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Opinion

A conversation with Terry Goddard

Tucson, Arizona | Published: 04.22.2007
Arizona Daily Star
Attorney General Terry Goddard, the state's chief legal officer, oversees the state's largest law office, with about 400 attorneys.
Goddard's office gives most state agencies legal advice and investigates and prosecutes various types of fraud, corruption and civil-rights issues. Among the office's responsibilities are the legal services for the Department of Economic Security and consumer protection.
Goddard spent his lunch hour with the Arizona Daily Star's editorial board on Friday, April 13. Here are excerpts from that conversation.
GODDARD: If I could start on where we stand with the Legislature. Because of Southern Arizona, because of Tucson specifically, my budget is being held.
I had the temerity last fall to use a RICO (Racketeer Influenced and Corrupt Organizations Act, a federal law that penalizes criminal acts performed as part of an ongoing criminal organization) seizure that we had gotten from a rather unusual criminal group out of Scottsdale.
We finally perfected that seizure last summer and we looked for the No. 1 most desirable purpose for the money that could fit the statutory parameters of the RICO fund. We chose the Southern Arizona crime lab, along with DPS (Department of Public Safety), which was a partner in the investigation in that case. It was $17.3 million. The crime lab transferred it from the RICO fund to the AG's office to the DPS, and promptly the sky fell in.
The chairman of the Appropriations Committee, Sen. Burns (Bob Burns, R-Peoria) decided — although he admitted that we followed the law as it exists today — that unless we agree to a substantial change in how RICO money is appropriated, he is not going to let our budget go. And so at the moment we are at impasse.
I had a call from Sen. Bee (Senate President Tim Bee, R-Tucson). He has made it clear that he is supportive, he is very supportive of the crime lab. He is very supportive of the way we administer our RICO money.
C.P. Direct was the case. It involved two local defendants. They advertised a product over the Internet, which got more than 500,000 customers. They made almost $70 million, which they promptly invested in local assets: cars, houses, real estate.
Most scam artists put the money overseas first. But these guys didn't do that. We had a minimal and very quick investigation. We took the (sexual enhancement) pills that they were selling, put them through a lab and they were worthless. We advertised for a year to see if the victims, the people who had bought these pills, would basically claim the money back. Out of 500,000, only 22,000 did. So $4 million went in refunds. At the end of the day, there was about $30 million that was shared between the Attorney General's Office and the Department of Public Safety: $17.3 million went to the crime lab.
STAR: That was sexual-enhancement stuff they were peddling?
GODDARD: Yes. That may be why few of the victims wanted to come forward. The bottom line here is that we had a lot of money. It is the only time in my tenure as AG that we've had a surplus.
Normally, the RICO money goes first to victims, second to the cost of the investigation and prosecution. And usually it's gone at that point. And we tap the revolving fund for the next round, for the wiretaps and the extra overtime for the officers and so on that allows us to keep going.
If the Legislature puts it into the appropriations process, it creates a huge problem: Our partners aren't going to come to the table because DPS and the Pima County Sheriff's Office don't want to do the investigation and not have at least some possibility they're going to get their costs back. They're not going to get their costs back from the Arizona Legislature, they know that. So they won't bring the cases to us in the first place.
That's the tragedy, because we do the sophisticated financial-fraud cases. We do the major drug-importation and conspiracy cases. County attorneys don't do that, don't want to do that.
STAR: The money would go into the general fund, right?
GODDARD: Put it all in the general fund, and then they'll appropriate what we need. There are problems with that. We don't know what we need in advance. This is very much a moving target. If you get a lead, then you follow up with other possible sources.
The other possibility is pure secrecy. Can you imagine going to a legislative appropriations committee and say I need half a million dollars for wiretaps. Well, who are you talking to? What kind of investigation is this? Who are are the suspects?
Legislators can't give a single example of where the RICO process, as we administer it at the AG's office, has gone wrong.
GODDARD: This year, my singular focus at the Legislature was to try to get a comparable salary for attorneys at the AG's office that are paid by other public-sector firms in the state. And right now, we are $7,000 to $10,000 below what, for instance, the Maricopa County attorney or even the city of Phoenix are paying their lawyers. And as a result, we've had almost a 25 percent turnover.
And I'm trying to get the Legislature to understand that they are losing money by this. They are losing valuable legal talent; they're losing training that they've invested in; and then suddenly they are walking across the street to another entity. And we're having this constant chaos of turnover. It's got to stop.
GODDARD: We're also working on a few things in the payday-lender area. I know you all have weighed in strongly on that subject.
STAR: What are you doing specifically on payday loans?
GODDARD: Well, I was working with Rep. McClure, (Marian McClure, R-Tucson) and we drafted some things. And because I thought she was moving in the right direction, we supported her first effort. Now, I'm not supportive of what came out of the committee.
I've got a forum in Tucson on May 16 to basically bring community groups together to discuss and find out some of the impacts. And I've been told, and probably with some validity, that impacts are going to be hard to assess because most people who take out these loans are not going to be reading the ads and seeing the notices and showing up during the workday to testify. But I do think we can bring together the community voices that are concerned about payday loans and the harm that they cause.
