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Arizona Republic reporters discuss the Johnson Utilities bribery trial, Ducey’s re-election campaign and a lawsuit against opioid manufacturers.
Thomas Hawthorne, Arizona Republic

After years of overflowing sewers, noxious fumes and other problems, a judge on Thursday recommended that state regulators take control of Johnson Utilities water company away from its founder and put it in the hands of an emergency manager.

The water and sewer company with about 30,000 customers in the San Tan Valley area has faced hundreds of complaints from customers this year alone, including for low water pressure that forced at least one school to flush toilets with bottled water.

Last week, Queen Creek Fire Chief Vance Gray testified that the company’s water issues represent “an immediate danger to the health and safety” of people in the area because the company doesn’t have enough water to fight fires.

Administrative Law Judge Sarah Harpring reviewed mountains of evidence in the case and  issued a 326-page recommendation Thursday that concluded regulators are justified and authorized to appoint their own manager . 

“(Johnson Utilities) has failed to provide service and equipment that is in all respects just, reasonable, safe, proper, adequate and sufficient,” Harpring wrote.

The five elected Corporation Commissioners can vote on the judge’s recommendation as soon as July 24, after giving the water company a required 10 days to respond to the order.

Company officials have fought the move to install a new manager and told The Arizona Republic last month that the company has invested heavily in system improvements.

Johnson Utilities’ attorney and manager could not immediately be reached after the judge’s recommendation was released.

Management contract likely an issue

One issue likely to be explored by the commissioners, should they order a new manager, is the management contract that siphons half the revenue from the utility to companies run by Johnson’s adult children, Chris and Barbara Johnson.

George Johnson was the only employee of Johnson Utilities. His company pays about $15.5 million a year to a company called Ultra Management, run by Chris and Barbara.

Ultra also has no employees, and pays Chris Johnson and Barbara Johnson for their role as managers.

Ultra pays yet another company, Hunt Management, also run by Chris and Barbara, to provide about 100 employees who run the utility.

“Because of the amount of revenues going to Ultra, (Johnson Utilities) has not adequately maintained and repaired its systems and has not sufficiently reinvested in its systems,” Harpring wrote.

Jury deliberating in bribery trial

Meanwhile, in an unrelated criminal case, the jury has met for three days to consider whether George Johnson is guilty of conspiracy and bribery. He and former utility regulator Gary Pierce, Pierce’s wife Sherry, and lobbyist Jim Norton are on trial in federal court.

Prosecutors said that Johnson paid bribes to Pierce in exchange for his support of rate increases at the water company that added about $10 a month to customer bills in 2011 and 2012.

Prosecutors said the bribes were paid through a fake job that Sherry Pierce had, working for the wife of Jim Norton.

The defendants maintain that Sherry Pierce’s work was legitimate.

Jurors can meet July 17, 18, 23 and 24 this month, if needed, to reach a verdict.

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Former Arizona Corporation Commission Chairman Gary Pierce and Johnson Utilities owner George Johnson were indicted on charges of bribery and conspiracy.
Wochit

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