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Maricopa County Assessor Paul Petersen indicted in adoption fraud

Posted by   /  October 9, 2019  /  No Comments

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Paul Petersen

Father David Petersen forced out of state treasurer post in 2006

By Jessica Boehm | Arizona Republic 

Maricopa County Assessor Paul Petersen has been indicted in an adoption fraud scheme, the Arizona Attorney General’s Office confirmed late Tuesday.

The assessor has for years run an adoption law practice in Mesa, which involves bringing women from the Marshall Islands to the U.S. to give birth. Their babies have been placed for adoption with U.S. parents.

Petersen is accused in the indictment of illegally obtaining services from Arizona’s Medicaid system for the women, falsely claiming the women are Arizona residents. He also is accused of violating a compact between the U.S. and the Marshall Islands. It prohibits citizens of that country to come to the U.S. if their travel is for the purpose of adoption, unless they have a special visa.

The 32-count indictment alleges conspiracy, theft, forgery and 29 counts of fraudulent schemes. 

Petersen was indicted along with another person, Lynwood Jennet. Little information was immediately available about Jennet.

“The scheme in this case fraudulently represented the pregnant women in question were residents of Arizona in order to obtain medical services by the Arizona Health Care Cost Containment System because without residency Arizona Health Care Cost Containment System services cannot be obtained,” the indictment reads.

According to his website, Petersen charges $40,000 per adoption.

The Attorney General’s Office planned a news conference for 11 a.m. Wednesday to discuss the “multi-state investigation, arrest and criminal indictment” involving Petersen. 

According to a news release, the Arizona Department of Public Safety, Homeland Security Investigations and the Utah Attorney General’s Office also were involved in the investigation.

Late Tuesday, The Salt Lake Tribune reported that the Utah attorney general charged Petersen with 11 other felonies, including communications fraud, human smuggling and sale of a child.

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SIDEBAR: Ex-treasurer taped private phone conversation with son

By Phil Riske |  Arizona Capitol Times  April 20, 2007

A recorded conversation between former state Treasurer David Petersen and his family that is now in the hands of the county sheriff had an unusual source — Petersen himself.

The recording, which was released along with transcripts by Maricopa County Sheriff Joe Arpaio on April 12, is part of an ongoing investigation into a $1.9 million payment from the Treasurer’s Office last June to the office of Attorney General Terry Goddard.

A document obtained from the Arizona Department of Administration through a public records request states that “Petersen and his family recorded themselves accidentally on a state digital recorder.”

David Petersen

The transcript of the recorded conversation begins with Petersen asking his son Paul, “Does that mean it’s on, though?” and then stating, “Oh, I see it’s off now.”

Further conversation into the recording revealed Petersen considered approaching Goddard about his investigation into several felonies he allegedly committed as a public official — and whether settling a disputed legal bill with the attorney general could help secure leniency.

Goddard has denied any sort of deal was struck for the money, which was a payment he said the office was entitled to for helping the state and local governments recover a portion of $131 million lost in investments from National Century Financial Enterprise in 2002.

He has pledged to cooperate with the investigation by Arpaio and Maricopa County Attorney Andrew Thomas regarding the payment.

In October, Petersen pleaded guilty to a single misdemeanor charge for failing to disclose a $4,200 commission he received for selling teaching materials for a character education program.

Treasurer resigned in November

He originally faced felony charges of theft, fraud and conflict of interest, and resigned Nov. 30 as part of a deal reached with Goddard. He was also ordered to pay $4,500 in fines and put on supervised probation for three years.

Petersen raised suspicion in June when he made the payment because it was originally withheld by then-Chief Deputy Treasurer Blaine Vance, who wished to seek an opinion from the solicitor general if Goddard’s office was entitled to the money.

Members of the Board of Investment, which oversees the state’s $10 billion investment portfolio, expressed displeasure upon learning about the payment to the Attorney General’s Office from the Arizona Capitol Times in July.

Vance and Tony Malaj, Petersen’s former chief of staff, have filed whistleblower claims with the Department of Administration on grounds they were retaliated against for cooperating with the investigation of Petersen.

The pair is mentioned in the recorded conversation, which is believed to have occurred sometime in May. Petersen’s son Paul said “Blaine (Vance) doesn’t do anything,” and his father related the concerns of another employee that he was a “negative manager” and “didn’t take initiative.”

According to the transcripts, Paul Petersen also instructed his father that he “could get rid of him (Tony Malaj) whenever you want.”

On April 18, at a Board of Investment meeting, current Treasurer Dean Martin said he will seek to hire outside counsel to determine if the Attorney General’s Office should receive its 35 percent recovery fee for additional settlement funds coming in from the NCFE settlement.

He maintains a Texas firm — Gibbs and Brun — hired to pursue the fraud portion of the settlement did most of the work, and $5.6 million in newly recovered funds in the NCFE case have been placed in escrow until the matter is settled.

“Terry Goddard and the former treasurer signed a contract that they (Gibbs and Brun) are our outside counsel, not the attorney general,” said Martin.

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