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Judge hears campaign finance case against AG Horne

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By BOB CHRISTIE
Associated Press

PHOENIX (AP) -- A prosecutor says evidence will show that Arizona Attorney General Tom Horne was in constant communication with an aide who was running an independent group backing him in the 2010 election, and she passed along his suggestions about campaign ads attacking his Democratic rival to her campaign consultant.

That "coordination" is illegal in Arizona, and Deputy Yavapai County Attorney Benjamin Kreutzberg told a judge hearing a civil case brought against Horne and aide Kathleen Winn that interviews and telephone, email and other records gathered during an FBI investigation will prove it. A judge in the Arizona Office of Administrative Hearings is hearing the civil case, which could end with an order that Horne repay $400,000 to donors and three times that amount in fines.

Regardless of the outcome, the pursuit of the case will likely harm Horne, who faces a challenge in this year's Republican primary. The same Democrat he barely defeated in 2010, Felecia Rotellini, is also running.

Independent expenditures like the one Winn set up to benefit Horne have proliferated in American politics since a 2010 U.S. Supreme Court decision loosened campaign finance rules. Outside organizations can raise and spend unlimited amounts for candidates, but they are not allowed to coordinate with the politicians.

In his opening statement Monday, Kreutzberg said: "This case is based in part on circumstantial evidence and inference. However, those inferences are quite strong."

Lawyers for Winn and Horne said the FBI got the definition of illegal coordination wrong when the agency launched its investigation in 2011. The U.S. attorney declined to seek criminal charges, but the FBI turned its files over to Arizona authorities, and the civil allegations were brought by Yavapai County Attorney Sheila Polk in October.

One of Horne's lawyers, Buddy Rake, said the FBI agents "confused the distinction between communication and coordination."

Horne and Winn were friends, and she was also advising him on a major real estate transaction that could result in financial security for Horne, Rake said in his opening statement. Although Winn was running an outside political group that supported Horne, that didn't mean she could no longer talk to him.

"You don't give up you First Amendment rights by forming a campaign committee," Rake told Judge Tammy Eigenheer. "You can talk on the phone every day.

"I think I'm being generous when I say they were confused - they were confused about what actually constituted coordination."

Winn and Horne deny the allegations, and their team of experienced Phoenix lawyers showed Monday they would fight tooth and nail on every point.

"The two people involved will tell you unequivocally," Winn attorney Timothy La Sota said. "They did not talk about the ad. They did not coordinate."

Other well-known attorneys on the team are Larry Debus and Michael Kimerer.

Kimerer and Debus repeatedly objected during FBI agent Brian Grehoski's testimony about emails and phone records, noting that there was no proof that Horne or Winn actually made the calls. But they were mainly rebuffed, as Grehoski laid out a chain of communications between them and consultant Brian Murray of Lincoln Strategy Group on the day an ad attacking Rotellini was being finalized.

Grehoski also testified that he was unable to link Winn to Horne's real estate sale through a review of email records and an interview with his commercial real estate broker.

He also said he obtained a video of Horne calling Winn "our secret weapon," during an election night party. Winn was hired as Horne's community outreach aide after he was elected.

Grehoski said he was initially investigating a fraud, wire fraud and conspiracy case, but provided no other details. He refused to answer when asked whether the FBI infiltrated computers or did other electronic surveillance. It is known that agents followed Horne, Winn and one of his lawyers because an FBI report was previously released, but the judge wouldn't allow those questions either.

Debus said he was trying to show that the FBI agent was prejudiced against Horne and Winn.

The hearing is expected to resume Tuesday and could stretch into Thursday. Because it is a civil case, the standard of proof is lower than that required for a civil conviction and the rules of evidence are relaxed.

Facing a tough election challenge in 2010, Horne and Winn allegedly worked together to raise money for the outside group she headed to pay for negative ads targeting Rotellini.

Horne was able to raise only $540,000, compared with his Democratic opponent's $699,000.

When an outside group began spending $1.5 million attacking Horne, the group Winn headed raised money to counter those efforts. She eventually raised more than $500,000, most of which was spent on a last-minute ad attacking Rotellini.

Horne, a Republican, is the state's top law enforcement officer. He defeated Rotellini, a former prosecutor and bank regulator, by about 63,000 votes out of a total of 1.6 million ballots cast in the 2010 general election for attorney general.

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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