Top deputies at the state Treasurer’s Office are competently managing state investments amid the turmoil of a criminal investigation of Treasurer David Petersen and accusations they are not serving the treasurer well, says a source with knowledge of Arizona’s financial portfolio.
Mr. Petersen, who, employees say, comes to his office only eight to 10 hours a week, is being investigated by the Attorney General’s Office for alleged felonies, including theft, fraud and conflict of interest. The Republican treasurer last month hired political ally and friend Don Dybus as a temporary special assistant, according to Mr. Dybus, to help him prepare the office for the next treasurer.
In an interview with Arizona Capitol Times last week, Mr. Dybus called deputy treasurers Blaine Vance and Tony Malaj “obstructionists” and “insubordinate.” Mr. Vance and Mr. Malaj have retained legal counsel.
Asked whether taxpayers should be concerned that the troubles at treasury are negatively affecting the way state investments are being handled, the source said no.
“As long as Blaine and Tony are still there, things are fine,” the source said. “There hasn’t been anything to compromise how investments are being handled.”
Neither Mr. Petersen nor Mr. Dybus did not returned phone calls before the Arizona Capitol Times went to press time the afternoon of July 13.
The Treasurer’s Office manages $9.5 billion in investments and cash.
Governor: It’s a full-time job
“There are a lot of assets that need to be protected,” Governor Napolitano said July 12. She again called on Mr. Petersen to get back to work.
“Ultimately it’s between the treasurer and his conscience about whether he’s doing the job he was assigned to do,” Ms. Napolitano said. “This is different from a situation where an officeholder becomes ill or becomes disabled for some reason. This is a result of the fact that he is under investigation.
“It’s up to him what he wants to do, but, in my view, the treasurer’s job should be a full-time job,” the governor said.
Employee fired over ‘window dressing’
Arizona Capitol Times has confirmed that a stock trader at treasury was fired within the past year for “window dressing” certain financial information prepared for the Board of Investment. The board, which was created by the Legislature as trustees of the Permanent Land Trust Funds, also oversees state investments.
A source close to the board says the falsification of information didn’t negatively affect the portfolio, but “calls the integrity of the person into question.”
“He was just trying to make the month-end numbers look better than what they were,” the source said.
Officials would not release the name of the terminated employee.
It is not clear what Mr. Petersen knew about the incident, although he is a member of the board. Other members are Bill Bell, director of the Department of Administration; Felecia Rotellini, state superintendent of Financial Institutions; Stephen Barnes of Barnes Investment Advisory, Inc., and Ross Jacobs, Yavapai County treasurer.
Mr. Jacobs says he has no concerns that the treasurer’s problems are affecting state coffers, but said he is not as knowledgeable as other board members.
“When I go to meetings, it seems the people on the board know a little bit more than I do,” he said. “I’m a little bit isolated up here. I don’t get the scuttlebutt…”
In a letter to Arizona Capitol Times, a retired employee who worked full-time for three treasurers and part-time for Mr. Petersen, said he should resign.
“In February 2003,” wrote Maridale Vair, “they asked me to come back to work part-time to try and bring some continuity to the office. Unfortunately, no one wanted to listen, and somehow all the statutory laws that applied to the office no longer seemed to be necessary.
“The investment officers Mr. Petersen hired did not have a clue on the types of investments they were allowed to invest monies, and even when told, just would not listen. Because of this, the office lost several excellent employees. Their work ethics and principles were being compromised,” Ms. Vair wrote.
“The circus he has brought into the office has got to interfere with the everyday activities and responsibilities of the office. He is a disgrace,” she wrote.
Mr. Petersen announced he will not seek re-election, but will not resign before his term is up at the end of the year.