The Daily Agenda: Getting the lawyers involved
The Daily Agenda: Getting the lawyers involved
Danny, Kirk and Mike strike back ... Trading the new water agency for an old one ... And the culmination of Sign Wars Week.
A year ago, USA Today’s Craig Harris (formerly of the Republic) wrote a scathing expose detailing the shady collaboration between three former Gov. Doug Ducey staffers and a company called Ryan LLC that finds or creates creative tax breaks for its customers, in this case, an Arizona oil company.
The five-part subscriber-only series revealed a heated battle that Ryan LLC and its three newly hired Arizona consultants, Danny Seiden, Kirk Adams and Mike Liburdi, waged against the Arizona Department of Revenue over whether diesel gas that Ryan’s client sold to a mining operation qualified as “mining equipment” and therefore should not have been taxed. If Ryan won, it could punch a $100 million loophole into Arizona tax code and earn itself a cut.
The series depicted Ryan as a firm with “questionable” practices where “they throw things against the wall to see what will stick.” And it raised a host of questions about conflicts of interest in Ducey’s office, including whether the trio of former staffers broke laws by lobbying for Ryan shortly after leaving government employment. Later, Harris declared that the FBI was investigating the situation based on his reporting, which had run in the Republic and USA Today, which share a parent company, Gannett.
But the series didn’t tell readers that Gannett had used Ryan’s services itself, according to a new lawsuit the company filed in a Texas court. The lawsuit alleges not only that Gannett tried to go around Ryan’s back to screw the company out of its fee, but that Gannett, USA Today and Harris defamed Ryan in the series.
“Among the many facts that USA Today1 failed to disclose and hid from its readers was the fact that since 2019 USA Today has itself been a Ryan client that sought, utilized and financially gained from Ryan’s tax services,” the company wrote in its lawsuit. “Then after Ryan’s successful work resulted in USA Today obtaining more than $2 million in tax savings — USA Today turned around and flatly stiffed Ryan on fees relating to hundreds of thousands of dollars in tax savings.”
The lawsuit claims that Gannett signed a contract with Ryan to ferret out any tax savings the media company might be entitled to, for which Ryan would receive a 35% cut. Ryan found significant tax savings in Kentucky, but Gannett said it didn’t want to pursue a refund. Then Gannett “unilaterally pursued the refund behind Ryan’s back” and recovered about $375,000 based on Ryan’s findings. When Ryan found out, it billed Gannett, which refused to pay. A similar story played out in Indiana, Ryan alleges, and Ryan demanded Gannett pay up.
Shortly after, USA Today “launched a defamatory multimedia campaign” against Ryan, the company argued.
Most of Ryan’s litany of complaints about Harris’ reporting are the kind that businessmen with lawyers complain about when they don’t like the scrutiny they receive from the press. Ryan complains about Harris describing the effort as “behind the scenes,” for example, because parts of the fight played out in tax court. But the lobbying from Seiden, Adams and Liburdi sure didn’t.
Many of the other complaints are based on things Harris said or tweeted while promoting the series, but which aren’t in the actual reporting itself. For example, Ryan complains that Harris tweeted that two top Department of Revenue officials were fired for standing up to Ryan’s hardball tactics, rather than for publicly disagreeing with Ducey about Prop. 208. In the series, Harris acknowledges the Prop. 208 dust-up but writes that the fired employees “said their opposition to the tax refunds was the real reason.” Reporting why they think they were fired isn’t defamation.
Harris’ series shone a light on the dark crossroads of business, money, politics and policy, and we’re firm believers that if you’re not pissing off politicians and powerful special interests, you’re not doing journalism right.
However, as we’ve previously noted, the claim that the FBI is investigating has always bothered us. While every journalist wants to believe their reporting gets results, a few phone calls from an FBI agent does not mean the agency is investigating. To claim otherwise is overselling it.
The story didn’t need overselling. But we’re inclined to agree with Democratic attorney Paul Eckstein when he said the series muddied the waters between what should be illegal and what is illegal. The kinds of cozy relationships with special interests and backroom deals Harris outlined are offensive to the average voter, yet commonplace in Ducey’s administration and largely legal. That should be the focus.
What is a g-belt?: Republican lawmakers say they’re working on some kind of bill related to banning kids from attending drag shows, though there hasn’t been a bill introduced that we can point you to. Instead, they sent out a press release capitalizing on a wave of anti-drag show sentiment on the right. (You can see how these culture wars are playing out at the local level in this Payson Roundup story, where a town council member rails against a library book about sex ed that he admits he has not read, asking what would come next, “having drag queens read to our children?”) Arizona Sen. Vince Leach told the Republic’s Ray Stern the press release’s tone was mostly his doing.
“When you have a drag queen sitting on the steps with her ... crotch wide open and little kids sticking dollar bills in her g-belt, that’s a problem with me,” Leach told Stern.
Sinema at the center: No federal bill has passed on guns yet, but the political press is already heralding the key role that U.S. Sen. Kyrsten Sinema played in pulling together often-competing factions for a compromise. Sinema is one of four lawmakers brokering the deal, which sprung from her rare unscripted comments after the Uvalde shooting, Politico’s Burgess Everett and Marianne Levine report. Meanwhile, cops in Tucson met with schools to talk about how to face active shooters, and Mesa schools are moving up their plans for more security at school entrances.
