How the Arizona governor stepped in to help a GOP donor who made a fortune on tax refunds
In 2016, G. Brint Ryan needed a favor from Arizona Gov. Doug Ducey.The Texas multimillionaire, who runs a firm that helps clients reduce their tax bills, wanted one of his top employees placed on an Arizona board that decides property valuations. That board has the power to slash real estate taxes paid by Arizona businesses – including businesses that are Ryan’s clients.Susan Bittick, an attorney at Ryan’s firm, knew how to make that happen.On May 9, according to emails obtained by The Arizona Republic, part of the USA TODAY Network, Bittick reached out to one of Ducey’s top lieutenants – Danny Seiden – at the time the governor’s deputy chief of staff.“Danny,” she wrote, “Brint Ryan has asked me to arrange a call for him with Governor Ducey. He wants to discuss a potential appointee to the State Board of Equalization.”Seiden connected Bittick with a staffer who handled scheduling for such calls.Jeffrey Nolan, who heads the Scottsdale, Arizona, office of Ryan LLC, was already familiar with the Equalization Board. He was listed as a tax consultant on hundreds of appeals filed in 2016 and 2017 on behalf of property owners seeking to get Arizona’s Maricopa County to agree that its property assessments had been made in error and were too high. When the county doesn’t grant a reduction, the owner can then take the appeal before the Equalization Board for consideration.Nolan’s boss, G. Brint Ryan, now wanted Nolan to land a seat on that board. It wouldn’t be the last favor Ryan would ask from Ducey during his six years in office, nor the most significant. The powerful Texas businessman also needed the governor’s help persuading the Department of Revenue to abandon legal action against one of his clients – Carter Oil – and to refund roughly $12,000 in sales taxes the Arizona company paid for diesel fuel it sold to a mining operation.But it wasn’t just the legal settlement and the $12,000 for his client that Ryan was after.Revenue Department officials told The Arizona Republic that if they acquiesced to Ryan’s requests, it would set a precedent whereby any company that paid sales taxes on diesel fuel sold to mining operations could claim a refund – leading to an outflow of more than $100 million from Arizona’s treasury – from which Ryan LLC could claim millions in commissions.Favors like these might cost Arizona’s taxpayers, but attending to the needs of wealthy businessmen with deep political connections to the Republican Party was in Ducey’s long-term interests.For any Republican governor with his eye on the White House, Ryan would hold a key to one of the most important states in the Electoral College – and the funds to help win it. “If Ducey has presidential aspirations, he needs to stay in the good graces of a person who could finance a national run,” said Robert Maguire, research director for the Center for Responsive Politics in Washington, D.C. “That is symptomatic of this corrupting political system.” See how Gov. Doug Ducey connects to other key players in this investigation.Through his spokespeople, Ducey declined to comment.In an email message, Ryan said confidentiality agreements prohibited him from saying anything. But he added that he wished he could because “from some of the questions you have posed to my staff, you apparently have a very out-sized impression of my personal and professional influence.”Helping Ryan did not happen as quickly as Ryan or Ducey might have liked.In the case of Nolan, placement on the Equalization Board took more than a year, apparently because Seiden initially informed Bittick that the board’s structure might be changed. When that didn’t happen, Bittick persisted.“At that time, you told me that the Governor was considering reorganizing – or possibly even eliminating – that board,” Bittick wrote. “What is the status of that? Jeff Nolan did apply but he contacted me today and said he never received any response to his application.”Emails show Seiden again worked to set up a call between Ryan and the governor, and this time, Ryan got what he wanted. In 2017, Ducey appointed Nolan to the Equalization Board. Ryan LLC spread the news in an internationally circulated statement on Aug. 11.“Jeff Nolan’s wealth of experience will provide valuable insight to the board on assessing and valuing Arizona properties,” said Ryan, according to the release. “We are proud that Jeff has been asked to play such an important role for setting fair valuations that safeguard property owners and taxpayers across the state of Arizona.”Several property tax appeals listing Nolan as the agent were filed as late as June 22, 2017. Six days later, Nolan took the oath to become a board member.Despite the fanfare about his appointment to the board, it is unclear how Nolan put his experience to use.He served for nearly eight months, but the board’s chairman, George Shook, told The Arizona Republic that Nolan never sat in on a hearing. In 2018, Nolan resigned, leaving his seat empty. He did not respond to multiple requests for