Special investigation, Arizona Department of Veterans' Services, misuse of public monies, conflict of interest, and misfeasance by the former director: report to the Arizona Legislature

              Special Investigation
Arizona Department of
Veterans’ Services
Misuse of Public Monies, Conflict of Interest,
and Misfeasance by the Former Director
Special Investigative Unit
Debra K. Davenport
Auditor General
NOVEMBER • 2009
A REPORT
TO THE
ARIZONA LEGISLATURE
The is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators
and five representatives. Her mission is to provide independent and impartial information and specific recommendations to
improve the operations of state and local government entities. To this end, she provides financial audits and accounting services
to the State and political subdivisions, investigates possible misuse of public monies, and conducts performance audits of
school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Senator Thayer Verschoor, Chair Representative Judy Burges, Vice Chair
Senator Pamela Gorman Representative Tom Boone
Senator John Huppenthal Representative Cloves Campbell
Senator Richard Miranda Representative Rich Crandall
Senator Rebecca Rios Representative Kyrsten Sinema
Senator Bob Burns (ex-officio) Representative Kirk Adams (ex-officio)
Audit Staff
George Graham, Manager
Lindsey Perry, Senior
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.azauditor.gov
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
November 19, 2009
Members of the Arizona Legislature
The Honorable Jan Brewer, Arizona Governor
The Honorable Joey Strickland
Office of the Director of the Arizona Department of Veterans’ Services
Advisory Commission
Arizona Veterans’ Service Advisory Commission
The Honorable Terry Goddard
Office of the Attorney General
The Office of the Auditor General has conducted a special investigation of the Arizona
Department of Veterans’ Services for the period July 2002 through September 2007. The
investigation determined the amount of public monies misused, if any, and whether there were
any conflict-of-interest and procurement violations during that period.
The investigation consisted primarily of inquiries and examination of selected financial records
and other documentation. Therefore, the investigation was substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards. Accordingly, the
Office does not express an opinion on the adequacy of the financial records or the internal
controls of the Arizona Department of Veterans’ Services. The Office also does not ensure that
all matters involving the Department’s internal controls, which might be material weaknesses
under standards established by the American Institute of Certified Public Accountants or other
conditions that may require correction or improvement, have been disclosed.
The accompanying Investigative Report describes the Office’s findings and recommendations as
a result of this special investigation.
After this report is distributed to the members of the Arizona State Legislature, the Governor, the
Director, the Advisory Commission, and the Attorney General, it becomes public record.
Debbie Davenport
Auditor General
Enclosure
In April 2007, the Arizona Attorney General’s Office requested that the Office of the
Auditor General (Office) investigate potential conflict-of-interest violations by former
Arizona Department of Veterans’ Services (Department) Director, Mr. Patrick
Chorpenning, Sr., in regard to his son’s employment. In October 2008, the Office
became aware of other possible misconduct by Mr. Chorpenning, including misuse
of public monies, procurement fraud, and additional conflicts of interest. As a result
of our investigation, we determined that from July 2002 to September 2007, Mr.
Chorpenning authorized the expenditure of $1,001,640 (as outlined below) in
possible violation of several state laws. We have submitted our report to the Attorney
General’s Office, and they have taken criminal action against Mr. Chorpenning (see
the Conclusion on page 27 of this report).
Specifically, Mr. Chorpenning may have violated:
1. Conflict-of-interest laws by participating in authorizing his son’s employment
agreements with the Department on four occasions and failing to disclose his
conflict. Payments for his son’s employment totaled $215,984.
2. Conflict-of-interest laws by directing department employees to hire his wife,
creating a position for her, and later approving a 35 percent increase to her
salary. Mr. Chorpenning’s wife collected $114,104 in department payments.
3. State laws concerning the use of public monies by improperly gifting public
monies to individuals and private corporations totaling $288,795.
4. State laws concerning the use of public monies and procurement fraud by
circumventing procurement rules in order to purchase media and advertising
services totaling $382,757.
Office of the Auditor General
SUMMARY
page i
Further, Mr. Chorpenning may have violated state laws concerning fraudulent
schemes by attempting to conceal his improper involvement in hiring his son and his
wife. Despite direct inquiries, he failed to inform the Arizona Governor’s Office that the
Department was paying for his son’s employment, and he misled the Governor’s
Office regarding the circumstances of his wife’s initial hire. Additionally, Mr.
Chorpenning’s wife may have violated public document laws by falsifying her
employment application and filing it with the Department.
As a public official, Mr. Chorpenning had a fiduciary duty to Arizona’s citizens, in
general, and to Arizona veterans and their families, in particular, for ensuring the
prudent use of public money. However, Mr. Chorpenning failed in his responsibilities
to the public by violating conflict-of-interest statutes, misusing public monies, and
circumventing the Arizona Procurement Code. Although no internal control system
can totally prevent dishonest actions such as Mr. Chorpenning’s, there are actions
the Department can take to help deter future instances of misconduct. See
Recommendations on page 25 of this report.
State of Arizona
page ii
Dates Description Procurement
Violations
Conflict of
Interest
Misuse of
Public Monies
12/02-04/05 Son’s employment - $215,984 -
02/04-03/07 Wife’s employment - 114,104 -
10/02-04/04 Gifting monies to a private corporation - - $ 37,000
11/03-03/07 Employee-related gifts - - 38,595
09/03-09/07 Gifting monies for a war memorial - - 213,200
07/02-04/05 Payments to a media company $382,757 - -
Total by Category $382,757 $330,088 $288,795
Total Violations $1,001,640
Table 1: Summary of Violations
July 2002 to September 2007
Office of the Auditor General
TABLE OF CONTENTS
continued
1
5
6
7
11
13
15
16
17
18
21
25
27
Introduction & Background
Finding 1: Former Director engaged in conflicts of
interest
Son’s employment
Wife’s employment
Finding 2: Former Director concealed his improper
actions
Finding 3: Former Director’s wife falsified and
submitted a public document to the Department
Finding 4: Former Director misused public monies
Gifting monies to a private organization
Employee-related gifts
War memorial payments
Finding 5: Former Director violated procurement rules
Recommendations
Conclusion
page iii
TABLE OF CONTENTS
concluded
page iv
State of Arizona
ii
5
15
17
19
22
Tables:
1 Summary of Violations
July 2002 to September 2007
2 Conflicts of Interest
December 2002 to March 2007
3 Misuse of Public Monies Summary
October 2002 to September 2007
4 Employee Gift Expenditures
November 2003 to March 2007
5 War Memorial Payments
September 2003 to September 2007
6 Summary of the Media and Advertising Services Paid for by the
Department
July 2002 to April 2005
In 1982, the Governor established the Arizona Veterans’ Service Commission
(Commission) as a separate agency. In 1999, the Legislature separated the
Commission from the agency by making the Commission an advisory body and
creating a separate department. The Department’s mission is to advance the
interests of Arizona veterans through advocacy, legislation, service, and community
relationships. The director is appointed by the Governor and is responsible for
ensuring adequate management of the Department and veterans’ affairs, as
prescribed by state laws and regulations. The Department is financially accountable
to Arizona’s citizens, in general, and to Arizona veterans and their families, in
particular, for the state appropriations, donations, and state home fund revenue it
receives. The Department’s fiscal year 2007 appropriations totaled $18,132,800;
fiscal year 2008 totaled $23,772,600; and fiscal year 2009 totaled $22,462,800 (all
three amounts unaudited).
