Paul Petersen sentenced to 5 years in Arizona prison following a joint financial fraud HSI and DPS investigation

PHOENIX — Former Maricopa County Assessor Paul Petersen has been sentenced to five years in state prison on March 19, for running an adoption scheme that was unlawfully paid for by Arizona taxpayers following an investigation by Homeland Security Investigations (HSI) and the Arizona Department of Public Safety (AZ DPS). This sentence will be in addition to his federal sentence.

Through his adoption practice, Petersen brought pregnant women from the Marshall Islands to the U.S. to give birth, paid for unlawfully by Arizona taxpayers. In June 2020, Petersen pleaded guilty to multiple felony counts including Fraudulent Schemes and Artifices and Forgery. Petersen admitted to fraudulently enrolling the birth mothers in Medicaid and cheating AHCCCS out of thousands of dollars. Additionally, Petersen admitted he forged court documents to increase adoptive parents’ fees.

For more than a decade, Petersen arranged adoptions from the Marshall Islands. He charged adoptive families around $35,000 per adoption and claimed he used portions of the money for medical, legal and housing expenses. However, Petersen directed his co-conspirator, Lynwood Jennet, and the birth mothers to provide false information to the Arizona Health Care Cost Containment System (AHCCCS), the state’s Medicaid system, to pay for the births with tax dollars. The birth mothers should not have qualified for AHCCCS benefits because they were not Arizona residents. Between Nov. 2015 and May 2019, AHCCCS paid for at least 29 births.

In Dec. 2018, a family looking to adopt contacted Petersen and grew suspicious of his adoption agency and contacted law enforcement. Additionally, in April 2019, a social worker at Mercy Gilbert Medical Center contacted law enforcement after a birth mother listed the same person (Lynwood Jennet) as her emergency contact, notary and interpreter. The social worker told detectives she was the third woman in three weeks to show up at the hospital under similar circumstances. A State Grand jury indicted Petersen in October 2019.

Following the October 2019 indictment, the Arizona Attorney General’s Office (AGO) opened a second criminal investigation against Petersen after he provided false information regarding birth mothers’ fees to prospective adoptive parents and to the Maricopa County Superior Court Juvenile Division. Petersen often included fraudulent or false information on court paperwork to ensure adoptions were approved. Specifically, Petersen inflated the duration he paid for a birth mother’s living expenses to the adoptive family. For example, one family paid Petersen $33,000 for an adoption. According to an affidavit filed by Petersen in the case, he paid $11,000 for living expenses for the birth mother to live in Arizona for five months. But in reality, the birth mother arrived in Arizona one day prior to giving birth and only stayed for an additional 14 days.

In accordance with Petersen's plea agreement, he has paid $679,000 in restitution ($650,000 to AHCCCS, $11,000 to an uncharged victim, $18,000 to the AGO for extraordinary investigative costs).

“It doesn't matter who you are, no one is above the law,” said Attorney General Mark Brnovich. “Paul Petersen violated the public’s trust and defrauded taxpayers. Today he was held accountable.”

In December 2020, Petersen was sentenced to six years in federal prison for a “get-rich-quick scheme…hidden behind the shiny veneer of a humanitarian operation,” according to the federal judge. Arizona's plea agreements were not part of a global settlement.

Petersen is also scheduled for sentencing in a separate Utah case related to human trafficking.

Assistant Attorneys General Scott Blake and Evan Malady prosecuted the case.

Co-Defendant Lynwood Jennet

In December 2019, Petersen’s co-defendant Lynwood Jennet pleaded guilty for her involvement in the adoption fraud scheme. As part of her plea agreements, Jennet agreed to testify against Petersen. Jennet faces between two to four years in the Arizona Department of Corrections.

A sentencing hearing for Jennet is scheduled for April 19, 2021.