Arizona Attorney General using consumer fraud funds for politically charged legal fights

PHOENIX (3TV/CBS 5) - Consumer fraud complaints are rising dramatically across Arizona and around the country. In Arizona, defending consumers from scams and rip-offs falls to the office of Arizona’s Attorney General Mark Brnovich. Arizona’s Family investigators poured through years of budget records for the Attorney General’s office. The investigation found that Brnovich’s office has increasingly diverted funds earmarked for consumer protection to pay for legal battles that have nothing to do with consumer fraud.

“The Arizona Attorney General is the top cop,” said attorney Robert Rutila who’s submitted cases to the Attorney General’s Office on behalf of his clients on several occasions but says the AG’s office declined to take action. “It really doesn’t give a reason for declining the action,” said Rutila, reading the most recent letter from Brnovich’s office.

“They’re not easy cases. And for individuals, it’s expensive to hire a private lawyer,” says Rutila. “The Arizona Consumer Fraud Act empowers individuals to do so, but the Arizona Attorney General is the primary enforcer of the law, and they should be taking on these cases.” Rutila’s client is one of the more than 15,000 consumer complaints submitted to the Attorney General in 2021. According to the Federal Trade Commission, social media scams alone cost US consumers $770 million last year.

“They’re getting more relentless. They’re getting more crafty, and they’re getting more vicious. And if we don’t fight and stop them, there’s no real other process to do it,” said Joseph Sciarrotta, chief counsel for the Attorney General’s civil litigation division. Sciarrotta says he’s proud of the division’s work, saying the office has recovered nearly $300 million for Arizona consumers through legal action and investigations during Brnovich’s nearly eight years as Attorney General.

However, in budget requests submitted by the Attorney General since 2018, the office has increasingly diverted money in the Consumer Protection and Fraud Revolving Fund to pay for other operations. Analysis of the operations shows they have little or no connection to protecting Arizona consumers.

Arizona’s statute that governs the Consumer Protection/Fraud Revolving Fund states:

Brnovich warned Governor Ducey of potential legal consequences.

In a budget request dated August 31, 2017, Brnovich wrote to Governor Doug Ducey warning that enforcement actions required by new state laws were siphoning resources away from consumer protection efforts. The Attorney General admits in the letter that his office was using Consumer Protection/Fraud Revolving Funds to pay for the Government Accountability and Special Litigation Unit (GASL) and warned of possible legal consequences.

“There is legal risk associated with using consumer fraud settlement monies (outside of civil penalties and fees and costs) for non-CPA salaries, since by statute those monies may only be used for consumer restitution or for expenses related to “rectify[ing] violations or alleged violations of consumer protection laws,” said Brnovich in his letter to the Governor.

Later in the letter, Brnovich states, “The necessary reassignment of attorneys from CPA to GASL limits the number of investigations that CPA attorneys can initiate in response to consumer complaints.” It’s unclear if that warning resulted in any funding increases. Still, according to recent budget requests, the Attorney General’s office continues to use money from the consumer protection fund for other purposes.

In the Attorney General’s 2023 fiscal year budget request, Brnovich asked to divert $1.2 million to the Federalism Unit, $1.2 million to the Government Accountability and Special Litigation Unit, $525,000 to the Voter Fraud Unit, $315,000 to the Southern Arizona Law Enforcement Unit, and $1.5 million to the Organized Retail Theft Task Force. According to previous budgets, funding for many of the units mentioned above came from other sources.

Seeking higher office

Brnovich, also running in the Arizona Republican primary for US Senate, has extensively touted the Federalism Unit’s work while on the campaign trail, including in several interviews on FOX News.

The unit’s current docket includes several lawsuits against President Joe Biden, including the decision to stop border wall construction. Earlier this week, a federal judge granted Brnovich a Temporary Restraining Order (TRO) request after President Biden announced his decision to end Title 42 immigration restrictions. Brnovich also used the unit to file briefs in New York City and New Jersey gun rights cases.

Brnovich’s office said the Attorney General was busy when we repeatedly requested an interview. Instead, they offered to allow Sciarrotta to address questions about the budget.

Interpreting the statute

“The technical reading of the statute says they can be used for operating expenses, generally. And then including consumer-related matters. And it also says the legislature may appropriate out of this fund,” said Sciarrotta. He argues that the state legislature decides where the AG’s office can use those funds. “It’s not how we want to use it. It’s not how we get to use it. It’s how we’re told to use it,” said Sciarrotta.

But many of the documents reviewed by Arizona’s Family Investigates included budget requests submitted by the Brnovich’s office, clearly indicating the office was asking for the transfer of funds.

Robert Rutila, meanwhile, views this as a matter of priorities. ”I can’t imagine a more important act to enforce than the Consumer Fraud Act,” said Rutila. “It’s his (Mark Brnovich) job to enforce the laws of the state of Arizona.”

Attorney General’s Response

Katie Conner, Spokesperson for the Attorney General’s Office, released the following statement after this report was originally published online: “Morgan Loew’s segment about the Attorney General’s Office use of monies recovered through consumer enforcement actions grossly mischaracterizes how these funds are used. Our office receives its funding from the Arizona Legislature, which exercises its sole discretion as to where the funds come from and how they may be appropriately expended. Attorney General Brnovich has secured a record amount of more than $300 million in consumer restitution and other similar relief from those who took advantage of consumers. The ‘politically charged legal fights’ referred to in the story are lawsuits against the Biden administration’s policies to open our borders in violation of federal immigration laws, which endangers the health, safety and well-being of all Arizonans.”

Editor’s Note: This article was edited to add a statement from the Attorney General’s Office.

Copyright 2022 KTVK/KPHO. All rights reserved.