Ex-AZ Corp. Commissioner, owner of Johnson Utilities indicted on bribery charges

Posted: Updated:
Gary Pierce (Source: http://www.azcc.gov) Gary Pierce (Source: http://www.azcc.gov)
Johnson Utilities (Source: 3TV/CBS 5) Johnson Utilities (Source: 3TV/CBS 5)
Johnson Utilities (Source: 3TV/CBS 5) Johnson Utilities (Source: 3TV/CBS 5)
Johnson Utilities (Source: 3TV/CBS 5) Johnson Utilities (Source: 3TV/CBS 5)
PINAL COUNTY, AZ (3TV/CBS 5) -

Former Arizona Corporation Commission member Gary Pierce is accused of soliciting roughly $400,000 in cash and property in exchange for voting for a rate increase and new rules that would benefit the owner of Johnson Utilities, LLC., according to a federal indictment obtained by CBS 5 Investigators.

The changes generated millions of dollars in new revenue for Johnson Utilities and allowed its owner, George Johnson, to pay for his personal income taxes with money from ratepayers.

Johnson has now removed himself from all management of the utility. According to documents, he removed himself to 'devote his time to defending himself'. 

You can view the legal papers filed here.

Johnson Utilities is a water and wastewater service provider in Pinal County.

The Indictment

The indictment alleges that George Johnson used lobbyist James Norton as the go-between for the conspiracy.

According to the indictment, Johnson wanted his “personal income tax expenses reimbursed, and paid for, by payments made by the Utility’s customers” and to “increase the Utility’s wastewater division’s revenues through a rate base increase.”

The indictment states that Pierce “knowingly and willfully, solicited, accepted and agreed to accept money, ultimately totaling $31,500, and solicited real property valued at approximately $350,000, from defendant  JAMES FRANKLIN NORTON, a retained lobbyist for Johnson Utilities, LLC.”

“knowingly and willfully, solicited, accepted and agreed to accept money"

When reached for comment, James Norton stated, “I have no comment until I see the indictment.” He said he was unaware of the recent court action, but confirmed that he had represented Johnson Utilities as a lobbyist “on and off” for about 12 years.

According to the indictment, Pierce, along with two other commissioners voted in favor of the wastewater rate base increase in September of 2011. Pierce and three other commissioners voted in favor of a new policy on income taxes that would benefit Johnson in February of 2013.

[ASSOCIATED PRESS: Former Arizona utility regulator indicted on bribery charges]

CBS 5 and 3TV reached out to the Corporation Commission to find out if the Commission would revisit the votes in question. A spokeswoman said she would attempt to get an answer.

Pierce is no longer a member of the Corporation Commission. He was reportedly the subject of an FBI investigation related to dark money spent on behalf of Arizona Public Service during the 2014 election. Critics argued at the time that Pierce was too “cozy” with the utilities he was charged with regulating.

Too "cozy"

It is unknown whether the dark money FBI investigation led to the current indictment.

Johnson Utilities Customers feeling "frustrated," "ripped off"

News of the indictment spread quickly through San Tan Valley, near the headquarters of Johnson Utilities.

Brandi Dennison said she learned of the allegations against her utility just before paying her water bill.

"It just makes me feel cheated," she said. "I mean [George Johnson] probably has a lot of his own money, and he's basically taking from the poor."

A few blocks away, Pedro Lozada's house is covered with American flags for Memorial Day. He said the idea that his water rates might be higher because of bribery is "un-American."

"It makes me feel very frustrated that someone in that position, that's there to service the public, is taking advantage of the public," he said.

Next door, Shawna Dorner said the allegations were just the latest in a string of problems with the company. She no longer lets her children drink the tap water after a number of high-profile water quality concerns with the utility, including the announcement of high nitrate levels in the water last month.

"We're getting ripped off. It feels like they're taking the money out of our pockets. It feels like crap because obviously we're paying for [Johnson] to live his life when we don't have much, and it's not safe for my own child."

Arizona Corporation Commission reaction

The Arizona Corporation Commission responded to this latest development with this statement:

The Commission was made aware at the same time as the general public of an indictment involving a former commissioner and other individuals.  The Commission is currently reviewing the allegations, and the Commission believes it would be inappropriate at this time to comment on a pending criminal proceeding.   

This is not the first time Johnson Utilities has been in the news.

History

Last June, some San Tan Valley residents complained about raw sewage bubbling up from manhole covers.

[READ MORE: Raw sewage bubbling up from manhole covers in San Tan Valley]

One resident said it took at least four hours for Johnson Utilities to come out and clear the clogged drain underground. 

Many community members say they immediately called Johnson Utilities to report it. San Tan Valley resident Jerod Miller tells us no one called him back or came out to stop it.

"Just brown like a brown river running down into the wash," Miller described the mess.

"A brown river"

Soon afterward, a manager from the Johnson Utilities treatment facility located behind Miller's house told him it was equipment failure, and that something had stopped working, and they were looking into it.

We called and emailed Johnson Utilities and even stopped by their offices in San Tan Valley to try and get answers to why this was happening but we were turned away and told that corporate would contact us.

[READ MORE: Stinky and nasty mess flowing through a neighborhood in San Tan Valley]

Also, back in December, high nitrate levels were reportedly found in water in Pinal County. But Johnson Utilities released a statement saying their water "is safe to drink."

[RELATED: ADEQ: High nitrate levels found in Pinal Co. water; Johnson Utilities says water is safe]

At the time, Johnson Utilities posted this statement on its website.

The statement on the website reads:

"Johnson Utilities Water is Safe to Drink December 2, 2016 – 6:30 pm ADEQ issued a Public Health Warning today indicating that Johnson Utilities’ water was unsafe to drink due to slightly elevated levels of nitrates. The condition that existed in a small portion of our water distribution system discovered during the annual nitrate testing on 10/27/2016 and with the confirmation sample performed on 11/21/2016 no longer exists today. Our water is under the allowable limits for nitrates and is safe to drink. Repeat samples more recently show that the nitrate levels were far below the maximum allowable limit. We believe the original samples were not correctly performed or read and we have sampled twice since then. OUR WATER IS SAFE TO DRINK.

George Johnson
Johnson Utilities"

There was even controversy dating back to 2015, when the company faced E. coli questions.

In a report, ADEQ accused Johnson Utilities of not properly notifying and updating people about the E. coli concerns. 

[READ MORE: Johnson Utilities faces allegations from ADEQ after E. coli scare]

State investigators also said the company also didn't properly maintain several of its production, treatment and distribution facilities.

"A drinking water facility that is in violation of state statutes could face civil administration penalties," said Mindi Cross with ADEQ.

At the time, Johnson Utilities officials said the E. coli readings were the result of a false positive. In a statement issued to 3TV on Wednesday, company officials wrote, "Johnson worked closely with ADEQ on the approval of proper notifications, and is confident that after meeting soon, the state will agree that sanctions are not warranted."

Click/tap here to download the free azfamily mobile app.

Copyright 2017 KPHO/KTVK (KPHO Broadcasting Corporation). All rights reserved.