Arizona Attorney General Kris Mayes closed her criminal investigation into Governor Katie Hobbs and Sunshine Residential Homes without filing charges.
That did not close the story.
Mayes announced August 21 that investigators had reviewed more than 100,000 documents, campaign-finance records, procurement records, bank documents, state emails and chats and conducted multiple interviews before concluding they could not establish the quid pro quo necessary to support a bribery charge. Arizona Capitol Times
But less than a week later, Arizona House Speaker Steve Montenegro challenged the investigation itself.
In a five-page August 27 letter, Montenegro identified five areas where he says the Attorney General either overlooked evidence, omitted contradictory testimony or failed to adequately explain the conclusions contained in her final memorandum. He demanded written answers by 5 p.m. on September 4.
His challenge comes as other questions are being raised outside the Legislature. Arizona Daily Independent
ABC15 has questioned a previously undisclosed Hobbs legal-defense fund that received another $150,000 from Sunshine. KJZZ and Capitol Media Services have reported on Hobbs’ decision not to sit for an investigative interview. And, critically, Mayes’ investigation is not the only government inquiry into the matter. ABC15 Arizona in Phoenix (KNXV)
The Arizona Auditor General’s investigation remains active with assistance from Maricopa County Attorney Rachel Mitchell’s office. Separately, the Arizona House retained outside counsel earlier this year to conduct its own independent investigation, including reviewing records and conducting interviews.
So while Mayes has made her prosecutorial decision, the broader Sunshine controversy is not over.
And the questions are multiplying.
An Alleged Offer That Never Made the Final Memo
Perhaps the most serious allegation in Montenegro’s letter involves former DCS Director Michael Faust.
According to Montenegro, Faust told investigators that Sunshine founder Simon Kottoor approached him in the fall of 2022 with an offer: Kottoor would recommend that Governor-elect Hobbs retain Faust as DCS director if Faust approved a rate increase for Sunshine.
Faust refused, according to Montenegro’s letter.
The Speaker says former DCS employee Alex Ong had contemporaneous knowledge of the alleged offer.
If accurate, Montenegro argues, the incident mattered for two reasons.
First, he says investigators should have examined whether the alleged offer itself raised potential legal issues.
Second, Montenegro says it provided context for what came next: Sunshine continuing to seek substantially higher reimbursement rates from DCS while company leadership had a political relationship with the incoming governor.
The Attorney General’s public memorandum did not include the allegation.
That leaves an obvious question:
Why not?
Mayes’ investigation did interview Faust. Reporting on the AG findings says Faust told investigators that he did not believe Hobbs pressured DCS and described Kottoor as a tough businessman who cared about children but also knew how to make money. KJZZ
But Montenegro is asking something different.
If investigators were told Kottoor allegedly offered to use influence with the incoming governor in exchange for favorable official action, why was that allegation not discussed in the final memorandum?
Did Mayes Rely on an Account Other Witnesses Disputed?
Montenegro also directly challenges the Attorney General’s treatment of former DCS Director David Lujan.
The AG investigation concluded Sunshine’s political contributions did not cause its rate increases.
Instead, investigators said Sunshine possessed extraordinary leverage over Arizona’s foster-care system because of the number of beds it controlled and its ability to potentially redirect capacity toward federal contracts that paid more. KJZZ
But Montenegro says testimony from DCS officials complicates part of that explanation.
According to his letter, Mayes’ memorandum describes Lujan as relying on staff recommendations in approving Sunshine’s May 2023 increase.
Montenegro cites Ong and former DCS official Robert Navarro as saying they opposed the increase.
Ong testified that the recommendation had “consistently” been to deny Sunshine’s request, according to Montenegro’s account. The Speaker says Ong believed Lujan intended to grant the increase anyway and eventually stopped resisting because Lujan had the authority to terminate employees.
Navarro also opposed the increase, Montenegro says, and was fired weeks later.
That appears to conflict with another part of the public record.
KJZZ reported from the Attorney General’s findings that Lujan told investigators he deferred to Ong and Navarro, who recommended a 30% increase to keep Sunshine’s beds available to the state.
Those two accounts need reconciliation.
