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Doug Ducey's AZ Coronavirus Relief Fund draws controversy, questions

22nd May, 19:12

From left: Jerry Simms, Turf Paradise owner; Michael Bidwill, Arizona Cardinals chairman and president; and Robert Sarver, Phoenix Suns owner.

When Gov. Doug Ducey launched his AZ Coronavirus Relief Fund in late March, the first million-dollar donor was already in place: Michael Bidwill, chairman and president of the Arizona Cardinals and a close friend of Ducey's.

A few weeks later, another $1 million pledge arrived. Jerry Simms, owner of the north Phoenix horse racing venue Turf Paradise, told The Arizona Republic he had been inspired to give while watching a Lady Gaga charity concert benefiting COVID-19 relief efforts.

"When you see ... on TV where people are lined up to get food, how can you sit on your hands if you have a few bucks? You just want to do the right thing," said Simms, who temporarily shuttered his track in mid-March as the new coronavirus began to spread in Arizona.

More than a million dollars and counting has flowed to the fund intended to address the pandemic's impact in Arizona. Most of the donations have come in increments of a few hundred dollars or less.

But some high-dollar contributors, such as Simms, whose donation was touted in a news release from the Governor's Office, have raised questions about whether the giving is motivated by more than community spirit. A charitable fund with well-intended goals can, because of its association with Ducey, present an opportunity to curry favor with the governor or give that appearance.

In Simms' case, his $1 million gift to Ducey's fund came as the governor prepares to fill three vacancies on the five-member state Racing Commission, which regulates horse racing in Arizona including at Turf Paradise, 1501 W. Bell Road.

In addition, the Ducey administration is in the final stages of negotiating the state's gaming compact with Native American tribes. Simms, who bought Turf Paradise 20 years ago, has long lobbied governors and lawmakers to approve casino-style gambling at his track.

"Is there something expected in return? The optics say yes," said Stephen Nolan, a longtime racing and jockey agent and critic of Simms.

Simms told The Republic his donation had nothing to do with Racing Commission appointments or a desire to see expanded gaming in Arizona. He didn't speak to Ducey about his April 27 donation, nor does he expect anything in return, he said.

"If people want to put a spin on giving money for people in need, they'll just do it," Simms said. "They will say bad things about anything I do."

Daniel Scarpinato, Ducey's chief of staff, said donations to the COVID-19 relief fund should not be seen as politically motivated. Simms and other donors are being good corporate citizens.

"This is something we should be praising, not denigrating," Scarpinato said.

"If someone were to donate with the expectation that they somehow will curry political favor, they will be very disappointed," Scarpinato said. "This is a crisis and people in our community want to step up and contribute and find a way to be helpful, and I think it's wonderful."

Brendan Fischer, director of the federal reform program at Campaign Legal Center in Washington, D.C., said Ducey deserves credit for creating a fund to help Arizonans, but it also presents ethical challenges.

Fischer cited the Clinton Foundation. The charity of former President Bill Clinton and then-Secretary of State Hillary Clinton came under intense scrutiny during the 2016 presidential race because entities and individuals had allegedly donated trying to secure access or influence at the State Department.

"Any time you have wealthy special interests writing large checks to an entity closely associated with a public official, you have an opportunity for at least an appearance of a conflict of interest," Fischer said.

Ducey created the AZ Coronavirus Relief Fund because business owners wanted to help, Scarpinato said.

"As we work to combat the spread of COVID-19, access to resources that can help support families and businesses in this time of need is critical," Ducey said on March 24.

He housed it in the Arizona Commerce Authority, the public-private entity that recruits businesses to the state with financial incentives. Donations to the fund are tax-deductible.

The Ducey administration had released the names of several big donors, but not a complete list. After The Republic began asking questions, Ducey's office released to the newspaper a list of all 500-plus donors.

In addition to $1 million donations from Simms and Bidwill, the largest contribution -- $5 million -- came from the Ben and Catherine Ivy Foundation, earmarked for personal-protective equipment such as masks and medical gowns.

