In the Matter Of

IN THE MATTER OF THE ARIZONA HOUSE OF REPRESENTATIVES INVESTIGATION OF CERTAIN ALLEGATIONS AGAINST STATE CORPORATION COMMISSIONER JAMES M. IRVIN A Report by the Speaker of the House to the ARIZONA HOUSE OF REPRESENTATIVES Forty Sixth Legislature Presented by A. Melvin McDonald Jr., Esquire Special House Counsel October 6, 2003 Volume I Southern Union v. Irvin INTRODUCTORY REMARKS On June 27, 2003, House Speaker Franklin “Jake” Flake appointed A. Melvin McDonald and the law firm of Jones, Skelton & Hochuli to act as Special Counsel to the Speaker. McDonald was directed to conduct a thorough and comprehensive investigation into a variety of misconduct allegations involving Arizona Corporation Commissioner James M. Irvin. Before McDonald's appointment, House Judiciary Chairman Steve Tully had published a two-volume investigative study which resulted in the identification of three separate areas of alleged official improprieties on the part of Mr. Irvin. The Speaker instructed McDonald to determine whether any of the three areas of alleged official misconduct outlined in the Tully report were serious enough to rise to the level of “impeachable offenses” under the Arizona Constitution, Statutory and Case Law. During the course of his inquiry, McDonald and his team of investigators have expanded their investigation into five separate areas of possible misconduct. On the eve of his announced appointment, McDonald began to assemble a team of former federal investigators whose investigative skills, accomplishments and record of performance are above reproach. In order to ensure a bipartisan approach to the investigation, McDonald, a former Superior Court judge who was later appointed United States Attorney by former President Ronald Reagan, selected former United -2- States Attorney Jose de Jesus Rivera, an appointee of former President Bill Clinton, to assist in the investigation. Rivera served as U.S. Attorney from May 1998 through April of 2001. Early in his career, Rivera worked with the Civil Rights Division of the Department of Justice and later served in the U.S. Attorney's office as a federal prosecutor from 1977-1981. McDonald assembled a six-member investigative team with 170 years of combined federal law enforcement investigative experience. The Investigative Team included the following former federal agents: A. Doug Hopkins. Mr. Hopkins served as a Special Agent with the FBI for 28 years (1971-1998). Hopkins has extensive investigative experience relative to violations of federal law involving bank fraud and embezzlement, kidnapping, bank robbery, bombings and fraud against the government. Hopkins was one of the lead investigators in the car-bomb slaying of reporter Don Bolles. For his work in the Bolles bombing, he received a letter of commendation from then U.S. Attorney Michael Hawkins. During his 28 years of service, Hopkins received ten written commendations from the Director of the FBI. He was selected by his peers to serve as a member of the Special Agents Advisory Committee to the Director of the FBI in 1992. B. John Thrasher. Mr. Thrasher served as an IRS investigator with 25 years of service in the Criminal Investigation Division (1974-1999). Mr. Thrasher -3- specialized in complex criminal financial investigations. His work focused on money laundering, tax evasion, narcotics trafficking, offshore tax shelters, gambling, embezzlement, telemarketing fraud and other complex financial crimes. He was selected as a member of the Organized Crime Drug Enforcement Task Force and the Financial Task Force for the U.S. Attorney's office in Phoenix. Mr. Thrasher coordinated a nationwide tax shelter/money laundering investigation out of Washington D.C. which resulted in the prosecution of 20 individuals. C. Don Tucker. Mr. Tucker had a distinguished 33 year investigative career (1961-1994) which began with the Federal Bureau of Narcotics (1961-1964) and ended with his appointment as Chief of Court Security for all federal courts in the United States (1994-1996). Mr. Tucker served as the Special Agent with the United States Secret Service (1964-1990) and was eventually selected as Special Agent in Charge of the U.S. Secret Service in Phoenix, a position he occupied for 12 years (1978-1990). He was appointed by President George Herbert Walker Bush to serve as the United States Marshall for the District of Arizona (1990-1994). While serving as Chief of Court Security for all federal courts, Mr. Tucker coordinated the investigation into the terrorist bombing of the Alfred F. Murrah Federal Building in Oklahoma City, Oklahoma that had resulted in the death of 168 people. -4- D. Jerry Wagner. Mr. Wagner served as an FBI investigator for over 27 years (1970-1998). His career involved narcotics investigations, serious crimes on Indian