Who actually recommended the Sunshine increase?
If the Attorney General’s explanation relies in part on the premise that DCS staff recommended it, testimony from those employees saying they had consistently recommended denial is not a minor detail.
It goes directly to how the decision was made.
Another Provider Raises Another Problem
Montenegro also challenges statements attributed to Lujan about competing providers.
According to the Speaker, Lujan represented Sunshine’s request as the only congregate-care provider rate-increase request he had received since becoming director.
Montenegro points to Power House, another provider whose request was rejected in July 2023, and says Ong testified Lujan would have been involved in that decision.
This is where precision matters.
ABC15 reported that Sunshine and one other company received increases during the 2022–23 contracting period. KJZZ, citing the Attorney General’s investigation, reported that two other providers received larger percentage increases than Sunshine between 2019 and 2024.
So the defensible question is not whether Sunshine was literally the only provider ever receiving an increase.
It is:
What treatment did Sunshine receive that similarly situated providers did not?
And why?
Sunshine’s Political Connections Were Known Inside DCS
One of the clearest facts to emerge from Mayes’ own investigation is that Sunshine’s political giving was discussed inside DCS.
KJZZ reported that Lujan told investigators Navarro brought up Sunshine’s contributions during a February 2023 meeting, telling him the company would probably seek a rate increase and adding that they were donors to the governor.
Capitol Media Services similarly reported that Navarro confirmed briefing Lujan about the donations and that Navarro and Ong discussed Sunshine’s political contributions in internal Teams messages.
Mayes’ investigators found no evidence that Hobbs or her office created that pressure or instructed DCS to treat Sunshine favorably.
That is an important finding.
But Montenegro says the internal perception went further than the AG memorandum suggests.
According to his letter, Ong described the connection between Sunshine’s donations and its requests for higher rates as “pretty obvious.”
Montenegro also cites contemporaneous communications between Ong and Navarro in which Ong reportedly wrote that he did not “feel safe,” while Navarro responded that he felt “like a dead man walking.”
Montenegro says employees perceived Kottoor as someone capable of going directly to Hobbs if agency employees stood in his way.
That does not establish that Hobbs actually intervened.
Mayes found no evidence that she did.
But it does sharpen the question:
If employees responsible for Sunshine’s rate requests knew about its political contributions and believed those relationships carried influence, how did investigators determine that environment had no effect on the decision-making process?
The Money Was Substantial
The political contributions at the center of the controversy were not insignificant.
KJZZ reported that attorneys for Hobbs said Sunshine, Kottoor and others associated with the company gave a combined $580,840 to the Arizona Democratic Party, Hobbs’ campaign, inaugural fund and legal-defense fund between September 2022 and May 2024.
Sunshine gave $100,000 to Hobbs’ inaugural fund.
Other reporting established another $300,000 went to the Arizona Democratic Party. Arizona Capitol Times
And then investigators uncovered another source of money that had received far less public scrutiny.
The $150,000 Legal-Defense Fund
ABC15 reported that Sunshine made three additional $50,000 contributions to a Hobbs legal-defense fund between November 3, 2023, and May 24, 2024.
Total: $150,000.
The existence of that fund was not publicly known when Sunshine made the contributions. ABC15 Arizona in Phoenix (KNXV)
Hobbs’ campaign manager told investigators that the fund paid attorneys handling election litigation brought by Hobbs’ 2022 opponent Kari Lake.
But ABC15 asked two additional questions:
Who else donated to the fund?
And:
Was any of the money used for legal expenses connected to the Sunshine investigation?
According to ABC15, Hobbs’ campaign did not answer those questions. ABC15 Arizona in Phoenix (KNXV)
Capitol Media Services had previously reported on the lack of transparency surrounding the legal-defense fund and noted Arizona law does not require disclosure of those donors. (Arizona Capitol Times)
So the contributions may have been legally undisclosed.
That does not make the questions disappear.
Was Sunshine Really About to Take Its Beds Away?
One of the Attorney General’s central explanations for Sunshine’s unusual rate increases is simple: DCS needed Sunshine’s beds, and Sunshine knew it.