Pursuant to Arizona Revised Statutes (A.R.S.) §41-602, the Commission is charged
with providing policy advice to the Governor and to the Department’s director
regarding veterans’ issues. The Department’s director is responsible for informing
the Commission regarding policies adopted by the Department; however, the
Commission does not have the authority to approve actions taken by the Department
nor its director.
The Department employs more than 280 employees and is composed of four
divisions:
1. Veterans’ Services Division—Provides a network of veterans’ benefits and
employs counselors based in 24 offices located throughout Arizona. These
counselors provide information and assistance to veterans and their family
members.
2. Arizona State Veterans’ Home (nursing home)—Constructed in 1995, the
nursing home is a 200-bed, state-owned, state-operated licensed skilled
nursing facility located in Phoenix. The nursing home serves the long-term
needs of Arizona veterans and their dependent and surviving spouses.
Generally, the nursing home is financially self-sufficient, relying solely on the fees
collected to support its operations.
Office of the Auditor General
INTRODUCTION
& BACKGROUND
page 1
3. Fiduciary Division:
a. Guardian—Makes decisions about medical treatment and personal care
for those veterans and dependents that the Arizona Superior Court
assigns to them.
b. Conservator—Manages property and financial affairs for those veterans
and dependents that the Arizona Superior Court assigns to them.
c. Personal Representative—Administers the estates of deceased veterans
and distributes their assets to any heirs.
4. Administration—Composed of the Department Director’s Office, Human
Resources, Purchasing, Financial Services, and Information Technology.
In addition to the activities described above, the Department is also responsible for:
1. State Home for Veterans Trust Fund (Veterans’ Home Fund)—Established
under A.R.S. §41-608.01, the Veterans’ Home Fund is used to account for
Arizona State veterans’ home operations. The nursing home is designed to be
a self-sustaining facility with funding generated from operations that include
payments from the U.S. Department of Veterans Affairs, Medicare, Arizona
Health Care Cost Containment System, Long Term Care contractors, and private
pay residents. Monies in the Home Fund are public money and are subject to
state laws, regulations, and procurement policies and procedures unless
specifically exempted.
2. The Veterans’ Donation Fund (Donation Fund)—Established under A.R.S. §41-
608, the Donation Fund consists of monies, gifts, and contributions donated to
the Department as well as proceeds from the sale of specialty motor vehicle
registrations such as Veterans, Military Support, Former Prisoner of War, Purple
Heart, and Pearl Harbor Survivor license plates. The Donation Fund may be
expended at the discretion of the Department’s director for the benefit of
veterans within the State of Arizona. Monies in the Donation Fund are public
money and are subject to state laws, regulations, and procurement policies and
procedures unless specifically exempted.
Patrick Chorpenning, Sr., former Department Director
In February 1999, Mr. Patrick Chorpenning, Sr., was the first director to be appointed
under Laws 1999, Chapter 164, by then-Governor, Jane Dee Hull. As the Director, Mr.
Chorpenning was responsible for the Department’s overall administration, directly
supervising an executive management team. In September 2004, Mr. Chorpenning
took on additional duties as the Military Affairs Policy Adviser to former Arizona
Governor Janet Napolitano, which included securing benefits for members of the
National Guard and continually informing the Governor of the military base relocation
and closure process.
State of Arizona
page 2
On March 16, 2007, the U.S. Department of Health & Human Services issued a
$10,000 civil penalty to the Department for substandard care conditions at the
nursing home and threatened to revoke the nursing home’s status as a Medicare
provider unless conditions improved. On March 26, 2007, former Governor
Napolitano ordered an immediate review of the nursing home and removed Mr.
Chorpenning from direct oversight of the home but allowed him to retain control of
all remaining department functions. That next day, Mr. Chorpenning resigned from his
director position.
As a result of the deficiencies found by the U.S. Department of Health & Human
Services within the nursing home in 2007, the Arizona State Legislature appropriated
State General Fund monies for the nursing home. The nursing home received
appropriations in fiscal year 2008 totaling $3,457,900; fiscal year 2009 totaling
$2,855,000; and fiscal year 2010 totaling $2,855,000 (all three amounts unaudited).
Office of the Auditor General
page 3
State of Arizona
page 4
Former Director engaged in conflicts of interest
From December 2002 to March 2007, the former Department of Veteran’s Services
Director, Mr. Patrick Chorpenning, Sr., may have intentionally and repeatedly violated
conflict-of-interest laws when participating in hiring his son and his wife, allowing
payments totaling $330,088 to sustain their employment. As illustrated in Table 2
below, Mr. Chorpenning directed and ultimately authorized his son’s employment
with the Department and later created another position for his son through an
interagency service agreement. From December 2002 to April 2005, the Department
expended $215,984 for Mr. Chorpenning’s son’s salary, employer-related benefits,
materials, supplies, travel, communications, and equipment. Following his son’s hire,
Mr. Chorpenning then improperly created a position for his wife at the Department,
directed her hiring, and later participated in an unjustified increase to her salary. From
February 2004 to March 2007, the Department spent at least $114,104 for Ms.
Chorpenning’s salary.
To help ensure that public officials do not improperly use their position for their own
benefit, Arizona law requires that public officials make known their substantial interest
in any decision (this disclosure must be made available to the public), as well as
refrain from voting on or participating in that decision, all of which Mr. Chorpenning
failed to do.