STAR: What do you think of Senate Bill 1446. That's the one that would get rid of the sunset provision.
GODDARD: Frankly, I think it's still way too high on the interest cap. I'm more and more skeptical. I don't think it does any net good as it came out of the committee.
STAR: What do you think of the sunset provision itself?
GODDARD: Sunset provisions certainly put you in a better position to negotiate with the industry because you do have a finite termination. If you do nothing, independent of the sunset, all that is going to happen is in 2010 the industry is going to show up with a new bill. And it will be better. The industry has told me that the national lenders think Arizona is amazing. They would be willing, cheerfully, within their profit picture, to take a significant amount of reduction in terms of the ceilings and permissiveness of the Arizona market.
I don't want to put too much dependence on the sunset to solve our problems. I don't think you can wait and just have it go away.
STAR: Can we talk about Child Protective Services for a minute? There's been a lot of activity in the Legislature, a lot of talk about what, if anything, needs to be done about CPS. The Legislature may want to conduct closed hearings on CPS because most members of the Legislature don't really understand what CPS does.
GODDARD: I did an opinion. I am afraid it didn't get any attention because it was issued the Friday before Easter. We did a precomprehensive, which goes to the Brandon Williams (the 5-year-old autistic boy who died March 21) cases, which is the obligation of health-care providers and others in the community under current state law to report any incident of abuse. It was a reply to a legislator. Clearly there was failure of a number of different agencies to report what could have been, and actually was, evidence of abuse, and they didn't do it.
STAR: What did they ask you to do?
GODDARD: I would refer you to the letter. It's on our Web site at azag.gov under "opinions."
It does try to articulate what I think many people have misunderstood in the past, which is exactly what the reporting obligations are. They're very extensive under state law. Basically, if you had seen young Brandon with bandages, that should have been reported.
I can't argue with somebody who wants to raise the Legislature's understanding of what CPS does and what pressures they're under. If the only question is getting a Legislature more up to speed, I would certainly support it. I think that's a great idea.
STAR: Is there anybody who measures the success of CPS?
GODDARD: I tend to doubt it because the standard of success keeps changing. I've heard the governor talk entirely in terms of child welfare. Some legislators talk entirely of family unification. And CPS is constantly in a pingpong match between those two separate poles.
Right now — this has been my experience — they're leaning toward family unification as the primary obligation. And child welfare is there, but as a secondary objective.
We represent CPS in every case of dependency and severance. Right now, there are 7,000 in the process that I'm aware of. The AG's office has won 99 percent of the cases for both severance and dependency. That is not normal in a contested legal situation. I mean, there's a lawyer on the other side of every one of these cases, usually state-appointed but nonetheless a competent lawyer is handing the interest of the parents, the family.
We should not be winning 99 percent of anything. We're good. We have some very dedicated attorneys; they're not that good. I would be happy with a 70 percent or 80 percent win rate because then it would mean that some of the close calls were coming through the system.
STAR: So you're saying that's because you're only getting the worst cases?
GODDARD: We get the worst of the worst.
STAR On illegal immigration and business owners, is there going to be some clarity on this issue of knowingly hiring illegals?
GODDARD: I was just in Nevada two days ago, and it had a similar bill before its Legislature. And the questions were: What databank are we going to use? How reliable is it? How quickly will they turn the information around.
The Social Security Administration is making a whole lot of money off illegal immigrants who have somebody else's card — $85 billion, I think, last year. And so you know, it's our dirty little secret. I believe we've got to balance the number of work permits with the number of jobs that are available.
The other place we pay the price for what's happening in Arizona is we're No. 1 in the country for identity theft. It's because we're three times the national average in something called employer fraud, which is somebody brings somebody else's Social Security number when they apply for a job.
Well, that to my mind isn't identity theft, in the classic sense. Nobody's taken money out of my account and put it into his. In fact, they're putting money into somebody else's account, that is the deduction that their employer is drawing.
Almost every day, I'm signing off on charging documents for people who are cranking out phony Social Security cards and driver's licenses. About $200 to $300 is the going price. And they're awfully good. Near perfect.
STAR: Are these real numbers, though, for Social Security?
GODDARD: If they're really good, they take either recently deceased or under 18 and identify those numbers and assign them to the phony cards. Most of the ones we arrest take a number at random.
We also had an interesting thing where we just busted six travel agents in the Phoenix area for facilitating the flight of immigrants out of Las Vegas. And every one of those was either complicit or actually providing false ID.
The ID would fool most employers. And if there was a valid number that you can call or a Web site that you can visit at the Social Security Administration that will say, at least, who they think that number is assigned to, it's a 50-year-old man and he's living in Oshkosh, the fact that you found it and it's being presented by a woman in Tucson would lead you probably as an employer to decide that this is a phony ID.
STAR: Is there a problem with children's Social Security numbers?
GODDARD: It's the number one place I'm going to look if I want to steal somebody's identity and set up a false account or have a Social Security number. My child has had his Social Security number since he was 6 months old. Most kids do. But they don't really use it.
One of the things I advise parents when we're checking for identity theft is to get your free annual credit report and check it out carefully. Also get one for your minor children.
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