committee, headquartered at Winn's Mesa address, raised $512,500 in nine days to fund anti-Rotellini TV ads through Tempe-based Lincoln Strategy Group, a political-consulting firm.
Contributions included a $115,000 donation from Horne's brother-in-law in California and $350,000 from the Republican State Leadership Committee, a Virginia-based organization whose goal is to elect Republicans to statewide office. Montgomery said Horne may not be required to repay the donation from his brother-in-law.
Horne beat Rotellini by 3 percentage points. Following his victory, Horne hired Winn as his director of community and outreach.
In July 2011, Horne assigned Margaret "Meg" Hinchey, supervising special agent in the attorney general's criminal division, to internally investigate whether an employee was leaking information about his agency to the media. During that probe, Hinchey uncovered allegations that Horne and Winn coordinated campaign activities. The next month, the information was turned over to the FBI, which started an investigation and asked the County Attorney's Office to assist with interviews and obtain subpoenas.
Typically, Secretary of State Ken Bennett's office investigates campaign-finance violations and recommends to the Attorney General's Office whether to pursue charges. That recommendation is needed for a prosecutor to take action, according to Bennett.
However, because the FBI's long involvement in Horne's case, it wasn't until last month that federal agents and the County Attorney's Office met with Bennett's staff to discuss why action should be taken against Horne.
Bennett provided Montgomery with an official letter Sept. 20, recommending that Montgomery pursue civil charges against Horne, Business Leaders for Arizona and Winn. The letter states that e-mails that are part of the evidence "unquestionably demonstrate Attorney General Horne actively seeking funds for the IE committee." An Oct. 27, 2010, e-mail from Horne to Winn says: "Try again for the hundred k (sic)."
Winn two days later raised $100,000 from Horne's brother-in-law, Richard G. Newman, a California businessman.
Bennett's office on Monday released an Oct. 20, 2010, e-mail exchange between Winn and Brian Murray, a consultant to Winn's committee. The records note that while Winn was discussing strategy with Murray via e-mail, she also was on the phone with Horne. That same day, Winn began raising money for the committee, campaign-finance records show.
Murray confirmed he cooperated with the FBI inquiry but had no comment on the allegations.
Winn said Monday that law enforcement treated her unfairly. She said thatinvestigators did not interview her for her side of the story and that she "never coordinated" with Horne. "It just never happened," she said.
Investigators are misreading her communications with Horne , she added. She was advising him on a complicated real-estate transaction, not details of the independent expenditure committee, she said.
"The people that conducted the investigation have phone logs and several e-mails that are disconnected," she said. "I'm glad I'm not in Salem, and I'm glad I'm not in the witch trials, because that's what it feels like today."
Political reaction was swift. Though Republicans generally would not comment on the record about a fellow Republican, the Democratic Party and its elected officials called on Horne to resign.
Rotellini called the charges a stain on the Attorney General's Office, noting the race was decided "by precious few votes."
"The attorney general will have his day in court, as he should," Rotellini said. "But the fact that Tom Horne needs to have a day in court is shameful. This goes well beyond politics. It goes to the core of the meaning of the office."
John J. "Jack" Pitney Jr., a government professor at Claremont McKenna College in Southern California, said any allegation against a law-enforcement official undermines public trust.
"A conviction is far more damaging," Pitney said. "But even an accusation like this could give rise to future attacks, so it's very damaging. ... The personal and political image is very difficult to undo."
Republic reporters Mary Jo Pitzl and Michael Kiefer contributed to this article.