Utility executive: Sherry Pierce hired for her connections to Pinal County, not bribe

Assistant U.S. Attorney Fred Battista says it was lobbyist Jim Norton’s “strong suggestion” that led to the flow of money from a utility owner to the pockets of a utility regulator.

Norton testified he did not require but urged his then-wife, Kelly Norton, to hire Sherry Pierce to do work on behalf of water utility owner George Johnson starting in 2011. Kelly Norton operated KNB Consulting, and she hired Pierce as an independent contractor at the firm.

At the time, Pierce’s husband, Gary Pierce, was chairman of the Arizona Corporation Commission, which regulates Johnson’s water company, Johnson Utilities.

Norton, having been a friend and confidant of Gary Pierce for years, was well-aware of his elected position as he advised Kelly Norton to hire Sherry Pierce.

The government has alleged that she was given a “no-show job” at KNB to funnel nine monthly payments of $3,500 to her husband; the payments were allegedly bribes in exchange for Gary Pierce’s Corporation Commission votes in favor of Johnson Utilities.

The Pierces, Johnson and Jim Norton are now facing charges of felony conspiracy, bribery, mail fraud and five counts of wire fraud. They were offered plea deals in exchange for their cooperation on a larger case from which theirs emerged, but rejected the deals and maintain their innocence.

Kelly Norton revealed the alleged bribery scheme to federal authorities in exchange for immunity.

As the unindicted co-conspirator, Kelly Norton was the government’s star witness, and she testified that she was “required” to hire Sherry Pierce even though she did not want to. She said she was eventually “bullied” into complying after her husband went so far as to give her the silent treatment.

Jim Norton rejected that account, but he also testified that his wife would not have gotten Johnson’s business “unless there was a suitable replacement for Sherry.”

Norton, who had represented Johnson for more than a decade on various issues, had been tasked with projects related to the incorporation of San Tan Valley – where the majority of Johnson’s customers reside – and the expansion of the Pinal County Board of Supervisors.

Norton eventually told Johnson he needed additional resources to accomplish the goals in Pinal County because his firm, R&R Partners, lacked the Pinal County expertise and connections on the ground to get the job done.

At the same time, he said, Kelly Norton was looking to grow her own consultancy business. Norton suggested Johnson hire her firm, which would then engage Sherry Pierce.

Danny Hodges, a Johnson Utilities executive at the time of the alleged scheme, testified on June 20 that Kelly Norton alone would never have been hired to do the job. He also testified that Sherry Pierce’s inclusion made sense given her connections in the area.

Ellen Babbitt, who did community outreach for Johnson but who was not implicated in this case, was also hired to work on the projects for $3,500 a month, but she was brought on directly by Johnson.

Hodges said he had no concern that the arrangement with Sherry Pierce could be perceived as a conflict of interest.

“We weren’t paying her directly,” he said, adding he was focused on the work that had to be completed rather than the optics of her employment by KNB.

Hodges was later asked whether Pierce knew she was working for Johnson – she testified she did not – but he did not answer Fred Battista’s question; he was interrupted by an objection from Johnson’s attorney, Woody Thompson, and Battista never returned directly to the matter.

While cross-examining Norton, Battista also homed in on a $25,000 bonus he received from Johnson in 2013 the day after the Corporation Commission voted to expand a tax pass-through policy to Johnson Utilities. The policy allowed Johnson to pass on his personal income tax liability to his customers.

The vote making that possible was allegedly one of the votes for which Gary Pierce was bribed.

However, the defense has said Pierce had a history of expressing his support for the policy, and Norton testified that he would have had to be “one of the dumbest criminals in America” to bribe someone already on his side.

Rather than a reward for the alleged scheme, Norton said the bonus he was paid was for the successful – and he said legitimate – work he and his wife did on Johnson’s behalf. None of the money ever went to Sherry Pierce despite her contributions to that success.

But as Battista pointed out, the $25,000 bonus was paid to KNB Consulting, not Norton’s firm R&R Partners.

Kelly Norton even wrote out an invoice from KNB to Johnson in February 2013 for consulting work at the cost of $25,000; she had not done any work on Johnson’s behalf for six months, and her husband had not been employed in any capacity by KNB.

Battista suggested that having the bonus check go through KNB kept Norton’s partners at R&R from getting their share, a suggestion Norton disagreed with.

He testified that the bonus went to KNB because of the work he and his wife did for Johnson in the months prior that had led to success at the Corporation Commission and elsewhere.

The exchange left the jurors curious about the bonus, too.

A dozen juror questions were asked of Norton, including whether invoicing for a bonus was a typical practice – he said it was, depending on the client.

As for why Sherry Pierce did not get a slice, he said the idea was simply never discussed.