Money.

"The city’s ethics code prohibits council members or their family members from soliciting or accepting gifts, including employment, from anyone that has business before the city."

A Scottsdale resident has filed an ethics complaint with the city against Councilman Guy Phillips over his involvement in the anti-Southbridge Two referendum drive and anonymous donations made through a GoFundMe page set up to benefit him following a work-related injury.

Resident Mike Norton filed the complaint with City Attorney Sherry Scott last week. 

The complaint alleges payments made by the Committee for the Preservation of Old Town Scottsdale – the PAC behind the petition drive – to Cora Phillips constituted a violation of city code and state law.

The complaint also alleges anonymous donations to a GoFundMe online fundraiser set up by resident Susan Wood to benefit Guy Phillips could constitute similar violations. 

Woods set up the fundraiser, which raised $2,470 of a $20,000 goal, to assist Phillips with medical bills after he injured his leg while working, according to the fundraiser’s still-active webpage.

Cora Phillips, who is married to Guy Phillips, was paid $3,192 and collected approximately 600 signatures in support of putting the Southbridge Two project before voters, according to documents on file with the city.

Norton alleges the payments constituted an illegal gift from the PAC to the Phillips family.

The city’s ethics code prohibits council members or their family members from soliciting or accepting gifts, including employment, from anyone that has business before the city.

Phillips told the Progress on Jan. 16, he did not believe the payments to his wife constituted a violation.

“There would be no way I would know how much she could collect and so it’s absurd to think it would influence my decision. You should be looking at how much developer money the council members got for their yes vote before insinuating I’m the sellout.”

Phillips declined to comment on Norton’s complaint because he had not received a copy.

“I still have not received any complaint filing and if and when I do, I need to review it so at this time I cannot answers questions pertaining to alleged violations,” Phillips said on Jan. 21, the day it was filed.

Norton said in a statement Phillips’ position played a role in his decision to file the complaint.

“When one sitting city council member responds to claims of potentially improper payments by alleging other city council members received ‘more value’ for their opposing votes on Southbridge 2, the entire process of city government has disintegrated in to a debate over who broke the law worse,” Norton said in a statement.  

Norton said he would like to see the allegations vetted by the rules set in the city’s ethics code rather than litigated in social media.

PAC backers have sided with Phillips.

Lamar Whitmer, a consultant working with the PAC, called the allegations of improper payments to Cora Phillips “nonsense”, and stated they were legitimate payments to a paid petition circulator.

“The whole issue sounds ridiculous and spurious and obviously it’s going to be a frivolous complaint,” he said. “Whoever files it will be subject to criminal and civil sanctions from the city, so good luck.”

Petition sheets on file with the City Clerk show Cora Phillips gathered approximately 603 signatures.

She was paid $3,192 by the PAC through Dec. 31, according to campaign finance filings.

This equates to about $5.29 per signature – though this number could change if Phillips received additional payments after Jan. 1. Those payments would be reported on the PAC’s next finance filing in April.

The Norton complaint questioned why Cora Phillips was paid more than other signature gatherers.

“The rate of payment to Cora Phillips also vastly exceeded the amount paid any other signature gatherer…Paying Cora Phillips a preferential rate is an economic value not provided to others, and therefore a violation of State Statutes and Scottsdale Code,” according to the complaint.

The PAC paid three other individuals to gather signatures: Howard Deming ($68.28), Shirley Cordiasco ($370) and Susie Wheeler ($75). The PAC also paid $58,496 to Diane Burns of Apache Junction, who runs a professional petition gathering company and represented multiple individuals.

Whitmer confirmed Phillips was paid per signature, but declined to provide a specific methodology for how it determined how much each circulator was paid.

Old Town PAC Treasurer Dewey Schade, who helped write the city’s ethics code over a decade ago, said he had no problems with the payments to Cora Phillips.

Scottsdale resident Jim Derouin, a lawyer who also helped craft the city’s ethics code in 2006, said Phillips should have filed a conflict of interest form with the city after his wife received a payment from the PAC.

The city’s ethics code requires council members to immediately refrain from “participating in any manner” in the decision-making process as soon as a conflict arises.

They also have to declare conflict in a form filed with the city clerk within three days. It is then up to the city attorney to decide if Phillips has to recuse himself from future council actions.