Corporate donors include the charitable arm of Arizona Public Service ($250,000), the electricity utility that has spent millions to benefit the campaigns of Arizona politicians, including Corporation Commission members who regulate the company; Salt River Project ($100,000); Western Alliance Bank ($150,000), whose executive chairman is Phoenix Suns owner Robert Sarver; and Waymo ($100,000), the self-driving car company that has received broad regulatory support from Ducey.

On the governor publicly announced he had appointed a five-member committee to disburse the funds.

Scarpinato said all five committee members have experience helping charities.

The members are also Ducey allies and political supporters: Tina Marie Tentorie, APS Foundation executive director; Nicole Bidwill, co-owner of the Cardinals and sister of Michael Bidwill; Eileen Klein, whom Ducey appointed as state treasurer in 2018 (she didn't run for reelection); Sandra Watson, president and chief executive of the Commerce Authority where Ducey serves as chairman; and Dan Mahoney, a partner at Snell & Wilmer law firm.

Arizona campaign finance records show Tentorie from 2016 to 2018 gave $3,400 to an APS-related political action committee that was a big donor to Ducey's reelection; Nicole Bidwill in 2017 gave $10,000 in political contributions to help Ducey; and Mahoney donated $10,200 in 2017 and 2018 to help Ducey get reelected.

Simms said he appreciates that Ducey's charity has no overhead costs.

So far, AZ Coronavirus Relief Fund has passed some of the donated money to charities that do have overhead costs.

The fund had neither made nor announced any distributions when The Republic first contacted the Governor's Office about its plans for the money on May 11. Two days later, the governor and Commerce Authority announced a first round of grant funding would total $1.5 million. In the days since, they have announced grants including $500,000 for food banks, $100,000 for children with disabilities, $300,000 to groups serving senior citizens, $100,000 for foster families and $500,000 for child care.

The office says the $5 million April donation was earmarked for personal protective equipment that the Department of Health Services will distribute "as it is received."

Fischer said Ducey's charity might compete for donations with established Arizona charities that have established track records of delivering services.

Kristen Merrifield, CEO of Alliance of Arizona Nonprofits, said it's possible Ducey's new charity could take away contributions from nonprofit organizations but so far that hasn't happened.

Simms told The Republic that he didn't want publicity for his AZ Coronavirus Relief Fund donation.

"We didn't reach out and talk to the TV stations. There was no solicitation," Simms said. "I have given other money. I don't take an ad out. I didn't call anyone."

Ducey's office and Turf Paradise did, however, issue similarly worded news releases on April 27, in which Ducey praised Simms' $1 million gift: "This generous contribution from Jerry Simms will help our medical professionals and vulnerable populations amid this health emergency. Thank you to Jerry and all our community partners who are stepping up to help others." The news releases also noted Turf Paradise had given $25,000 worth of food to St. Mary's Food Bank.

Even without an announcement, Simms' donation was going to attract attention. It's the second-largest donation and accounts for 12% of the $8.2 million Ducey has raised, according to the Governor's Office.

And Simms is a controversial figure. During the late 1980s, Simms got tangled in a California political-corruption case dubbed "Shrimpscam," which sent 15 people to prison, including legislators and other public officials. Simms, who was granted immunity as a federal witness, admitted making a loan to a public official that was intended as a bribe, and playing a role in an extortion plot, according to court records. In 2017, Simms told The Republic he did not realize at the time that he was paying a bribe, and noted that an FBI case agent in California signed an affidavit declaring he was a crime victim.

More recently, he has fought a long-running legal battle with his brother, Ron, over finances and control of the partnership that owns Turf Paradise. That legal conflict, still unresolved, spiraled into a separate battle involving attempts to effectively ban Ron Simms from racing.

Jerry Simms also has clashed with members of the Arizona Horsemen's Benevolent and Protective Association, who race their horses at his track and share in profits from gambling.

Simms said he wants to expand into casino-style gambling at his track, but the 2002 voter-approved Arizona Tribal-State Gaming Compact prohibits casinos outside reservation land, including at racetracks.

