Over the past month, Minnesota has been hard at work to set the gold standard for jaw-dropping fraud scandals under the watch of Democratic Minnesota Gov. Tim Walz. The Somali daycare scandal has turned the state into a national punchline — hundreds of millions in taxpayer dollars stolen in plain sight while Kamala Harris’ favorite “masculine” governor looked the other way.
Now, with Walz stepping aside from this reelection bid, a new contender for “most scandal-plagued governor on the 2026 ballot” has emerged: Democratic Arizona Gov. Katie Hobbs. While Minnesota’s scandals have dominated headlines, Hobbs has been busy compiling a rap sheet that rivals what happened in the Land of 10,000 Lakes. But unlike Walz, Hobbs and her administration are under active criminal investigation.
A Pay-To-Play Scheme Engulfs The Hobbs Administration
The list of Hobbs’ scandals is a mile long and begins at the start of her tenure as governor. At that time, Hobbs allegedly set up a shady slush fund to provide donors with a conduit to buy political favor from her administration. While setting up and managing the fund, Hobbs allegedly and illegally used public resources — like the state’s website — to solicit money for her inauguration. And she also tried to stop the disclosure of the names of those who donated to her inaugural fund.
After immense political pressure, Hobbs finally released the names of the donors. One of the names of the groups on the list was Sunshine Residential Homes Inc., a for-profit company that contracts with the State of Arizona. Sunshine Residential donated $100,000 to the alleged secret fund, which was suspicious enough. But after some additional digging by local reporters, an even deeper level of corruption was revealed — an alleged pay-to-play scheme between Hobbs and the group home.
According to the report, it turns out Sunshine Residential Homes doled out $400,000 to the Arizona Democratic Party, Hobbs’ gubernatorial campaign committee, and her aforementioned inaugural fund. Hobbs and her campaign finance manager even arranged a dinner with the government contractor to meet with the CEO in private.
After making the large donations, Sunshine was granted a 30 percent increase in its rates at a time when the Arizona Department of Child Safety cut loose 16 providers! On top of that, no other standard group home provider received a rate increase. This arrangement ensured that Sunshine Residential would receive millions in additional revenue at the taxpayers’ expense.
Hobbs is currently under criminal investigation for this pay-to-play scheme, but it’s not the only financial scandal we’ve seen during her reign as governor.
Agency Fraud Runs Rampant Under Katie Hobbs
Earlier this year, one of the largest Medicaid fraud scandals in state history came to light when it was discovered that the Arizona Health Care Cost Containment System had been rocked by more than $2 billion in fraudulent billing.
Reports tied the abuse largely to Residential Treatment Facilities — often called “sober living homes” — where patients were allegedly exploited in schemes designed to maximize profits rather than provide care. Investigators allege that some facilities bribed individuals to attend certain programs, then billed Medicaid for services that were medically unnecessary — or never provided at all.
One of the most prominent cases involved Farukh Jara Ali and occurred under the watch of Katie Hobbs. Ali — the Pakistan-based owner of ProMD — was indicted in June for submitting more than $650 million in fraudulent Medicaid claims. Not only does that money come directly from taxpayers, but the whole scheme also exploited Arizona’s healthcare system at the expense of people who need real help.
Arizona’s Medicaid program isn’t the only agency that Hobbs has let turn into a playground for fraudsters. In 2023, the Arizona Department of Housing wired $2 Million to a fake NGO claiming to be providing affordable housing. A scathing report from the Auditor General found that the department lacked basic security protocols, failing to develop any wire transfer procedures that would have stopped the fraud. As of today, none of the scammers that ripped off Arizona taxpayers have been caught.
Sweetheart Deals And A Jobs Program For Insiders
In addition to the agency fraud and her pay-to-play favor factory, Hobbs has developed a reputation that sweetheart deals await close friends and family members of the administration.
In 2024, Hobbs shelled out $700,000 for a new state logo. One of the beneficiaries of the logo re-design project happened to be Kevin Coochwytewa, brother of the CEO of Urias Communications, a marketing agency owned by the then Office of Tourism Director Lisa Urias. She even recommended Coochwytewa for the job, despite the obvious conflict of interest with her firm.
That same year, it was discovered that Hobbs had turned her office into a jobs program for her political friends — expanding her staff by a whopping 40 percent over the previous administration. And then she followed that up this year with a handout of nearly $600,000 in taxpayer money to a former Democrat politician and her assistant for two newly created jobs.
Altogether, Hobbs’ various scandals paint a damning picture of a governor who has blurred the line between public service and personal politics at every turn. While Tim Walz’s fraud crisis may have shocked the nation, the controversies surrounding Katie Hobbs cut closer to the governor’s office itself — donor favoritism, insider deals, massive fraud, and an alleged pay-to-play scheme currently under criminal investigation.
With Tim Walz pulling out of his gubernatorial race, Hobbs stands alone as the most scandal-plagued governor on the 2026 ballot. Arizona voters can’t afford to tolerate another four years of her corruption.
Scot Mussi is President of the Arizona Free Enterprise Club, a nonprofit advancing pro-growth, limited government policies in Arizona. He has played a key role in major policy victories, including historic income tax cuts, expanded school choice, and election integrity reforms. Mussi has nearly 20 years of experience in Arizona public policy, serves on the boards of the AZ Liberty Network and AZ Freedom Foundation, and lives in Gilbert with his wife and four children.
The views and opinions expressed in this commentary are those of the author and do not reflect the official position of the Daily Caller News Foundation.
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