Arizona DES Ammo Purchases Under Tim Jeffries Not Improper, New Audit Found

About 85,000 rounds of ammunition found at the headquarters of the Arizona Department of Economic Security in 2016 weren't improperly purchased, after all.

Phoenix New Times has learned through public records obtained from DES that a fresh audit completed this year has essentially exonerated the agency's former boss, Tim Jeffries, and his ex-security chief, Charles Loftus, of any improper purchases.

Jeffries and Loftus were slammed in the media in 2016 following Jeffries' forced resignation and the seemingly ominous discovery of dozens of handguns and the large stockpile of ammo.

Jeffries, a strongly religious, eccentric businessman tapped to lead the state agency in 2015 by Governor Doug Ducey, had authorized the accumulation of weapons indirectly as part of a plan to replace contract security guards with guards employed by the state agency, which he said would save the state money and enhance safety for DES workers. Jeffries claims he had no direct input on the purchases.

Much of the ammo ended up stored haphazardly, including boxes piled under a desk in one locked office, making for bad optics. After Ducey forced Jeffries to resign in late 2016 following a series of blunders and bad publicity, Arizona Republic reporter Craig Harris broke the story about the guns and ammo, writing that top officials in Ducey's office and the Arizona Attorney General's Office said they were "shocked" and "surprised" by the find.

The worst criticism came from a June 2017 audit report by the state Department of Public Safety, which stated that two-thirds of the "excessive" amount of ammo had been purchased from businesses not contracted with the state, in violation of state procurement codes. Whoever is responsible could be charged with a misdemeanor crime, the audit stated.

The firearms purchases were valid, but only 25,000 rounds of the ammo stockpile had been purchased through vendors contracted with the state, wrote the 2017 audit's author, DPS Inspector Christopher Luebkin.

However, the May 2, 2018, audit report — which was released to New Times last week as part of a May 15 request for records — flips the script on Luebkin's report.

According to the May audit, a review of receipts and purchase orders for 2016 "identified only 25,000 rounds of reloaded practice ammunition purchased through a non-contracted vendor [italics in original], which was not in violation of the procurement code as these reloaded rounds were not available through a statewide contract."

Not that the purchase of the reloaded ammunition ordered by Loftus, who was fired in 2016 along with four other Jeffries acolytes, was done perfectly by the book. Someone forgot to fill out a required form for the legit purchase, and DES procurement staff still approved it, the May report says.

Loftus, as previously reported, also bought 2,900 rounds of ammunition with his own money in 2016, then got reimbursed by DES. One of these purchases was through an off-contract vendor, but the report doesn't deem it a violation, either.

Loftus said last year that he bought the rounds himself as an "emergency" because new guard trainees had to qualify with their firearms at the range within a few days, and needed the ammo.

The audit gently reminds DES that procurement personnel should study all relevant procedures in order to avoid any violations in the future.

Jeffries, who's seeking $5.1 million in a defamation lawsuit against the state because of Luebkin's report, said on Friday when told of the May 2 audit report that he looks forward to reviewing the report with his attorney, and to the "additional vindication that comes with it."

"The malicious smears regarding 'DES guns and ammo' that were slanderously fed to the Arizona Repugnant one week after my exit were pivotal to the Manufactured Crisis proffered to our Governor resulting in my ouster and the firing of five other good public servants," he said.

A Scottsdale resident, Jeffries ran for state Senate in his district this year, but lost.

Luebkin's 2017 report made several other allegations against Jeffries and Loftus. In one accusation, he quoted a DES employee who claimed that Jeffries and Loftus would take DES ammo and their DES-issued handguns to a shooting range nearly every week to go plinking. Last year, after filing his lawsuit, Jeffries angrily called that allegation "a fucking lie."

"There's a lot of non-truth in there," Loftus said last week. He's suing the state for defamation along with Jeffries, and his notice of claim states that he'll settle for $2.6 million. "We have witnesses who know the DPS investigator lied."

Another lie, Loftus added, was Luebkin's claim that the amount of ammo purchased for the new security team was "excessive." He showed New Times a letter he unearthed in a records request last year in which a top DPS official tells Marcy Cox, chief of staff of DPS' Highway Patrol division, that 85,000 rounds was "normal, if not on the light side" to supply a force of 30 to 50 security officers with ammo for duty and training.

Although Loftus told New Times that Luebkin was "mysteriously canned" three months ago, DPS reports that "Christopher Luebkin is currently a civilian reserve and intermittent employee in good standing."

DES doesn't track current amounts of its ammo, which is now stored at a DPS facility and has been partly depleted in shooting-range training sessions.

The civil suit by Loftus and Jeffries in Maricopa County Superior Court has survived one motion to dismiss by the state and is moving slowly in the system. Barring any settlements, a pretrial conference in the case is scheduled for August 2019.

Tasya Peterson, DES spokeswoman, said "the reports speak for themselves."

She noted in an email that "OIG and its staff are focused on continual process improvements, efficiencies and best practices to represent the citizens of Arizona."

The DES Office of Inspector General, which has a primary focus of rooting out fraud, waste, and abuse in public services, is being run much differently now under new management than it did under Jeffries. Three hundred uniforms ordered for the planned internal security force, for example, had yellow smiley faces stitched on the back.

"Was Tim Jeffries running a state agency or a cult?" asked Republic columnist Laurie Roberts in a piece published after the "chillingly creepy" find of guns and ammo at DES.

New policies and procedures have been put into place under Michael Trailor, the new DES director since May 2017. Inspector General Juan "Jay" Arcellana, fired in 2016, was replaced by Fidencio Rivera, who installed his own chief of security to replace Loftus.

Earlier this year, the agency began a program to try to find state jobs for 21 armed DES-employed security officers who had already been hired under Jeffries' program, but whose security services are no longer wanted at DES. About half had found positions as of April.

Rivera moved this year to strip the weapons from all DES employees who were authorized to carry firearms, including those certified under the Arizona Peace Officers Standards and Training Board. This will put DES security standards back to the way they were prior to 2009, Rivera wrote in an April memo to Trailor.

In an undated letter this year to the roughly 8,000 employees of DES, Trailor and Rivera outlined some of the new security measures to help keep workers safe. They include quality assurance inspections, seminars in offices with "enhanced security concerns," and enhanced training in subjects like workplace violence, interactions with mentally ill clients, and "de-escalation techniques."

(UPDATE: Jeffries terminated his defamation lawsuit in October 2020, complaining that he was unable to admit evidence of what he claimed was Ducey's underlying motive for defaming him.)