Mayes’ investigators found that Sunshine threatened to redirect capacity toward federal contracts paying substantially higher rates, potentially leaving Arizona with fewer placements for foster children.
On its face, that sounds like a compelling explanation.
But Montenegro points to facts that raise a more difficult question: Was Arizona actually in imminent danger of losing those beds?
According to his letter, Sunshine had been raising the possibility of shifting capacity to the federal government since at least 2021. Yet DCS had previously resisted the company’s requests for higher rates.
More importantly, Montenegro says Sunshine remained contractually obligated to provide its existing capacity to DCS through April 2024 and, at the time, was not licensed to operate as an ORR provider.
If that characterization is accurate, Sunshine may have had leverage. But leverage is not the same thing as an immediate threat.
A provider saying it may pursue more lucrative federal business in the future is very different from hundreds of foster-care beds being on the verge of disappearing.
And that distinction matters.
If Sunshine had been making essentially the same threat since 2021, what changed in 2023 that suddenly made the threat persuasive enough to justify extraordinary rate increases?
Mayes concluded there were legitimate operational reasons for DCS to accommodate Sunshine.
Montenegro’s challenge is not that those reasons were imaginary.
It is that they may not fully explain why DCS changed course when it did.
Did DCS Break Its Own Contract Rules for Sunshine?
Montenegro’s fifth issue may ultimately be among the easiest to resolve because it does not require determining anyone’s political motive.
It requires reading the contract.
According to the Speaker, the congregate-care agreements contemplated rate changes in connection with contract extensions.
Sunshine’s May 2023 increase, Montenegro says, did not occur that way.
He cites Ong acknowledging that DCS operated outside the process contained in the contract terms and conditions and alleges other providers were not given the same opportunity.
That raises a question separate from bribery:
Why was Sunshine allowed to receive an increase outside the normal contractual process?
If DCS had legal authority to do it, that authority should be identifiable.
Then There’s Hobbs Herself
Another issue did not originate with Montenegro at all.
Hobbs never sat for a live interview with investigators.
Capitol Media Services reported that the investigation took longer, in part, because Hobbs would not submit to an interview and instead provided two written statements denying involvement in Sunshine’s rate increases.
Earlier in August, Mayes publicly rejected the suggestion that Hobbs could simply ignore the investigation.
“You cannot blow off the Attorney General’s Office,” Mayes said, while maintaining investigators would obtain the information they needed.
But written responses are not the same investigative tool as a live interview.
Investigators conducting an interview can immediately challenge an answer, introduce contradictory documents, explore inconsistencies and ask follow-up questions.
That opportunity did not exist here.
So another question remains:
How thoroughly could investigators test what Hobbs knew and when she knew it without questioning her directly?
Hobbs Vetoed Contractor-Disclosure Legislation
There is also an uncomfortable policy contradiction at the end of Mayes’ investigation.
Mayes concluded there was insufficient evidence to prosecute but simultaneously called for legislative reform requiring greater transparency surrounding political donations by state contractors.
The problem?
Hobbs had already vetoed legislation seeking additional contractor-contribution disclosures.
Capitol Media Services reported in June that the legislation would have required companies bidding on state contracts to disclose donations to the governor, campaign committees, inaugural funds and certain affiliated political entities.
Hobbs called the measure a “political stunt” and argued transparency reforms should apply more broadly to elected officials and political committees. Arizona Capitol Times
So Mayes ended the criminal investigation by identifying essentially the same transparency gap lawmakers had already tried to address.
That leaves a legitimate policy question:
Will Hobbs now support legislation closing that gap?
Mayes’ Investigation Is Over. The Auditor General’s Is Not.
This point is critical.
Mayes closing her criminal investigation did not end government scrutiny of Sunshine.
Capitol Media Services reported when Mayes announced her findings that the Arizona Auditor General’s Office still had its own investigation underway, assisted by Maricopa County Attorney Rachel Mitchell.
There was no announced completion date.
KJZZ likewise reported August 24 that the Auditor General investigation continues. KJZZ
That means describing the entire Sunshine matter as closed would be inaccurate.
One investigation closed.
Another remains open.