Water problem presses on: Instead of creating a new water agency, like Gov. Doug Ducey wanted, lawmakers plan to add more funding to an existing water agency, the Water Infrastructure Finance Authority, the Arizona Capitol Times’ Nathan Brown and Camryn Sanchez report. A bill for water funding would likely be released alongside the budget deal and could have bipartisan support. As the state’s elected leaders discuss how to bureaucratically manage water funding, Bureau of Reclamation Commissioner Camille Calimlim Touton said the Colorado River’s reservoirs’ extremely low water levels could warrant big cuts next year, the Los Angeles Times’ Ian James writes.
Scary times: Some parts of Apache and Navajo counties couldn’t call 911 over the weekend after a fiber line was vandalized, and local officials said Frontier Communications wasn’t quick to resolve the problem, AZFamily’s Briana Whitney reports. Families shared how they weren’t able to call for help in emergencies, and Whitney notes that “at least one person died during the outage.”
Another day in court: The U.S. Supreme Court dismissed a lawsuit yesterday from Arizona Attorney General Mark Brnovich and other Republican states to put the public charge rule back in place, a Trump-era rule that denied green cards for people who could have ended up using social safety net programs, seemingly because the case at hand made it difficult to reach a clear ruling, Capitol Media Services’ Howie Fischer reports.
Moving on up: Attorney Roopali Desai, whose name you might notice from any of a number of election lawsuits over the past decade, was nominated by the Biden administration for a federal judge position on the Ninth Circuit Court of Appeals. To learn more about Desai, check out this profile of her from earlier this year, when she was named one of USA Today’s Women of the Year.
Protection for me but not for thee: Democratic U.S. Rep. Raúl Grijalva voted against the widely supported bill that would provide more security for U.S. Supreme Court justices and their families, saying he was opposed because court staff weren’t included in the extra protection and because of inaction on gun violence, the Republic’s Tara Kavaler reports.
Not Arizona stories, but noteworthy: The commission tasked with certifying primary results in Otero County, New Mexico, won’t do their job because commissioners don’t like Dominion machines, and the state’s top court had to intervene. And Republic columnist Elvia Diaz points out how Republican Mayra Flores’ win in a special election in south Texas shows how Democrats take Latino votes for granted.
Behind the scenes: A Phoenix lawyer named Larry Hammond who clerked for a U.S. Supreme Court justice pushed the concept of “viability” in the abortion debate, which became the legal standard of protecting abortion access until a fetus was viable outside the womb, journalist Michael Kiefer reports in the Phoenix New Times. Hammond went on to become the “dean of defense attorneys” here.
Better late than never: A five-year-old lawsuit over whether the state illegally shorted schools hundreds of millions of dollars by not fully funding a school improvement formula required by law is finally heading to trial, Capitol scribe Howie Fischer reports. While no date has been set for the trial, a Maricopa County Superior Court judge threw out arguments from Republican lawmakers that the case is moot because they’ve changed the formula.
Budgeting is all guesswork anyway: The Legislature’s last-minute budgeting means school districts are scrambling to enact their spending plans without clear guidance on how much the state will shell out to schools this year, the Gilbert Sun News’ Cecilia Chan reports. Schools are also facing the prospect of another epic battle next year over whether lawmakers will raise the aggregate expenditure limit, considering this year’s lift on the limit only lasts for this year.
Speaking of budgeting being guesswork, we’re raising our price next week to $100. But if you buy an annual membership now for just $80, you can opt into keeping that price forever. It’s a good deal!
Correction: Our bad, Tom: Yesterday’s report incorrectly stated that Steve Gallardo is the only person of color on the Maricopa County Board of Supervisors. While he’s the only Latino elected to the position, Republican Tom Galvin, who was appointed to the board last year and is up for election this year, is also Latino.
Republican lawmakers are once again trying to expand the state’s education voucher system to all 1.1 million Arizona K-12 students, despite voters’ resounding rejection of a similar plan just a few years ago. But the plan has almost no chance of passing.
Republican leaders in the Arizona House allowed for the late introduction of two new bills: House Bill 2853, which would allow any child to access a voucher for a private or religious school, and HB2854, which would provide schools with a $400 million cash infusion. But lawmakers drafted the legislation in a way that says schools won’t get any of that money unless lawmakers also pass voucher expansion.
Democrats are steadfastly against a universal expansion of Empowerment Scholarship Accounts, Arizona’s school vouchers, and without Democrats, passing legislation requires the agreement of every single Republican in the House and Senate.
Republican Sen. Paul Boyer has already said he won’t support a universal voucher, telling the Republic’s Mary Jo Pitzl that it would almost certainly trigger another voter referendum like Proposition 305 in 2018 that voters used to overwhelmingly shoot down the Legislature’s voucher expansion plan.
We unwittingly made sign wars the theme of the entire week! Today’s sign wars update comes from the Phoenix New Times’ Katya Schwenk, who notes that after GOP gubernatorial contender Kari Lake promised to put up three new signs for every one her haters deface, she’s got three shitloads of signs to put up.
“I am glad that these losers are crawling out of their parent’s basement, I just wish it was to do something productive to society, rather than destroy property,” Lake wrote in a statement to the New Times.
The lawsuit uses USA Today and Gannett interchangeably, though it seemingly argues that the parent company, not the national paper, failed to pay its debts.