Feds: George Johnson bribery scheme stemmed from 'larger investigation'

Posted at 6:54 AM, Jul 05, 2017
and last updated 2017-07-06 09:23:23-04

Evidence of bribery against a former elected Arizona utility regulator was discovered during a larger, unrelated federal investigation, a prosecutor said in an email filed in court.

The email confirmed speculation within Arizona political circles that the bribery allegations against former Corporation Commissioner Gary Pierce had surfaced during a broader investigation, though prosecutor Fred Battista didn't reveal the focus of the larger probe.

Pierce, his wife Sherry, lobbyist Jim Norton and water company owner George Johnson were indicted in May in what prosecutors say was an influence-peddling scheme aimed at benefiting Johnson. The four have pleaded not guilty to fraud and bribery charges. 

Battista said in a June 22 email to defense attorneys that Gary Pierce, Norton and other people were interviewed by FBI agents during the broader investigation.  

Cosme Lopez, a spokesman for the U.S. Attorney's Office, which is prosecuting Pierce, couldn't immediately comment Wednesday on the broader investigation.  

In the bribery case, Johnson is accused of funneling $31,000 through Norton to Pierce and his wife for favorable treatment in a rate case before the commission.  

The indictment said Gary Pierce voted in 2011 to let Johnson's water company request that Johnson's personal income taxes be covered by the utility's customers.

Prosecutors also said Pierce was the intended recipient of a $350,000 property that was supposed to be paid for by Johnson, though it's unknown if the real estate deal was completed.

Pierce, who left the commission in early 2015 because of term limits, acknowledged last year that he was questioned by FBI agents investigating the 2014 commission election. The parent company of electric utility Arizona Public Service Co. was widely believed to have spent $3.2 million backing Republicans for the utility commission.

In that same election, Pierce's son Justin was running for secretary of state.  

The parent company, Pinnacle West Capital Corp., disclosed in public filings in August 2016 that it had received federal grand jury subpoenas seeking information on the elections involving the commission and secretary of state.  

The FBI said at the time that it was conducting a long-term investigation related to the financing of certain statewide elections in 2014 but it has not named APS.

Battista's email in the bribery case against Pierce was filed Monday as defense attorneys opposed a request by prosecutors to bar public release of FBI reports, interview and grand jury transcripts and audio recordings of witness interviews.

Battista said prosecutors will hand over records of interviews with Pierce, Norton and others, but want to avoid the release of information unrelated to the bribery case. 

"We do not want persons who are unrelated to this case getting their hands on evidence that the FBI has gathered in an ongoing investigation," Battista wrote, adding that releasing such information could have "serious negative effects" on the bribery case and the larger investigation.

Ashley Adams, an attorney for Sherry Pierce, wrote in a June 22 email that the proposed court order sought by prosecutors is overly broad.

"If the matters are unrelated, then there is no good cause for confidentiality," Adams told the prosecutor in the email. "If they are related, we should be advised as such, especially if other charges are anticipated."

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