And the Arizona House Has Its Own Investigation
There is yet another track.
In November 2025, Montenegro formed a House advisory team to investigate the DCS-Sunshine matter. Arizona Legislature
Then, on February 2, 2026, the Arizona House announced it had retained outside attorney Justin Smith of the James Otis Law Group to conduct an independent investigation.
According to the official House announcement, Smith was tasked with reviewing records, conducting interviews and reporting his findings directly to the advisory team and House leadership. Arizona Legislature
The House specifically said its investigation would continue alongside the other inquiries.
So there are now multiple layers of scrutiny surrounding substantially the same underlying events:
Mayes’ criminal investigation, now closed without charges.
The Arizona Auditor General investigation, still ongoing with Maricopa County Attorney involvement.
And an Arizona House investigation being conducted with independent outside counsel.
That context matters.
Mayes Closed the Case. Nobody Closed the Questions.
Montenegro has given Mayes until 5 p.m. September 4 to answer five specific questions about her investigation.
But the questions now extend well beyond his letter.
ABC15 has asked who else financed Hobbs’ legal-defense fund and whether any of the money was spent on matters connected to the Sunshine investigation.
KJZZ and Capitol Media Services have reported that Hobbs never sat for an investigative interview and the legacy media has been restless on the issue.
The Attorney General’s own findings establish that Sunshine’s political contributions were discussed inside DCS while the company was seeking higher rates.
And the public record establishes that Sunshine and people associated with the company contributed hundreds of thousands of dollars to political entities associated with Hobbs and Arizona Democrats while Sunshine was doing substantial business with the state.
Meanwhile, the Auditor General investigation remains open and the Arizona House is conducting its own investigation with independent counsel.
So the unanswered questions now include:
Why wasn’t Hobbs interviewed?
Who else funded her legal defense?
Why did Sunshine contribute another $150,000 to that fund after receiving its first extraordinary rate increase?
Why weren’t those contributions publicly disclosed?
Did DCS employees recommend Sunshine’s increase, or did key employees oppose it?
What happened with the alleged Faust-Kottoor conversation described by Montenegro?
How immediate was Sunshine’s threat to redirect beds toward federal contracts?
Did Sunshine’s financial condition support its requests for substantially higher reimbursement?
Why was Sunshine permitted to receive a rate increase through a process Montenegro says departed from the contract?
How did Sunshine’s treatment compare with similarly situated providers?
And if Mayes now believes contractor political contributions require greater transparency, will Hobbs support legislation requiring it?
The Attorney General made a prosecutorial determination: after two years of investigation, her office concluded it could not establish the quid pro quo required to support a bribery charge.
But a decision not to prosecute is not the same thing as declaring every underlying fact explained.
The public can ask a different question:
Does the evidence make sense when all of it is placed side by side?
Right now, substantial parts of the public record still require explanation.
Mayes says her investigation was exhaustive.
Montenegro says significant evidence was overlooked or omitted.
Witness accounts cited by Montenegro appear to conflict with portions of the narrative used to explain Sunshine’s treatment.
Hobbs never submitted to a live investigative interview.
Sunshine contributed another $150,000 to a legal-defense fund whose donors were not publicly disclosed.
ABC15 says Hobbs’ campaign would not identify the other donors or answer whether the fund paid expenses connected to the Sunshine investigation.
The Auditor General investigation remains open.
And the Arizona House is still conducting its own inquiry with independent outside counsel.
It is more than enough reason for journalists to keep asking questions. It appears even legacy media is not letting this story go.
And at 5 p.m. September 4, Mayes faces Montenegro’s deadline to start answering some of them.
EDITOR’S NOTE: Questions surrounding Attorney General Kris Mayes’ decision to close the Sunshine investigation are coming from across Arizona’s political and media landscape. State 48 News wanted readers to see not only the questions we are asking, but what other Arizona journalists and news organizations are asking as well. Because many of these issues involve competing accounts of what investigators knew, what witnesses said, and what the underlying records show, we have heavily sourced this report. Wherever possible, we link directly to official records, correspondence, investigative findings and reporting from other Arizona news organizations so readers can examine the evidence and draw their own conclusions.