AG: Maricopa County assessor illegally flew pregnant women to U.S.; 8 found in Mesa house

JESSICA BOEHM ,  URIEL J. GARCIA ,  LILY ALTAVENA   | The Republic | azcentral.com

Maricopa County Assessor Paul Petersen, in his private-sector career as an adoption attorney, arranged for 28 pregnant women from the Republic of the Marshall Islands to travel to Arizona to place their children for adoption over the past four years, Arizona Attorney General Mark Brnovich said Wednesday. 

It is illegal for Marshallese women to travel to the United States for the purpose of adoption.

It's also illegal to scam Arizona's Medicaid system, which Brnovich alleges Petersen did when he helped these women illegally access state-funded medical benefits to the tune of $814,000.

Petersen and a co-defendant, Lynwood Jennet, were indicted in Arizona on Monday on 29 counts of fraudulent schemes and three counts of conspiracy, theft and forgery.

Eight pregnant Marshallese women were found in a residence in Mesa on Tuesday night when Department of Public Safety troopers executed a search warrant, according to DPS Director Frank Milstead. There are no plans to charge the women, but it unclear what will happen to their adoption plans, Milstead said.

A neighbor, Bella Perez, said she has lived in the neighborhood for about a year and saw “a lot of” pregnant women and women with children coming in and out of the fourplex. She thought maybe they were all part of a family living together, she said.

When she saw several law enforcement officers in the area Tuesday, she thought it was a drug bust. Then a reporter knocked on her door, and she found out what had happened.

"That’s crazy, that’s like a lot. How can you do that to kids?” Perez said of the allegations against Petersen.

“It’s crazy how a neighbor of yours is doing all those things and you don’t even know.”

The charges came out of a multistate investigation involving the Arizona Department of Public Safety, Homeland Security Investigations and the Utah Attorney General’s Office, according to the Arizona Attorney General's Office. 

The Utah attorney general charged Petersen with 11 other felonies, including communications fraud, human smuggling and sale of a child.

He also faces 19 federal charges, filed in the U.S. District Court for western Arkansas, related to allegations he illegally brought four people to the United States who continue to reside there.

An investigation by Honolulu Civil Beat last year questioned the legality of the adoptions Petersen administered.

Petersen, who is member of the Church of Jesus Christ of Latter-day Saints, served his church mission in the Republic of the Marshall Islands, according to court documents.

The Republic of the Marshall Islands is located near the equator in the Pacific Ocean between Hawaii and the Philippines. It has a population of about 53,000 people.

The Arizona charges against Petersen

The Arizona Attorney General's Office investigation focused on Medicaid fraud. The indictment alleges Petersen illegally obtained medical services for the women, falsely claiming the women were Arizona residents.

Milstead said DPS began investigating Petersen's adoption practices in December after a state trooper was tipped off by a friend who considered adopting through Petersen's office but was concerned about the legitimacy of the adoption process. 

The Arizona case involves actions dating to November 2015, but according to court records, Petersen has arranged Marshallese adoptions since 2005.

Milstead said he expects the DPS to recommend other charges to the Attorney General's Office. 

According to court records, the 28 pregnant women identified by Arizona investigators followed a similar adoption pattern: 

• Petersen paid individuals in the Marshall Islands to help locate pregnant women interested in adoption. He then matched them with adoptive families in the U.S.
• Petersen paid the pregnant women $1,000 per month while they were pregnant in the U.S. and covered other expenses. Some birth mothers were promised up to $10,000 to place their unborn child for adoption. 
• He charged the adoptive families about $35,000 per adoption, claiming this included the birth mother's medical costs.
• Petersen sent money to the pregnant women in the Marshall Islands to purchase passports. 
• Petersen paid for the women to fly to Phoenix and stay in a house he owns for the duration of their pregnancy. In some instances, the women gave birth within days of arriving in Arizona. In other cases, they were in the state as long as six months. 
• Shortly before the women gave birth, Petersen or his associates assisted her in signing up for Medicaid benefits, falsely stating they were Arizona residents. 
• After the women gave birth and the adoption was complete, Petersen paid for them to fly back to the Marshall Islands or to other states — most often Arkansas.  