“I am not saying (Cora Phillips) should not have done it, but I am saying is once she did get the money, which was attributed to him by the ethics code, he has to declare he had a conflict and then he has to work out to the attorney how broad the prospective conflict of interest has been,” Derouin said.

Derouin said the proceeds from GoFundMe campaign could potentially pose a conflict of interest as well.

Through Jan. 21, the campaign raised a total of $2,470 via 18 individual payments of between $25 and $300 each. All 18 donations were made anonymously.

The Norton complaint alleged the GoFundMe campaign could have been used to funnel payments from the Old Town PAC to Phillips, which would constitute a violation of city code and state law.

“It is my belief if the anonymous donors are disclosed it will be found many are also supporters of the ‘Save Old Town’ movement and POTS PAC,” according to the complaint.

Wood, the resident who set up the GoFundMe page, said she consulted with Scottsdale City Clerk Carolyn Jagger prior to setting up the GoFundMe in order to ensure no violations occurred.

“We actually went to Carolyn Jagger, the city clerk, to find out if it was okay to do so and then she gave us proper structure to help us set it up,” Wood said.

Wood said the clerk gave her several stipulations to avoid a conflict, including ensuring no money was paid directly to Phillips.

Wood said all monies were deposited into her bank account and then payments were made directly to Phillip’s healthcare provider or insurer.

Even if the payments were reserved for medical expenses, they could potentially pose a violation if donations came from parties affiliated with the Old Town PAC.

“If one of those people who are anonymous ends up being an officer or a principal in the POTS PAC, then you have a gift situation and a conflict of interest,” Derouin said.

Schade told the Progress he was not aware of the GoFundMe fundraiser for Phillips.

Derouin said the identities of the donors should be revealed to determine whether or not a conflict of interest existed.

Payments were made to the GoFundMe campaign prior to the city council’s Dec. 4 vote, to approve Southbridge Two, meaning a conflict would have existed prior to the vote if one of the anonymous donors is connected to the PAC.

Phillips voted no on the project, which narrowly passed on a 4-3 vote.

If any donations came from individuals with ties to the Old Town PAC, Phillips should have filed a conflict of interest form with Scott, the city attorney, who would then decide if any recusals were necessary, Derouin said.

“We need the facts,” Derouin said.

Wood said she did not know if any members of the Old Town PAC donated to the campaign, though she admitted to having access to the names of donors.

 “I don’t really know who they are,” Wood said. “I mean, I know their names, but I don’t know if they personally (donated).”

However, it appears Wood became well acquainted with members of the PAC during the petition drive.

According to multiple public posts on her Facebook page, she was an active participant in the PAC’s referendum drive and posted photos at the PAC’s headquarters in downtown Scottsdale in December.

Whether or not the GoFundMe donations constitute a conflict of interest, Derouin said they could result in campaign finance violations, because Phillips declared himself a candidate for the 2020 city council election in Sept. 2019, before the GoFundMe was set up.

Derouin said the anonymous donations could be used to circumvent reporting requirements by funneling campaign donations through the crowdfunding website.

Wood insisted all donations through the Phillips GoFundMe were directed to medical expenses.

Still, Derouin argued allowing one candidate to benefit from anonymous crowdfunding donations is a slippery slope.

“I would submit to you if this is okay for Guy, then it’s okay for the  other 10 people running for city council to set up GoFundMe accounts, run contributions through them, make them anonymous, and then you figured out a new way to defeat campaign finance law,” Derouin said.

The next steps in the complaint process are outlined in Scottsdale’s city code.

The city attorney keeps a rotation of 10 to 12 ethics reviewers to handle complaints filed against the mayor or city council. Each year, the city attorney nominates a new person from the group to serve as the city’s independent ethics reviewer.

The reviewer has 15 days to make a recommendation concerning the complaint, which can include dismissing the case if it is found to have no merit.

If the reviewer finds the complaint has merit, they can refer it to applicable law enforcement agencies if there is an alleged violation of state or federal law or refer potential ethics violations to a three-person panel made up of individuals in the city’s independent ethics pool.

The ethics panel would then have 60 days to review the case and report back to the council. The council must then consider the report in a public meeting and either accept or reject the findings.