Office of the Auditor General
page 5
FINDING 1
Position Relationship Dates Amount
Nursing Home Assistant Administrator Son 12/16/02 – 08/01/03 $ 40,302
Interagency Service Agreement—Arizona
State University Senior Administrator Son 07/24/03 – 04/18/05 175,682¹
Total payments for son $215,984
Strategic Planner/Special Projects Wife 02/14/04 – 11/06/05 57,000
In-House Design Coordinator Wife 11/07/05 – 03/23/07 57,104
Total payments for wife $114,104
Table 2: Conflicts of Interest
December 2002 to March 2007
Source: Auditor General staff analysis of Arizona Department of Veterans’ Services and Arizona State University records.
1 In total, the Department expended $250,000 on the interagency service agreement. Mr. Chorpenning’s son resigned
from his interagency position on April 18, 2005, prior to the agreement’s termination date. Therefore, $175,682 of the
$250,000 was used to fund his son’s salary, and employer-related benefits and expenses.
Mr. Chorpenning’s Son—Nursing Home Assistant
Administrator
Mr. Chorpenning may have unlawfully participated in his son’s employment by
explicitly directing his subordinate staff to hire his son as the assistant administrator
of the nursing home. This employment opportunity was not advertised, and no
documentation exists showing that Mr. Chorpenning’s son interviewed for the
position. As a result of Mr. Chorpenning’s directives, his son was hired on December
16, 2002, at an annual salary of $62,000. As an uncovered employee, Mr.
Chorpenning’s son served at his father’s discretion and was primarily responsible for
applying for federal grants on the Department’s behalf until he resigned effective
August 1, 2003. For the period of his employment from December 2002 to August
2003, Mr. Chorpenning’s son received approximately $40,303 in compensation.
Mr. Chorpenning’s Son—Interagency Service Agreement
Senior Administrator
During Mr. Chorpenning’s son’s employment at the nursing home, Arizona
Department of Administration officials became aware of the employment situation
between father and son and informed Mr. Chorpenning of its inappropriate nature. As
a result, in June 2003, Mr. Chorpenning initiated an interagency service agreement
between Arizona State University (ASU) and the Department to develop programs
and services to support the educational needs of veterans, which included providing
grant-writing services and serving as the contact between ASU and veterans. Mr.
Chorpenning stipulated that the agreement was contingent upon the
Department’s assigning a current employee as the senior administrator for the
project. In July 2003, Mr. Chorpenning placed his son as the employee and
committed $120,000 of department monies to pay for his son’s annual salary
of $65,000, and employer-related benefits, materials, supplies, travel,
communications, and equipment. The Department used the Veteran’s Home
Fund to pay for the initial agreement.
In April 2004, Mr. Chorpenning continued his improper involvement with his son’s
employment by approving an extension to the agreement for a 3-month period from
June 30, 2004 to September 30, 2004, with no additional monies provided. Mr.
Chorpenning also improperly approved a second extension to the agreement for
another 1-year period from September 30, 2004 through September 30, 2005,
agreeing to an additional $130,000 to fund his son’s annual salary, and employer-related
benefits and expenses. The Department used Donation Fund monies to pay
for the second extension.
State of Arizona
page 6
Mr. Chorpenning assigned his son as
the employee under the interagency
service agreement with Arizona State
University.
On April 18, 2005, Mr. Chorpenning’s son resigned from his ASU position. ASU
appointed one of its own employees to fill the son’s vacated position for the
remainder of the agreement terms. In total, the Department expended $250,000 on
the interagency service agreement with ASU, $175,682 of which was used to fund the
son’s annual salary, and employer-related benefits and expenses.
From July 2003 through April 2005, Mr. Chorpenning’s son’s work product did not
fulfill the overall objective of the interagency service agreement, which was to obtain
funding opportunities for veterans’ education. Instead, at the
Department’s direction, Mr. Chorpenning’s son’s work time was spent
on applying for federal grants solely on the Department’s behalf.
Specifically, his son applied for federal grants in efforts to obtain
funding for nursing home improvements and building a new Tucson
veterans’ home. ASU’s Project Director had little involvement in the
son’s day-to-day activities, and in fact, Mr. Chorpenning and his son
largely determined the project’s direction. Neither the Department nor ASU were able
to provide evidence of any funding opportunities the son obtained to enhance
veterans’ educational opportunities.
Mr. Chorpenning’s Wife—Strategic Planner/Special
Projects
Mr. Chorpenning may have unlawfully participated in his wife’s
employment by directing his subordinate staff to contract with what he
claimed was his wife’s company, Feather Your Nest Designs, to
redecorate the veterans’ nursing home. Citing the need to follow
procurement rules, department staff refused to issue a contract with
Ms. Chorpenning or her company. Mr. Chorpenning then authorized
the creation of an additional position so his wife could be hired as an
employee, serving at Mr. Chorpenning’s discretion.
On February 3, 2004, Mr. Chorpenning added the position under the Strategic
Planner/Special Projects title, which was offered to Ms. Chorpenning at an $18 hourly
rate. This employment opportunity was not advertised, and no one, including Ms.
Chorpenning, interviewed for the position. In fact, Ms. Chorpenning did not submit
her employment application until the day after she was hired.
Even though Ms. Chorpenning was hired under the pretext of Strategic
Planner/Special Projects, her actual responsibilities differed
significantly from the job responsibilities of this position. Rather than
the listed duties of developing the Department’s strategic plan,
conducting business and statistical research, researching personnel
issues, and reporting research findings to the Department’s executive
staff, Ms. Chorpenning was responsible for managing the nursing home’s
redecorating projects.
Office of the Auditor General
page 7
Mr. Chorpenning improperly directed
department employees to contract with
his wife to redecorate the veterans’
nursing home.
Mr. Chorpenning’s son’s work product
did not fulfill the overall objective of the
interagency service agreement.
Ms. Chorpenning’s actual work product
was completely unrelated to her hired
position.
On October 15, 2004, Mr. Chorpenning significantly increased his wife’s salary. Mr.
Chorpenning approved a $6.52 per hour increase to his wife’s salary, thereby
adjusting her rate from $18.48 to $25.00 per hour. This 35 percent increase was not
explained, Ms. Chorpenning’s title and responsibilities had not changed, no
evaluations were performed, and no goals or accolades were documented. In fact,
of the five employees receiving pay increases on this date, Ms. Chorpenning
was the only one without some sort of personnel action such as a promotion
or position change. Moreover, the other hourly increases were much smaller
than Ms. Chorpenning’s, ranging from $0.19 to $2.24 per hour. Finally, the
other strategic planner/special projects employee, whom the Department
hired more than 10 years ago, was earning approximately $2.22 per hour less
than Ms. Chorpenning, who had been in the same position for less than 9
months.