Brnovich said Wednesday that his office believes most of the children born in Arizona were adopted to out-of-state families. 

Petersen is accused in the indictment of illegally obtaining services from Arizona's Medicaid system for the women, falsely claiming the women were Arizona residents. Petersen is accused of bilking the state out of more than $800,000, the Arizona Attorney General's Office said Wednesday.

"The scheme in this case fraudulently represented the pregnant women in question were residents of Arizona in order to obtain medical services by the Arizona Health Care Cost Containment System because without residency Arizona Health Care Cost Containment System services cannot be obtained," the indictment reads.

Brnovich said the Arizona investigation focuses solely on the alleged fraud to the state's Medicaid system and stressed that his office was not pursuing families who adopted children through Petersen's law office. 

"It's unfair to the adoptive parents, and it's also unfair to the hard-working Arizona taxpayers," he said.

According to his website, Petersen charges $40,000 per adoption.

Petersen also serves as general counsel for Bright Star Adoptions, an agency that operates out of the same building as his law office, according to his website. 

Linda Henning Gansler is listed on the website as the director of Bright Star Adoptions. A woman who identified herself as "Linda" answered the agency's phone Wednesday but would not comment on the agency's relationship with Petersen. 

After Petersen was arrested, prosecutors were concerned about a flight risk. Petersen's cash bond was set at $500,000 in his initial court appearance Tuesday night.

He was asked to surrender his passport at his next court appearance, which was scheduled for Oct. 15.

Three charges against him, conspiracy, theft and one of fraudulent schemes, are higher-level Class 2 felonies. The forgery charge is a Class 4 felony, and the other 28 fraud changes are Class 5 felonies.

An attorney for Petersen did not respond to a request for comment. 

Utah case: 'The commercialization of children'

The Utah attorney general alleged that Petersen recruited more than 40 pregnant women from the Marshall Islands over the past three years and transported them to Utah, where they were paid to give up their children for adoption in the U.S.

Petersen is facing 11 felony charges in Utah.

The state’s investigation centered on claims of human smuggling, Sean Reyes, Utah’s attorney general, said during a news conference Wednesday.

"The commercialization of children is illegal and the commoditization of children is simply evil," he said.

Callers to the state attorney general's human trafficking tip line in October 2017 reported suspicious births and adoptions involving Marshallese women in Utah hospitals, sparking the investigation, Reyes said.

The agency eventually reached out to other states.

Leo Lucy, chief investigator with the Utah attorney general’s office, called Petersen’s operation a “large-scale adoption fraud scheme.”

Between December 2016 and September 2018, a little more than $2.7 million was deposited into a bank account Petersen gave adoptive families for wire transfers, according to Utah court documents. Most of the transfers included notes indicating they were payments for adoptions. 

Two adoptive parents in Utah told investigators that they visited a birth mother at a house owned by Petersen in a Salt Lake City suburb, according to the court documents. They saw 15 or more pregnant women in the house; some appeared to sleep on mattresses on a bare floor, court documents said. One of the parents remarked to the investigator that Petersen's adoption operation seemed like a "baby mill." 

Prosecutors in Utah are not questioning completed adoptions, Reyes said. His office does not anticipate any overturned adoptions as a result of the case.

“We have no interest ... in interfering in any adoptions that have taken place,” he said.  

However, investigators noted that some adoptions through Petersen’s firm are still pending and people involved in those adoptions are “very concerned.”

It’s unclear how Utah state agencies will handle the pending adoption cases.  

Since news of the charges broke, Lucy said the attorney general’s office has received more than 30 phone calls, many from potential victims that could lead to further investigation and possibly more charges. The office’s hotline is 801-839-5640.  

Reyes said those victims included birth mothers, children and adoptive parents.

Reyes said that he believes prosecutors will successfully prove the charges in court.  If the charges are found to be true, he said it would be extremely disappointing for the people of Maricopa County, who elected Petersen. 

Arkansas U.S. Attorney: 'Purest form of human trafficking'

The U.S. Attorney’s Office for the Western District of Arkansas detailed the activities of Petersen and his co-defendant there, Maki Takehisa. Authorities characterized their operation as a scheme to defraud and take advantage of Marshallese women and families to make quick money.

