Original Article Sergeant linked to fraud still on sheriff's payroll Dennis Wagner The Arizona Republic Oct. 28, 2005 12:00 AM In early August, Maricopa County Sheriff's Sgt. Leo Driving Hawk Sr. stood before a U.S. District magistrate in Phoenix and confessed to a felony as part of a plea agreement with federal prosecutors. The 16-year law officer admitted to his role in a $78 million swindle at his father's bank, where he moonlighted as vice president. Ten weeks later, Driving Hawk, a member of Sheriff Joe Arpaio's Internal Affairs Division, continues receiving a government paycheck while on administrative leave. Jack MacIntyre, an aide to Arpaio, said the sergeant still is collecting his $60,000 annual salary because the conviction has not been accepted by a judge and an internal investigation is unfinished. "We want to make sure we cross all the t's and dot all the i's so there's no lawsuit that costs even more," MacIntyre explained. Driving Hawk could not be reached for comment. He faces a maximum three years in prison. However, under terms of a plea agreement, the U.S. Attorney's Office is expected to request probation without time behind bars. In return, Driving Hawk would have to cooperate in future prosecutions. Sentencing is scheduled in April. Grounds for firing Law enforcement policies on termination vary from agency to agency but do not limit firing to employees who have been convicted of a felony. Officers may be dismissed for insubordination, policy breeches and ethical violations. Samuel Walker, a criminal justice professor at the University of Nebraska at Omaha who runs a Web site and has written books on police accountability, said a signed plea agreement should be grounds for firing. "Certainly, if he has admitted he's guilty, that would be sufficient," Walker said. "He probably should be terminated - and immediately." Arizona law officers must be certified by the state Peace Officer Standards and Training Board, which is empowered to strip certification from those who violate legal or ethical standards. An officer who commits a felony faces automatic decertification, and there is no legal reason to await formal conviction before termination, said Bob Forry, the agency's compliance manager. Forry added that enforcement agencies routinely fire officers for misconduct without awaiting a conviction or requiring one. Arpaio critics say Driving Hawk remains on staff because he knows about workings inside the Sheriff's Office. Over the past decade, at least a dozen of Arpaio's former employees and campaign rivals have filed suit alleging that the sheriff used his deputies to wage retribution against political enemies. Union leaders were investigated, demoted and fired or forced out. Opposing campaign figures were placed under surveillance, investigated and prosecuted. And as a member of Internal Affairs and the Threat Assessment Unit, Driving Hawk has insider knowledge about why and how the Sheriff's Office acted, critics say. MacIntyre said Driving Hawk was never in the sheriff's "inner circle." Personnel files obtained under Arizona public records law suggest otherwise. A job description says Driving Hawk was "hand-selected by the sheriff and/or the chief deputy" to serve in the Internal Affairs Division and communicated with the sheriff regularly "on sensitive investigations and other matters, including security issues." The files also show he was "one of the few supervisors who routinely reports directly to the sheriff." Federal officials publicly linked Driving Hawk with investment fraud for the first time 3 years ago when the Securities and Exchange Commission named him in a lawsuit. MacIntyre said personnel records contain no mention of that case because sheriff's officials did not learn of the allegations until this past July. However, a sheriff's spokesman told The Arizona Republic in June 2003 that Arpaio was aware of the SEC complaint. Nevertheless, MacIntyre said an internal probe was not launched until five weeks ago. It has not yet been completed. Driving Hawk's personnel file describes an accomplished sheriff's employee who has received numerous commendations and promotions. The most recent evaluation, done last January, praises the sergeant and approves a pay increase. Ponzi scheme Driving Hawk's father, Edward Sr., is a former chairman of the Rosebud Sioux tribe in South Dakota and past president of the National Congress of American Indians. In 1992 Edward Sr. founded the United States Reservation Bank and Trust, most recently based on the Salt River Reservation. Four years ago, the SEC lawsuit says, the bank became part of a Ponzi scheme, in which investors were lured with guaranteed profits of 20 percent and early clients were paid with money from those who followed. Edward Sr. has filed court papers blaming others for the alleged fraud and claiming his son was not a part of it. So far in the ongoing probe, charges have been lodged only against Leo Driving Hawk. Court papers say he became vice president at his father's bank in December 2001 and discovered the investment scheme. Before that, personnel records show, Leo juggled his hours at the Sheriff's Office to work at the bank. Two years ago, Leo told the Republic he didn't understand the business and was just trying to help his dad. However, plea papers contain an admission that he failed to notify authorities of fraud and, in at least one case, lied to a client who had invested $1 million. The SEC complaint says Reservation Bank raised $78 million from 20 victims "while under the control of Ed Driving Hawk and Leo Driving Hawk." It also says Leo was a principle in companies that siphoned more than $2.5 million from the bank "for no apparent consideration." Marshall Gandy, an SEC lawyer handling the civil case, said Leo received $216,258 and other money was funneled to the family's racehorse and casino-development businesses.