Mr. Chorpenning’s Wife—In-House Design Coordinator
On October 7, 2005, Mr. Chorpenning created a second position specifically
for his wife. Specifically, Mr. Chorpenning directed the Department’s Human
Resources Department to create the In-House Design Coordinator position
and reassign his wife from Special Projects/Strategic Planner to this newly
created position. The Department failed to post or announce the In-House
Design Coordinator position, interview candidates, or require an application
for the job. Ms. Chorpenning remained in this position from November 7,
2005, until she resigned on March 23, 2007.
As of August 2009, neither the Strategic Planner/Special Projects nor the In-House
Design Coordinator positions that Ms. Chorpenning vacated had been refilled.
In accordance with A.R.S. §38-503, “Any public officer or employee of a public
agency who has, or whose relative has, a substantial interest in any contract, sale,
purchase or service to such public agency shall make known that interest in the
official records of such public agency and shall refrain from voting upon or otherwise
participating in any manner as an officer or employee in such contract, sale or
purchase.” Further, according to A.R.S. §38-510, “A person who: 1. Intentionally or
knowingly violates any provision of sections 38-503 through 38-505 . . .” could be in
violation of the law and subject to a class 6 felony.
State of Arizona
page 8
Mr. Chorpenning improperly approved a
35 percent increase to his wife’s salary,
without merit or justification.
Mr. Chorpenning created a second
position specifically for his wife,
directing department employees to
reassign her to that position.
Impact on Nursing Home Operations and the Veterans’
Home Fund
The Veterans’ Home Fund accounts for the operation of its 200-bed skilled nursing
facility (veterans’ nursing home), which serves the long-term needs of Arizona
veterans, their dependents, and surviving spouses. The nursing home is financially
self-sufficient, relying solely on the fees it collects to support its operations. Further,
monies in the Veterans’ Home Fund are subject to an annual spending limit that the
Arizona State Legislature determines. The Nursing Home Administrator is
responsible for managing the nursing home and its operations, with ultimate
authority residing with the Department’s Director.
From fiscal years 2004 to 2007, nursing home renovations coordinated by Ms.
Chorpenning, a portion of Ms. Chorpenning’s salary, and a portion of Mr.
Chorpenning’s son’s interagency salary and employer-related expenses totaling at
least $786,820 were financed through the Veterans’ Home
Fund. Nonetheless, during that same period, Mr.
Chorpenning directed the Nursing Home Administrator to
reduce spending on nursing home operations, such as
decreasing food and dietary staffing, limiting staff overtime,
and prohibiting the purchase of nursing home equipment. In
fact, the Nursing Home Administrator stated that he had to
modify the Home Fund’s budget and reduce nursing home
positions and certain operations to accommodate these expenditures, and further, to
comply with the spending limits the Arizona Legislature established.
Additionally, the Veterans’ Home Fund fiscal year-end balance decreased
significantly, from $1,639,204 during fiscal year 2004 to $30,013 during fiscal year
2007, with a slight increase noted in fiscal year 2008 to $74,846. Certainly there are
other factors that have contributed to the Veterans’ Home Fund’s declining balance,
but the impact of the above-mentioned expenditures totaling at least $786,820 may
have caused a substantial depletion to the Veterans’ Home Fund.
In an interview with Auditor General staff, the Nursing Home Administrator stated that
it was his belief that Mr. Chorpenning stopped acting in the interest of the veterans,
and certainly the nursing home’s veterans, and started funneling department monies
to his personal friends and family members.
Office of the Auditor General
page 9
Mr. Chorpenning directed the hiring of his wife and
redecorating of the nursing home, while at the
same time demanding a reduction to spending on
nursing home operations and staff expenditures.
State of Arizona
page 10
Former Director concealed his improper actions
On September 17, 2004, the Arizona Governor’s Office (Governor’s Office) received
an anonymous e-mail that contained allegations about Mr. Chorpenning’s hiring his
relatives, including his son and his wife. The Governor’s Office forwarded this e-mail
to Mr. Chorpenning for a response. On September 22, 2004, Mr. Chorpenning sent a
response letter to the Governor’s Office, in which he attempted to conceal his
improper involvement by:
1. Failing to inform the Governor’s Office of his son’s employment status as the
senior administrator within the interagency services agreement between the
Department and Arizona State University, and
2. Misleading the Governor’s Office regarding the circumstances of his wife’s hire
by providing false information.
Even though Mr. Chorpenning had approved his son’s employment
under an agreement with Arizona State University over a year earlier
and his son was currently in that position and being paid with
department monies, he chose not to include that information within his
written response to the Governor’s Office. In fact, Mr. Chorpenning
reported only that his son had left the Department to start a private
public policy consulting firm. He never disclosed that his son worked
full-time for the Department through an agreement with Arizona State University,
which was fully funded with department monies.
Further, Mr. Chorpenning falsely and misleadingly stated in his
response to the Governor’s Office that the Department’s Nursing
Home Administrator had hired Ms. Chorpenning and that her hiring
was discussed with the Arizona Veterans’ Service Advisory
Commission. According to the Commission’s meeting minutes, no
discussion occurred relating to Ms. Chorpenning’s initial employment,
and further, as discussed in Finding 1, Mr. Chorpenning himself
improperly directed the Department’s Nursing Home Administrator and other
department employees to hire Ms. Chorpenning.
Office of the Auditor General
page 11
FINDING 2
Mr. Chorpenning failed to disclose to
the Governor’s Office that his son
worked for the Department through an
agreement with Arizona State University.
Mr. Chorpenning presented false
information to the Governor’s Office
regarding his wife’s employment with
the Department.
As a result of Mr. Chorpenning’s deception, the Governor’s Chief of Staff believed the
hiring issues involving Mr. Chorpenning’s relatives had been resolved and that no
further investigation was necessary.
In accordance with A.R.S. §13-2311, “ . . . any person who, pursuant to a scheme or
artifice to defraud or deceive, knowingly falsifies, conceals or covers up a material
fact by any trick, scheme or device or makes or uses any false writing or document
knowing such writing or document contains any false, fictitious or fraudulent
statement or entry . . .” could be in violation of the law and subject to a class 5 felony.