Reservations (including homicide and child sexual molestation cases), bank robbery, kidnapping and fugitive investigations, organized crime, foreign counterintelligence and espionage investigations and international terrorism investigations. His service in Arizona included investigative work on two of the biggest investigations in Arizona history: the Don Bolles car-bombing in 1976 and the Poland brother murder and hijacking of two Purolator guards in 1977. E. Mike Bartley. Mr. Bartley served as an FBI investigator for 29 years (1969-1998). During his service, Mr. Bartley had extensive investigative experience relative to investigations of bank fraud and embezzlement, kidnapping, bank robbery, bombings and fraud against the government. He was a member of the FBI Swat Team for 19 years, and served on the Caribbean Drug Task Force and the Violent Offender Fugitive Task Force. During his service with the FBI, he was awarded the FBI “Shield of Bravery” by FBI Director William Sessions, and later received the FBI “Medal of Meritorious Achievement” from FBI Director Louie Freeh. F. Kelly D. Sanderson. Mr. Sanderson served as an FBI investigator for 28 years (1971-1999). Mr. Sanderson's investigative duties extended to interstate crimes involving gambling, theft, auto theft rings, bank robberies, drugs and money laundering. -5- Mr. Sanderson was a recognized expert in the collection of intelligence, and was involved in complex investigations which included wiretap investigations. Before serving with the FBI, Sanderson was a member of a B-52 bombing crew that flew missions in Southeast Asia from 1967-1971. In addition to the contributions of this outstanding investigative team, various attorneys from Jones, Skelton & Hochuli have provided invaluable assistance in this investigative project. Those who have contributed from the law firm include Chris Doerfler and Randy Warner. Diana Weeks, secretary to Mel McDonald, has spent many long hours preparing transcripts from taped interviews and coordinating appointments and interviews with dozens of witnesses. COMMISSIONER JAMES D. IRVIN On August 20, 2003, special counsel met with the subject of this investigation inquiry, James D. Irvin, and his legal counsel, Jeffrey Walsh. The purpose of the meeting was to not only meet Mr. Irvin, but to learn more of Mr. Irvin's background and experience. In addition to information provided by Commissioner Irvin, special counsel McDonald reviewed public information on various websites about Mr. Irvin and his very successful career. It was agreed that the interview would not extend to substantive issues, but would be limited to background. -6- James D. Irvin has had a very successful professional career both in California and Arizona. He has had a highly successful political career in Arizona. Mr. Irvin is one of seven children. Born in Los Angeles, his grandfather started an armored car and security company, AT Systems. His father, who was a lawyer, expanded the business into one of the nation’s largest money couriers, a $230 million annual enterprise. AT Systems is the third largest armored transportation company in the nation. Commissioner Irvin was raised in Santa Monica, California, attending parochial schools until the 8th grade. He was a successful high school athlete, participating in football, baseball and track. He attended the University of Southern California, obtaining a Bachelor of Science degree in Education. He did student teaching in the Los Angeles school district, but became disillusioned with the teaching field when he saw what he felt was inept administration of school budgets and school planning, and witnessed the L.A. system advancing 5th graders to the 6th grade over his objection when the students lacked elementary reading, writing and arithmetic skills. After student teaching for one year, he left the field of education forever. He took a year off and traveled around the country with a college roommate. After this one year sabbatical, Commissioner Irvin returned to school in 1978 and earned a Master’s degree in Business Administration from Loyola Marymount -7- University in California. Before his election to the Arizona Corporation Commission, Mr. Irvin spent over 20 years in the private sector, serving as a CEO to one of his father’s security companies. He had worked at the company as a college student rolling coins, wrapping money and working weekends as a guard. He gradually moved up the chain of responsibility, receiving various promotions based upon a record of clear accomplishments. He worked as an assistant manager for the company in Pomona, California and when the company was having problems in San Francisco, Mr. Irvin moved to Northern California and turned the San Francisco office around

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