The compact expires in 2023, and the Ducey administration is negotiating with Arizona tribes on an agreement to replace it. One key tribal negotiator told The Republic that an agreement is close, but it does not include "racinos" at Turf Paradise or other racetracks. Yet, it could include sports betting outside of Native American-owned casinos.

Scarpinato, Ducey's chief of staff, told The Republic, "What the governor has said on renegotiating the compact is to ensure that there's not a change in the culture of the state. He favors something in agreement with the tribes that ensures we don't expand gaming beyond where it currently exists."

Simms said, "We don't know what we are going to get, it's so top secret. I know nothing. It's under high confidentiality."

But Racing Commissioner Rory Goree, a security consultant and advocate for the racehorse owners, said it looks bad that Simms made such a large donation to the governor's charity as gaming compact talks are coming to a close.

"It's politics," Goree said of the donation. "The governor is a very important person in the state."

Turf Paradise is regulated by the state Division of Racing, an administrative agency within the Department of Gaming, and by the Arizona Racing Commission, a five-member board appointed by the governor.

Live races at the track typically run from October to May, drawing more than 200,000 gamblers. Simms and key players who work at his track have long fought over safety and health issues, how to divide revenues from horse racing at Turf Paradise and from off-track betting. The disputes are typically resolved by the Racing Commission.

Simms had two allies on the commission quit a few months ago. Since mid-February, the oversight board has had only two voting members and, lacking a quorum, has been unable to take any action.

Earlier this month, a handful of individuals who rely on Turf Paradise for their livelihoods gathered in an office on the track's back lot. The group included Robert Hutton, president of the 1,300-member Arizona Horsemen's Benevolent & Protective Association.

Hutton said he was "sickened" to learn Simms had given $1 million to Ducey's COVID-19 relief fund. When Simms closed the track on March 14, it was financially devastating for thousands of workers who care for and train the 1,600 horses that race at Turf Paradise, Hutton said.

Hutton said he and others were forced to raise $20,000 to keep the racehorses from starving.

Kevin Owens, a Glendale horse breeder who has feuded with Simms, called Simms' $1 million donation "obnoxious."

"That money, to me, would have been better applied to taking care of the people who take care of you," Owens said. "If you are doing something out of the goodness of your heart, you should help your people."

Hutton said Simms requested association members pay half of the track's operating costs through April 30. Typically, Turf Paradise covers all of those costs.

Because Ducey hadn't filled the three empty seats on the Racing Commission, Hutton said his organization was unable to appeal the cost-sharing agreement.

"There's nowhere for us to go," Hutton said. "There's at least six people who have interviewed for the positions (on the Racing Commission.) They are very qualified people who could be appointed."

Horse owners had little choice but to agree to Simms' terms, he said. Hutton said the association's share of the track's operating costs were at least $94,717 through late April, with the money coming out of the racing purse. The association contributed another $26,445 to help horse owners who continued to keep their horses at the track.

By May 10, nearly all of the horses had been moved to other tracks in the hope that racing resumes this summer, Hutton said.

Simms said he had to ask the owners to contribute because no money has been coming into his track since mid-March, and he needed to share the costs of maintaining the track with the horse owners who benefit from the facility.

He said he donated $2,000 to help feed the horses.

Hutton said Simms' "influential donation" could sway Ducey to not appoint commissioners whom Simms doesn't like.

Simms scoffed at the idea that he has much control over the Racing Commission, and noted that one reason for the vacancies is it's difficult to find volunteers to serve.

"For five years, they couldn't get a fifth commissioner," Simms said. "Two have walked out, and they both are my friends ... I got voted down many times."

Scarpinato, the governor's chief of staff, said Simms' donation won't influence Ducey, agreeing that it's tough to find volunteers to serve on the Racing Commission. Plus, he said, the governor faces more pressing issues.

"We have been focused on the coronavirus and that has been our top priority the past 10 weeks," Scarpinato said. "And, it's very challenging to find good people who are willing to serve, and who do not have a conflict of interest on this commission."