State of Arizona
page 12
Former Director’s wife falsified and submitted a public
document to the Department
On February 15, 2004, the day after she was hired, Mr. Chorpenning’s wife submitted
an employment application to the Department falsely claiming that from 2002 to
2004, she worked for Feather Your Nest Design, earning $800 per week. She also
falsely listed her son-in-law as her supervisor. Conversely, Ms. Chorpenning
appeared to be unemployed as neither she individually nor Feather Your Nest
Design, the company, reported any wages, salary, or income to the Arizona
Department of Economic Security from January 1, 2001 to February 14, 2004.
In January 2004, nearly 2 years after the date listed on Ms. Chorpenning’s
application, she requested her son-in-law’s help with creating
a business under the name Feather Your Nest Design. Ms.
Chorpenning’s son-in-law then filed a corporate filing form for
the business with the Arizona Corporation Commission. That
same month, Ms. Chorpenning’s son-in-law also filed for and
received a federal Employer Identification Number. However,
in November 2004, he filed termination documents with the
Arizona Corporation Commission because Ms. Chorpenning
said she was too busy and had begun employment with the Department. Ms.
Chorpenning’s son-in-law stated that he was not aware of any business activity, and
he neither employed nor supervised Ms. Chorpenning.
In accordance with A.R.S. §39-161, “A person who . . . offers to be filed, registered or
recorded in a public office in this state an instrument he knows to be false or forged
. . .” could be in violation of the law and subject to a class 6 felony.
Office of the Auditor General
page 13
FINDING 3
Mr. Chorpenning’s wife submitted a falsified
employment application to the Department,
claiming that she worked for Feather Your Nest
Design while being supervised by her son-in-law.
State of Arizona
page 14
Former Director misused public monies
Public officials with oversight authority have a responsibility to prudently manage
money entrusted to them. However, from October 2002 to September 2007, Mr.
Chorpenning may have misused public monies when he improperly authorized the
expenditure of monies from the Department’s Donation Fund, totaling $288,795, for
purposes inconsistent with serving the needs of Arizona veterans (see Table 3
below). Specifically:
1. From October 2002 to March 2004, Mr. Chorpenning improperly authorized
payments totaling $37,000 to establish a private nonprofit corporation and pay
for its administrative costs. No services or products were provided directly to or
on behalf of the Department; these payments were a gift of public monies.
2. From November 2003 to March 2007, Mr. Chorpenning improperly authorized
payments totaling $38,595 to pay for employee-related gifts and banquets.
3. From September 2003 to September 2007, Mr. Chorpenning improperly
authorized four payments totaling $113,200 and contractually required two
additional payments totaling $100,000 to build a war memorial. However, former
Arizona Governor Janet Napolitano strictly prohibited the use of any public
monies for this memorial.
Office of the Auditor General
FINDING 4
page 15
Description Number of Instances Amount
Gifting monies to a private corporation 4 $ 37,000
Employee-related gifts 22 38,595
War memorial payments 6 213,200
Misuse of public monies 32 $288,795
Table 3: Misuse of Public Monies Summary
October 2002 to September 2007
Source: Auditor General staff analysis of Arizona Department of Veterans’ Services, Arizona Department of Administration,
and nonprofit organization records.
The Department’s Donation Fund consists of monies, gifts, and contributions
donated to the Department as well as proceeds from the sale of specialty
motor vehicle license plates. Donation Fund monies may be used at the
Director’s discretion; however, these monies are public monies and should be
prudently managed and used for the benefit of Arizona veterans. Further, the
Arizona Constitution prohibits public money from being given or loaned to any
individual, association, or corporation. Public money must be spent for a
public purpose. The Attorney General has held that an incidental private
benefit is not prohibited if there is a public purpose being served by the expenditure
and the public value is not far exceeded by the amount being paid.
Gifting Monies to a Private Organization
From October 2002 to April 2004, Mr. Chorpenning improperly used Donation Fund
monies totaling $37,000 to help establish and fund the
administrative operations of a planned nonprofit veterans’
service organization. On October 24, 2002, Mr. Chorpenning
authorized the first payment totaling $25,000 to this
organization, which had not yet applied for nonprofit 501(c)(3)
status from the Internal Revenue Service (IRS). In fact, Mr.
Chorpenning allowed the private organization to use these
Donation Fund monies to pay for its IRS application fee, attorney
fees, office rent, employees’ salaries, and other administrative
costs.
Additionally, from January to April 2004, Mr. Chorpenning
improperly authorized three more payments to the newly
recognized nonprofit corporation totaling $12,000 to help their
administrative operations. Similarly, these monies were used to
pay for the nonprofit corporation’s office rent, office supplies,
Web site hosting, letterhead, employees’ salaries, and other
administrative costs.
Although the nonprofit corporation may help serve the Arizona
veterans’ needs by maintaining a veterans’ registry, participating
in veterans’ outreach programs, and providing other information
and benefits to veterans, it was improper for Mr. Chorpenning to
use public monies to establish and maintain the administrative
operations of this private corporation.
State of Arizona
page 16
Department Donation Fund monies
should be prudently managed and used
for the benefit of Arizona veterans.
The Arizona Constitution prohibits gifting of public
monies, including donating or loaning public money to
private individuals or organizations.
The Arizona Constitution, Article IX, Section 7,
states: “Neither the State, nor any county, city, town,
municipality, or other subdivision of the State shall
ever give or loan its credit in the aid of, or make any
donation or grant, by subsidy or otherwise, to any
individual, association, or corporation, or become a
joint owner with any person, company, or
corporation, except as to such ownerships as may
accrue to the State by operation or provision of law.”
Attorney General Opinion I85-051 states in part:
“While public funds may not be loaned or given to
private individuals or entities, an incidental private
benefit is not prohibited by Article IX as long as
there is a public purpose served by the expenditure
or loan of funds and the value to be received by the
public is not far exceeded by the consideration
being paid.”
Employee-related Gifts
From November 2003 to March 2007, Mr. Chorpenning improperly authorized 22
payments and transfers from the Donation Fund totaling
$38,595 to purchase gifts and finance end-of-the-year
banquets for department employees.
State agencies are allowed to expend certain monies for
employee recognition programs; however, in 2003, Mr.