comment.Meanwhile, Ryan LLC forged ahead with its campaign to persuade top officials at the state’s Revenue Department to drop legal action against one of Ryan’s clients and approve tax refunds on diesel fuel paid by mining companies.Unlike the request to place Nolan on the Board of Equalization, there is no record of a personal phone call with Ducey about supporting this effort. But there was an email – again from attorney Bittick – that showed just how easy it was for Ryan LLC to gain access to Ducey, his key lieutenants and top officials at Arizona’s Department of Revenue. That email emerged from a meeting at the Republican Governors Association, which would become Ducey’s springboard into national politics. On Dec. 5, 2016 – shortly after Ryan filed a lawsuit in Arizona Tax Court seeking the first in what could be the $100 million flood of tax refunds – Bittick tapped out a few lines to Carlton Woodruff, at the time the chief deputy at Arizona’s Revenue Department. “I had breakfast with Governor Ducey at the RGA meeting last month, and he suggested I email you directly to request a meeting,” Bittick wrote. “I have had the good fortune of being able to visit with Governor Ducey many times about ways to improve the Department of Revenue.”The email captured essential elements of Ducey’s approach to running the government of Arizona. Many of his early days in office focused on the improvement of state government by reducing its staff and limiting its scope.His efforts also orbited around the RGA – Republican Governors Association – a conservative fundraising juggernaut that Ducey now runs, with national meetings that connect policymakers with moneymakers. Those efforts often point toward outcomes that benefit people who benefit Ducey. the biggest prize in the Republican primary. – Mark Jones, political science professor at Rice University https://www.azcentral.com/in-depth/news/local/arizona-investigations/2021/07/14/how-doug-ducey-stepped-in-to-help-texas-tax-refund-millionaire/7621675002/”>Copy textCopy this quote’s textThe quote has been copied
Mark Jones, political science professor at Rice UniversityIf anyone has presidential aspirations, Texas is almost the biggest prize if not the biggest prize in the Republican primary.But Ryan was special.“Presidential hopefuls love people like Brint Ryan, who put mountains of cash behind them,” said Andrew Wheat, who works for the liberal-leaning Texans for Public Justice watchdog group. “If anyone has presidential aspirations, Texas is almost the biggest prize if not the biggest prize in the Republican primary,” said Mark Jones, who has monitored Texas politics for two decades and is a political science professor at Rice University in Houston.“From Ducey’s point of view, Ryan can open a lot of doors for him that would be difficult to open without Ryan’s help, especially in a state where two leading candidates are looking to run for president in Gov. Greg Abbott and Sen. Ted Cruz,” Jones said. “It will be difficult to run a national campaign as a Republican if you don’t have a strong base in the Lone Star state.” Ducey’s plans for after his second term as governor, which ends in January 2023, are the subject of ongoing political speculation. After the death of longtime Sen. John McCain, some wondered whether Ducey would appoint a placeholder to the seat, and ultimately run for it himself. Instead, he appointed Jon Kyl, the retired Arizona senator who was, at the time, ushering Brett Kavanaugh into position for confirmation hearings for a Supreme Court seat. Kyl accepted the Senate appointment long enough to vote to confirm Kavanaugh, then announced he would resign – giving Ducey a second opportunity to try to claim the seat. Ducey chose Martha McSally, who had just finished running against Kyrsten Sinema for Arizona’s other Senate seat. McSally lost, making her the first Republican Senate candidate this century whom Arizonans voted to reject. Ducey appointed her nonetheless.To quash any remaining speculation that Ducey had his eye on the seat, he later told the New York Times, “I’m not running for the United States Senate. It’s a no.” The speculation turned toward something bigger: a possible run for president. While Ducey avoided cameras during the later months of his administration’s handling of the coronavirus pandemic, he was more eager to appear on TV talking about his views of a border crisis and to blast the new Biden-Harris administration. President Donald Trump meets with Arizona Gov. Doug Ducey in the Oval Office of the White House in Washington, D.C., on Aug. 5, 2020. Also pictured is Ducey’s Deputy Chief of Staff Gretchen Conger (left) and Dr. Deborah Birx (right), White House coronavirus response coordinator.Andrew Harnik/Associated PressHe joined former Vice President Mike Pence’s “Advancing American Freedom” political advocacy group on April 7, an organization designed to help the political future of Pence and his allies. The group includes a list of heavy hitters from the Trump administration.On May 26, he appeared before a national TV audience as conservative media