MESA, AZ (3TV/CBS 5) - Maricopa County Assessor Paul D. Petersen and a woman have been indicted on fraud charges in connection to his adoption business.
According to the Utah Attorney General's Office, Petersen was arrested in California Tuesday evening.
He was transferred to Maricopa County where he made his initial court appearance. The judge set a $500,000 cash bond and his next court appearance is Oct. 15 where he will be required to relinquish his passport.
According to court paperwork, Petersen and Lynwood Jennet arranged and paid for pregnant women to travel from the Republic of the Marshall Islands to the United States in order to place their children for adoption.
On Wednesday morning, Arizona’s Family obtained new court paperwork outlining the allegations against Petersen.
The paperwork indicates Petersen has been involved in adoptions with Marshallese babies since at least 2005.
According to court documents, between Nov. 30, 2015 and May 30, 2019, investigators identified 28 women from the Republic of the Marshall Islands who gave birth in the Phoenix area and arranged for their children to be adopted through Petersen.
Court paperwork indicates Petersen would pay for the pregnant women to fly to Phoenix and stay for the duration of their pregnancy. While the women were pregnant, they were housed in a home owned by Petersen.
When the women were ready to give birth, they were allegedly assisted in applying for Arizona Health Care Cost Containment System (AHCCCS) benefits. Often times, they were flown back to the Marshall Islands.
Petersen would then allegedly charge each adoptive family $35,000 per adoption. He would also reportedly pay the birth mothers up to $10,000 to place their unborn baby up for adoption.
These same birth mothers were allegedly paid $1,000 per month by Petersen while they were pregnant in the United States. They also had travel, food and cell phones paid for.
AHCCS investigators estimate the current loss to Arizona for the care of the birth mothers to over $800,000.
Petersen is also accused of hiring Marshallese women in Arizona, Utah and Arkansas who helped with the following: Translation for birth mothers, care the birth mothers, helping birth mothers apply for Medicaid, transporting birth mothers to and from appointments and notarizing legal documents.
Arizona Attorney General Mark Brnovich stressed that the investigation is centered on Petersen and his associates, not the adoptive families.
"The people that adopted these children are not the focus of this investigation," said Brnovich.
When asked "What will happen to the kids?" Brnovich reassured the public that "Anyone who has adopted a kid has nothing to worry about."
Utah's Attorney Office said that Petersen is alleged to have "transported over 40 pregnant Marshallese women" into that state over the last three years as part of the scheme.
The Utah Attorney General’s Office added that they worked closely with authorities from Arizona, Arkansas and the Republic of the Marshall Islands in parallel investigations of this scheme.
In Utah, Petersen is being charged with 11 felony offenses, including human smuggling, sale of a child and communications fraud.
The pair lied on legal documents and said the women were from Arizona, the documents said. One reason why is because the Compact of Free Association, passed in the mid-1980s, bans women from RMI to come to the U.S. just for adoption, unless they have a special visa.
They did this, investigators say, through the Law Office of Paul D. Petersen, where Jennet worked.
Jennet and Petersen changed the paperwork for the women so they could get medical care through Arizona's Medicaid system, or Arizona Health Care Cost Containment System (AHCCCS).
The crimes happened between Nov. 30, 2015 and May 30, 2019, investigators said.
Col. Frank Milstead with the Arizona Department of Public Safety said the investigation began in 2018. Milstead says a DPS Trooper's friend had gone to Petersen's law office to look into an adoption. That friend told the trooper he had concerns about the fees and the legitimacy of the operation.
Over the course of the investigation, several search warrants were served.
During the execution of one of those search warrants served Tuesday, investigators discovered eight pregnant Marshallese women staying at one of Petersen's homes.
Both Petersen and Jennet have been indicted on 28 counts of fraudulent schemes and practices, one count of conspiracy, one count of fraudulent schemes and artifices, one count of theft and one count of forgery.
Investigators with the Department of Public Safety raided the home and business of Maricopa County Assessor Paul D. Petersen on Tuesday. They are working with the investigation run by the Arizona Attorney General's Office.
The AG's Office calls it a "multi-state investigation."
According to the Maricopa County Assessor's website, Petersen has been helping people across the U.S. adopt for nearly 15 years.
Brnovich says he expects the investigation to grow and is asking people with information to call in with anything they might know.
Petersen was appointed to the position of County assessor in 2013, won a special election in 2014 and was re-elected in 2016. The county assessor is in charge of property valuation.
A Maricopa County spokesperson said Petersen is still the Maricopa County Assessor and the Board of Supervisors will seek legal matter on incidents.