Chorpenning began to improperly augment the employee
recognition program with Donation Fund monies that were
intended for the benefit of Arizona veterans. Specifically, Mr. Chorpenning authorized
the transfer of Donation Fund monies to the employee recognition program, and on
November 19, 2003, 300 $25 gift cards were purchased from a local grocery store
for all department employees. These gift cards were then distributed to employees
at the Department’s end-of-the-year banquet, making it appear as though the
employee program funded the gifts. In fact, in e-mail correspondence between Mr.
Chorpenning and the Department’s employee program director, Mr. Chorpenning
stated, “Remember this is not a department program but something that the
employee association is doing . . . .”
Mr. Chorpenning continued to allow these disbursements from the Donation Fund for
employee-related gifts until his resignation in March 2007, at which time the
Department’s new Interim Director immediately prohibited the use of Donation Fund
monies to finance employee-related items, believing this practice to be inappropriate.
In total, Donation Fund monies helped finance $38,595 worth of employee-related
gifts and banquets, including the purchase of approximately 1,248 grocery store gift
cards (see Table 4 below).
Office of the Auditor General
page 17
In 2003, Mr. Chorpenning began authorizing
Donation Fund monies to finance employee gifts,
monies that were intended for the benefit of
Arizona veterans.
Description Date # of Gift Cards Amount
Grocery store gift cards 11/19/03 300 $ 7,050
Grocery store gift cards 12/02/04 325 7,637
Grocery store gift cards 11/09/05 303 10,075
Grocery store gift cards 12/01/06 320 10,640
Miscellaneous employee expenses
(banquet and fund-raising supplies) 11/03-03/07 - 3,193
Total 1,248 $38,595
Table 4: Employee Gift Expenditures
November 2003 to March 2007
Source: Auditor General staff analysis of Arizona Department of Veterans’ Services and Employee Recognition records.
War Memorial Payments
From September 2003 to September 2007, Mr. Chorpenning improperly authorized
$213,200 of Donation Fund monies for the design and construction of a war
memorial in direct opposition to a Governor’s Order. In May 2003, former Arizona
Governor Janet Napolitano enacted Executive Order 2003-17, which created a 21-
member Iraqi War Memorial Commission under the Department’s leadership,
specifically commanded by Mr. Chorpenning, but prohibited the use of any public
monies to fund the project. The Executive Order states, “The Commission [Iraqi
Commission] shall have reasonable access to state-owned conference rooms in the
Executive Tower and, where feasible, to support staff and facilities of the Governor’s
Office and/or Department of Veterans’ Affairs [Department]; provided, however, that
all funding necessary for any war memorials recommended by the Commission shall
be funded by private donations, which the Commission shall be authorized to solicit”
(emphasis added).
On May 13, 2004, Mr. Chorpenning improperly and without authority
entered into a contractual agreement with the same private nonprofit
veterans’ service corporation as discussed on page 16 to help
finance and construct the memorial. In direct conflict with the
Governor’s order, Mr. Chorpenning agreed to hold the Department
financially responsible for funding the memorial by using Donation
Fund monies if necessary. Specifically, the contract stated:
1. “Should there be insufficient funds in the Memorial account . . . ADVS
[Department] will appropriate the money to [veterans’ service organization] in
the amount necessary to pay all costs in full.
2. In the event fundraising cannot generate the funds needed or that the donations
raised from the public are insufficient to build the memorial by the completion
date set by Legislation ADVS [Department] may pay the costs to build and/or
complete the memorial from the Veterans Donation Fund.”
The Iraqi Commission was unable to raise enough money to fully fund the
construction of the memorial. As a result, Mr. Chorpenning improperly authorized four
payments from the Department’s Donation Fund totaling $113,200 to aid with
memorial expenditures. These monies were provided to the same contracted
nonprofit corporation and used to pay for the costs of artist renderings, fund-raising
brochures, and sculpture design and completion.
The payments continued even after Mr. Chorpenning resigned from his position in
March 2007. Because of his improper actions making the Department contractually
responsible for funding the memorial, the Department was required to make two
additional payments in May and September 2007 totaling $100,000. See Table 5 on
page 19.
State of Arizona
page 18
Despite the Governor’s order prohibiting the use
of public monies, Mr. Chorpenning entered into a
contractual agreement, obligating the
Department’s Donation Fund to pay for memorial
expenditures.
On July 13, 2006, 2 years after Mr. Chorpenning had already obligated and used
Donation Fund monies for the war memorial, he received support from the Arizona
Veterans’ Service Advisory Commission to use Donation Fund monies to finance the
memorial. However, this support is ineffectual because the Commission does not
have the authority to approve or direct the expenditure of these funds nor the
authority to override the Governor’s executive order and cause public monies to be
used on this memorial. Moreover, the Commission had not been fully informed when
voting on this matter. Mr. Chorpenning failed to provide the members with the
following information:
• Mr. Chorpenning had already signed a contract in May 2004 with a private
veterans’ service organization, obligating Donation Fund monies for the war
memorial.
• $12,000 of Donation Fund monies had already been spent for the memorial.
• The Governor’s executive order strictly prohibited the use of public monies to
fund the memorial.1
Mr. Chorpenning admitted to Auditor General staff that he regretted using Donation
Fund monies to finance the memorial. As of May 15, 2009, the war memorial received
$243,687 in donations, with approximately 87 percent of this funding coming directly
from the Donation Fund.
In accordance with A.R.S. §35-301, “A public officer or other person . . . charged with
the receipt, safekeeping, transfer or disbursement of public money . . . without the
authority of law, appropriates it, or any portion thereof, to his own use, or to the use
of another . . .” could be in violation of the law and subject to a class 4 felony.
Office of the Auditor General
page 19
Description Date Amount
Artist renderings ($500 each) and fund-raising brochures 09/26/03 $ 5,000
Enduring Freedom Memorial Scale Model 08/20/04 7,000
Memorial sculpting fee (1/3 payment) 09/30/06 50,600
Memorial sculpting fee (1/3 payment) 09/30/06 50,600
Remaining balance on memorial sculpting fee 05/01/07 50,000
Help with constructing Enduring Freedom Memorial 09/04/07 50,000
Total Misuse of Public Monies $213,200
Table 5: War Memorial Payments
September 2003 to September 2007
Source: Auditor General staff analysis of Arizona Department of Veterans’ Services and nonprofit organization records.
1 Donation Fund monies are public monies because they are held by the Department and the Director in their official
capacities, in accordance with A.R.S. §35-302.