host Sean Hannity asked Ducey and other GOP governors about COVID-19 funding, immigration and crime. Ducey took the opportunity to again bash Joe Biden on the border situation, and he took a swipe at California’s current and former Democratic governors, claiming their policies helped him improve Arizona’s economy because of the “lack of opportunity” in the Golden State. Over and over, Ducey uses California as a foil to contrast his brand of tax and regulation slashing economics to his western neighbor’s more restrictive, higher tax business climate. Though Ducey has worked to elevate his national image on TV, no presidential candidate wins a nomination without enough campaign contributions to fund a national advertising onslaught in the primaries. Ducey has maintained longtime connections to the powerhouse Koch brothers’ organization.More visibly, his chairmanship of the Republican Governors Association in 2021 was recently extended for a rare second term. On the RGA’s website, Ducey touts the “incredible ROI” (return on investment) of the organization’s campaign-funding efforts. Under Ducey’s chairmanship this year, he’s promised to “have record cash on hand” to “expand the majority of Republican governors,” and an RGA spokeswoman confirmed Ducey has approached major donors for Recall Newsom! RGA Action, an organization that can raise and spend unlimited amounts of money for the recall effort against California Gov. Gavin Newsom, a Democrat.In Arizona, since being elected governor in 2014, Ducey has raised at least $43 million for his political campaigns and related political causes in the state, according to campaign finance records compiled by The Arizona Republic.And if the role of the RGA is to connect aspiring politicians with interested wealthy donors, it’s no wonder that both Ducey and people from Ryan LLC ended up in the same room. As conservative Republicans, Ryan, the head of Ryan LLC, and Ducey are ideologically well-matched. Both believe in cutting taxes. Ryan made a fortune saving companies on their tax bills. Ducey, in 2016, ordered the firing of 52 employees in the Department of Revenue where tax auditors and tax collectors work. Soon after, Arizona posted an $83 million drop in revenue from the reduction in tax audits.After the losses, and when Ducey was looking for additional money to increase teacher pay amid statewide backlash and teacher walkouts, he pushed to rehire 25 auditors.In 2014, Ryan and his employees made contributions to Ducey’s first run for governor. Since then, Ryan and key executives have given at least $9,300 to Ducey’s political campaigns, state campaign finance records show.When Ryan LLC faced its own problem in Arizona, it turned to Ducey’s office for help. Ryan’s attorney, Bittick, used her face time with Ducey at the RGA to connect with tax officials. While Bittick said she wanted to talk about improving the Revenue Department, what her firm really needed was a tax refund for Carter Oil. The firm represented Carter Oil, a Flagstaff, Arizona, fuel company that was looking for a small refund for taxes paid on diesel fuel sold to a mining operation.Exterior of Carter Oil Company in Flagstaff, Ariz. April 18, 2021.Michael Chow/The RepublicIf Ryan could win a mere $12,000 refund in this case, it would open the floodgates for other companies to claim similar refunds, costing taxpayers more than $100 million.Despite the hit to state coffers, tax officials said an entire cadre of Ducey’s current and former top aides contacted them to urge changes to the tax rules, which would allow Ryan to win the tax money back.Tax officials said Ducey’s top current and former deputies repeatedly told them the governor wanted the tax refund to happen.“What struck me as odd was how strident they were at the time and desperate for a settlement,” said Grant Nulle, the Department of Revenue’s deputy director. “They would say: ‘We already talked to the governor’s office, and you know what they told you to do.’”But Revenue officials thought changing the rules to issue such a large refund was bad policy, and contrary to long-standing tax law.Over the two years that followed, Ryan would find it needed even more help.As Ryan would later write to his subordinates, he needed to find a way to give Arizona’s tax officials “a swift ass-kicking.” So as Ducey’s second term unfolded – and even as McCain’s death was stirring up questions about Ducey’s political future – the governor’s top deputies would leave their jobs and go to work for Ryan. Contributing: Justin Price, The Arizona RepublicFollow reporter Craig Harris on Twitter @CraigHarrisUSAT.Back to Part 1: The Millionaire. He made a fortune winning tax refunds. To make more, he needed help from Arizona’s governor.Part 3: The Deputies. They were Gov. Doug Ducey’s top officials. Then they went after a huge tax refund.Part 4: The Insider. She was the governor’s deputy chief of staff. The tax deal she pushed would benefit her father’s mining firm.Part 5: The Public Servants. They stood up against a tax refund that would have cost Arizonans. It cost them their jobs.