The indictment says Petersen would offer to pay up to $10,000 to pregnant Marshallese women to travel to the U.S. to give birth to their babies and give them up for adoption.

“Since 2014, he (Petersen) used his law license and expertise to prey not only on the women of the Marshall Islands but on the families of Arkansas who wanted nothing more than to add to their families,” said Duane Kees, U.S. Attorney for the Western District of Arkansas, at a news conference in Springdale, Arkansas, which was streamed online.

Takehisa is a citizen of the Republic of the Marshall Islands.

According to federal court documents, Petersen and Takehisa had offered to pay at least four Marshallese women to give up their babies for adoption in Arkansas.

Kees said Petersen, with Takehisa's help, had total control of the women once they arrived in Arkansas. Kees said the women were placed in a single-family home and were sometimes confined to a room.

“He controlled what they were going to do and when they were going to do it,” Kees said.

The 19-count indictment filed in U.S. District Court in the Western District of Arkansas charges Petersen and Takehisa with conspiracy to smuggle the women for private financial gain; aiding and abetting the smuggling; wire fraud; mail fraud; conspiracy to commit visa fraud; and conspiracy to commit money laundering.

Petersen and Takehisa also would help the women lie to immigration officials about why they traveled to Arkansas, the indictment says.

As part of the scheme, Petersen would mail and file false adoption court documents in Polk and Washington counties in Arkansas, the indictment alleges.

To cover up his role, Petersen wired money from an Arizona bank account to someone else’s bank account in Arkansas, the indictment says.

Kees said at the news conference that at this point, there’s no evidence the women are seeking to be reunited with the babies. He said the women were not told to get pregnant. They were approached after they were pregnant, he said.

Kees said the women described “these ordeals as being treated as property.”

“Make no mistake,” he said, “this is the purest form of human trafficking.”

Kees estimated between 30 and 35 adoptions a year were conducted under fraudulent circumstances.

If Petersen is found guilty of all the federal charges in Arkansas, he could be sentenced up to 315 years in prison and be imposed a $5 million fine, Kees said.

A criminal complaint with a probable cause statement details Takehisa’s alleged role.

In April 2017, the FBI had received a tip that Takehisa had approached the women, who were not identified in court documents, in the Marshall Islands. U.S. State Department agents traveled to the Marshall Islands to interview the women, two of whom said Takehisa had offered to pay them $10,000 to travel to the U.S. and consent to an adoption. The complaint says Takehisa would take out the money from a bank account in her name. She also would pay for the women's travel arrangements.

Takehisa paid a woman, identified by the initials RMJ, $6,000 after she gave birth to a baby boy on July 2, 2014, at the Willow Creek Women’s Hospital in Johnson, Arkansas, the probable cause statement says.

The adoption was completed six days later, the court document says.

Another woman, identified as DJ in court documents, told the agents she lived in a house owned by Takehisa in Springdale where 10 other people lived, the complaint says.

She told the agents she didn’t have a room or a bed to sleep in. After she gave birth, Takehisa paid her $4,000 in cash at the hospital “on the day the baby was born,” the complaint says.

Adoption-law practice spans 15 years

Petersen is in his second term as assessor. He won a special election in 2014 to replace Keith Russell in the job and was reelected in 2016.

Before his election, Petersen served nearly eight years in the Assessor's Office working as the assessor's representative at the Arizona Legislature and as the agency's public information officer, according to his biography on the county assessor's website.

Petersen is an active member of the Maricopa County Republican Party, the Arizona Republican Party, and a precinct committeeman in Legislative District 25, according to the bio.

Petersen said his Mesa-based law practice focuses on "helping people all across the country in their effort to adopt children" and has done so for nearly 15 years.

He is a 2002 graduate of the Sandra Day O'Connor School of Law at Arizona State University.

Reach the reporter at jessica.boehm@gannett.com or 480-694-1823. Follow her on Twitter @jboehm_NEWS. 

Includes information from Arizona Republic reporter BrieAnna J. Frank.