State of Arizona
page 20
Former Director violated procurement rules
Arizona Revised Statutes and Arizona Administrative Code guidelines exist, in part,
to ensure that public officials obtain the best possible value for the public money they
spend by prohibiting the restraint of free trade and unreasonable reduction of
competition among vendors. Additionally, as public officials, department employees
have a responsibility to prudently manage department assets on behalf of the
community they serve. Although ultimately responsible for ensuring that the
procurement process was properly followed, Mr. Chorpenning intentionally
circumvented these procedures, and from July 2002 to April 2005, improperly spent
$382,757 of Donation Fund monies on media and advertising services that were
never competitively procured. Mr. Chorpenning’s inappropriate actions may have
harmed the Department by limiting competition as he directed business toward a
specific vendor without the benefit of full and open competition.
Mr. Chorpenning may have violated state laws, rules, and regulations when he:
• Circumvented the Arizona Procurement Code and the Department’s finance
and purchasing procedures by exclusively entering into an arrangement with a
local media production company (the vendor) to provide media and advertising
services.
• Without authority, improperly exceeded the Department’s spending limit of
$250,000 for contracts.
• Improperly spent $85,489 promoting a private trade name.
• Failed to prudently monitor the vendor’s services, expending $39,000 on behalf
of a private nonprofit corporation for consulting services that the nonprofit never
received.
Office of the Auditor General
FINDING 5
page 21
Mr. Chorpenning circumvented the Arizona Procurement
Code
During the period July 2002 to April 2005, Mr. Chorpenning may have violated various
state laws, rules, and regulations when purchasing a range of media and advertising
services from a local media production company. Mr. Chorpenning improperly
initiated an agreement with the Phoenix-based company to promote and advertise
the Department, a private trade name called Military Veterans for America, and the
same private, nonprofit veterans’ service corporation as discussed in Finding 4,
without using any competitive process. The Arizona Procurement Code requires that
state agencies issue an invitation for bid or request for proposal when purchasing
services exceeding the sealed bid threshold, which in 2002 was $35,000. Despite
repeated instruction from State Procurement Office administrators and department
staff that the Arizona Procurement Code applied to Donation Fund monies, Mr.
Chorpenning failed to use either method when purchasing media and advertising
services totaling $382,757. See Table 6 below.
The Department’s finance and purchasing staff were unaware of Mr. Chorpenning’s
arrangement for these services until the vendor began issuing invoices. When staff
approached Mr. Chorpenning about the lack of procurement, he stated that he had
a personal relationship with the vendor’s owner and wanted to use the vendor’s
services because they were good. However, by failing to follow sound procurement
practices, the Department may not have received the best value for the services
received.
In addition to circumventing procurement rules, Mr. Chorpenning also failed to
require a written agreement between the Department and the vendor. This
agreement should have documented all services to be provided by the
vendor and established accountability for those services. Instead, the vendor
provided an estimated cost of services on a project-by-project basis.
State of Arizona
page 22
Fiscal
Year
Marketing &
Advertising
Consulting,
Public and
Media Relations
Miscellaneous
Military
Veterans for
America
Services
Not
Received
Total
2002 $ 2,000 $ 6,000 $ 1,000 $ 7,200 - $ 16,200
2003 83,226 46,498 62,032 78,289 - 270,045
2004 2,550 31,500 15,062 - $31,500 80,612
2005 900 7,500 - - 7,500 15,900
Total $88,676 $91,498 $78,094 $85,489 $39,000 $382,757
Table 6: Summary of the Media and Advertising Services Paid for by the Department
July 2002 to April 2005
Source: Auditor General staff analysis of Arizona Department of Veterans’ Services, Arizona Department of Administration, private business, and nonprofit
organization records.
Mr. Chorpenning failed to require a
written agreement between the
Department and the vendor for the
media and advertising services.
Mr. Chorpenning exceeded the Department’s spending
limit of $250,000
Spending limits are governed by the Arizona Procurement Code, Arizona Governor’s
Executive Orders, and Arizona State Procurement Office Technical Bulletins. The
State Procurement Office determines the limit for each state agency and, beginning
in 2002 up to the present date, the Department is permitted to contract for purchases
up to $250,000. Limits are in place to prevent state agencies
from entering into contracts that they are not equipped to
adequately administer.
However, from July 2002 to April 2005, Mr. Chorpenning
exceeded the Department’s allowable spending limit of
$250,000 for the media and advertising services project
without following any competitive procurement process.
Further, Mr. Chorpenning failed to properly seek or receive
permission from the State Procurement Office to exceed the maximum limit. In fact,
Mr. Chorpenning exceeded the Department’s limit by more than $132,000. Mr.
Chorpenning signed authorization forms acknowledging the Department’s spending
limit thresholds, which were then submitted to the State Procurement Office. During
his tenure with the Department, Mr. Chorpenning signed three of these letters, in
2000, 2002, and 2006.
As a result of Mr. Chorpenning’s actions, the State Procurement Office may revoke,
suspend, or modify the Department’s procurement authority for failure to comply with
state laws, rules, and regulations.
Mr. Chorpenning improperly promoted a private trade
name
Of the total $382,757 that the Department expended on media and advertising
services, at least $85,489 was expended for services the vendor provided on behalf
of Military Veterans for America (MVFA), an organization in name only. Specifically,
from August 2002 to October 2003, the vendor invoiced the Department for services
related to MVFA, including consulting and public relations, providing a marketing
video, radio and television commercials, footage for a press conference, and a
project operations staff person.
Mr. Chorpenning attempted to create MVFA, reportedly to promote veterans’ license
plate sales, and helped market it as a nonprofit organization that enhanced and
raised awareness for veterans’ issues, not only in Arizona, but nation-wide. However,
no records exist documenting MVFA as a legitimate nonprofit corporation. There are
no officers, members, or shareholders.
Office of the Auditor General
page 23
Mr. Chorpenning exceeded the Department’s
allowable spending limit for the media and
advertising services project without following any
competitive procurement process or seeking
approval from the State Procurement Office.
Mr. Chorpenning worked with the vendor to create a branding message, logo, Web
site, and brochure materials to advertise MVFA. Additionally, Mr.
Chorpenning authorized the use of Donation Fund monies to pay for
a marketing video costing $30,986 and organized a press
conference to campaign for MVFA costing $6,734. Mr. Chorpenning
asked his and his wife’s personal trainer to voluntarily speak at the
press conference and represent himself as MVFA’s Executive
Director, even though he was not. While the personal trainer
represented himself as MVFA’s Executive Director at the press
conference, he later stated to Auditor General staff that he did not
have any involvement in MVFA other than this speaking engagement.
The public purpose for these disbursements was not identified, and the cost appears
to greatly exceed any benefit to the public. Mr. Chorpenning authorized and paid for
these services on behalf of MVFA even though MVFA was not an established
corporation and these services offered little or no quantifiable benefit to the
Department or Arizona veterans.
Mr. Chorpenning allowed the expenditure of public
monies for services not received
Of the total $382,757 the Department expended on media and advertising services,
$39,000 was expended for services the vendor supposedly provided to the same
private, nonprofit corporation as discussed in Finding 4. From November 2003 to
March 2005, the vendor invoiced the Department for both the nonprofit’s and
Department’s monthly services such as consulting, public relations, and media
relations. However, both the vendor and the nonprofit director stated that no services
were provided to the nonprofit corporation. The vendor assumed that Mr.
Chorpenning, his staff, or the nonprofit director had instructed vendor staff to prepare
these invoices; however, both the nonprofit director and department staff deny this.
Additionally, the vendor failed to produce any written documentation to support the
purposes of its invoicing or services it provided to the nonprofit or the Department.
Department staff paid for all media and advertising service invoices at the direction
of Mr. Chorpenning. Mr. Chorpenning failed to establish a business climate that
prudently monitored these services, and as a result, $39,000 was expended for
services not received.
In accordance with A.R.S. §41-2616, “A person who intentionally or knowingly
contracts for or purchases any material, services or construction pursuant to a
scheme or artifice to avoid the requirements of this chapter . . .” could be in violation
of the law and subject to a class 4 felony. Further, “A person who contracts for or
purchases any material, services or construction in a manner contrary to the
requirements of this chapter . . . is personally liable for the recovery of all public
monies paid plus twenty per cent of such amount and legal interest from the date of
payment and all costs and damages arising out of the violation.”
State of Arizona
page 24
Mr. Chorpenning asked his personal trainer to
voluntarily speak at a press conference,
representing himself as the Executive Director for
Military Veterans for America, even though he was
not.
To help ensure proper control over public monies, the Arizona Department of
Veterans’ Services (Department) should ensure that the following actions are taken:
1. The Department should institute policies and procedures that effectively oversee
management and address the risk of management override. For example,
department management should strengthen their understanding of the
business and control climates, brainstorm potential fraud risks within the
Department, cultivate a strong whistleblower system, and consistently maintain
an appropriate level of independence and skepticism. In doing so, the
Department increases the likelihood of preventing, deterring, and detecting
fraudulent activity.
2. The Department must take greater care to ensure its employees’ compliance
with conflict-of-interest statutes and can do so by establishing procedures to
periodically notify employees of the requirement to disclose conflicts of interest.
In accordance with A.R.S. §38-503, the Department should require all
employees who have, or whose relative has, a substantial interest in any
department contract, sale, purchase, service, or decision to file a conflict-of-interest
statement and refrain from voting upon or otherwise participating in any
manner as an employee in that contract, purchase, or service. In addition, if an
employee supervises a relative, the employee’s conflict-of-interest statement
should describe the relationship, and the supervisor must refrain from
participating in decisions or contracts relating to that relative, such as hiring and
approving pay increases. A.R.S. §38-502(9) defines a relative as a parent, child,
sister, brother, spouse, grandchild, grandparent, mother-in-law, father-in-law,
brother-in-law, sister-in-law, or stepchild. A separate file should be maintained for
public inspection of all known conflicts of interest and monitored by the
Department periodically.
3. The Department should strengthen its employment process by ensuring open
competitive practices in recruitment, selection, and placement of candidates
based on the merit of the candidate’s knowledge, skills, and abilities; overall
qualifications; and overall fitness for the position responsibilities. The
Department must take greater care to ensure that it follows state regulations by
Office of the Auditor General
page 25
RECOMMENDATIONS
instituting an open recruiting process; establishing procedures for posting
vacancy announcements; creating evaluation criteria, including written and
performance tests and interviews, and requiring an employment application
prior to selecting a candidate.
4. The Department should ensure the prudent use of public money, and more
specifically the proper use of Donation Fund and Veterans’ Home Fund monies.
Public money should not be used for private benefit unless that benefit is
incidental to a public purpose being served by the expenditure and the public
value is not far exceeded by the amount being paid. Expenditures should be
approved only if they support the Department’s needs in its role to serve the
public, and in particular, Arizona veterans, their dependents, and surviving
spouses. The Department should not pay for services on behalf of, or loan or gift
public monies to, any organization, corporation, or nonprofit entity.
5. Prior to using Donation Fund monies to make significant purchases of goods or
services, the director should consider discussing the project with the
Department’s legal representative. This will help ensure the Department’s
compliance with applicable state laws, regulations, and executive orders.
6. The Department must take greater care to ensure that it follows the State’s
procurement regulations, including the use of written contracts. In addition, the
Department must ensure that all contracts for purchases exceeding the sealed
bid threshold (currently $50,000) are awarded in compliance with the Arizona
Procurement Code as outlined in Arizona Revised Statutes and the Arizona
Administrative Code. These rules exist to help ensure that state agencies receive
the best possible value for the public money they spend by prohibiting the
restraint of free trade and unreasonable reduction of competition among
vendors.
7. The Department should ensure that expenditures are processed based on
proper documentation. Such documentation includes, but is not limited to,
properly and timely approved purchase requisitions, purchase orders, vendor
invoices, and vendor contracts. Further, the Department should take the
necessary actions to recover the monies it paid to the media production
company for services that it did not receive.
8. The Department should establish periodic monitoring procedures to ensure that
all policies and procedures prescribed by Arizona Revised Statutes, Arizona
Administrative Code, and Arizona Governor’s Executive Orders are being
followed.
State of Arizona
page 26
Arizona citizens, in general, and Arizona veterans and their families, in particular, were
deprived of proper and prudent management of veterans-related monies by former
Arizona Department of Veterans’ Services Director, Patrick Chorpenning, Sr., who
misused department monies and improperly used his position to obtain salary and
other benefits for his family members.
As a result, on November 18, 2009, the Arizona Attorney General’s Office took
criminal action against Mr. Chorpenning through the State Grand Jury. This action
resulted in the indictment of Mr. Chorpenning on eight felony counts related to conflict
of interest, fraudulent schemes and practices, misuse of public monies, and
procurement fraud.
Office of the Auditor General
page 27
CONCLUSION