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TED: COMING UP NEXT ON "ARIZONA HORIZON," THE ECONOMIC IMPACT OF THE SUPREME COURT REJECTING PRESIDENT TRUMP'S TARIFFS.

>>> ALSO TONIGHT, THE MAYOR OF SURPRISE JOINS US TO TALK ABOUT THE CONTROVERSIAL I.C.E.

DETENTION CENTER PLANNED FOR HIS CITY.

>>> AND AN ARIZONA PROGRAM THAT ALLOWS NONLAWYERS TO OWN LAW FIRMS IS FACING QUESTIONS ABOUT OVERSIGHT AND ACCOUNTABILITY.

THOSE STORIES AND MORE NEXT ON "ARIZONA HORIZON."

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TED: GOOD EVENING AND WELCOME TO "ARIZONA HORIZON."

I'M TED SIMONS.

THE U.S.

SUPREME COURT'S DECISION TO STRIKE DOWN THE PRESIDENT'S TARIFF PROGRAM WAS A MAJOR RULING THAT RAISED A NUMBER OF QUESTIONS NOT THE LEAST OF WHICH INVOLVES THE IMPACT ON THE U.S.

ECONOMY.

JOINING US NOW IS ECONOMIST DALE ROGERS FROM ASU'S W.P.

CAREY SCHOOL OF BUSINESS AND ECONOMIST DENNIS HOFFMAN FROM ASU'S SEIDMAN RESEARCH INSTITUTE.

GREAT TO HAVE YOU HERE.

>> GREAT TO BE WITH YOU.

TED: DALE, START WITH YOU.

THE U.S.

SUPREME COURT SAYS THE PRESIDENT CAN USE THE ECONOMIC EMERGENCY POWERS IF THERE'S AN EXTRAORDINARY OR UNUSUAL THREAT FROM ABROAD.

THEY DIDN'T SEE IT.

WHAT DOES IT MEAN TO THE REST OF US?

>> WELL, IT SHOULD BE A RELIEF IF THE TARIFFS WERE REALLY GOING TO GO OFF.

NOW THE TARIFF RATE, OVERALL THE AVERAGE, WHICH YOU CAN SEE AVERAGES DON'T MEAN THATCH, BUT THE AVERAGE UNDER TRUMP WAS 13.5% AND TRUMP WANTS TO PUT ON 15% THAT WOULD LAST FOR 150 DAYS.

COULD BE COMING OUT OF THIS TARIFFS WILL GO UP BECAUSE IT'S GOING TO BE 15% ON EVERYBODY, AND IT'S SUPPOSED TO BE FOR A LIMITED TIME, THOUGH I DON'T KNOW.

TED: WHAT DO YOU THINK?

THE INITIAL RESPONSE FROM FOLKS, BUSINESSES WAS IT DIDN'T SOUND LIKE A WOOF TO ME.

>> THERE WAS A CHANCE THAT MR.

TRUMP COULD USE THIS AS AN OFF-RAMP AND SAY, WELL, WE DID IT AS LONG AS WE COULD AND NOW WE'RE GOING TO MOVE ON.

I THINK MOVING ON WOULD HAVE BEEN A HUGE POLITICAL WIN FOR HIM.

HUGE POLITICAL WIN, BUT HE CHOSE NOT TO DO IT.

TED: OKAY, HE CHOSE NOT TO DO IT BECAUSE HE WANTS TO TAKE OTHER AVENUES.

THESE ARE TARIFFS BY ANY OTHER NAME?

FEES?

TAXES?

WHAT ARE THEY?

>> THEY'RE TARIFFS, JUST DIFFERENT SECTION.

IRONICALLY, THE ONE HE USED NOW IS ONLY SUPPOSED TO BE USED WHEN THERE IS LARGE AND SERIOUS BALANCE OF PAYMENTS DEFICITS.

INTERESTINGLY, TED, WE HAD 10% ON FRIDAY, AND HE RAISED THAT TO 15% ON MONDAY.

SOMETHING HAPPENED OVER THE WEEKEND.

THERE MUST HAVE BEEN EVEN LARGER SERIOUS BALANCE OF PAYMENTS PROBLEMS BECAUSE HE HAD TO GO FROM 10 TO 15%.

SORRY, I'M BEING FACETIOUS.

TED: RIGHT.

RIGHT.

>> THESE ISSUES DON'T EXIST TODAY.

HE'S JUST USING THESE SECTIONS EVEN THOUGH THERE'S NOTHING, NO EVIDENCE OF UNFAIR TRADE PRACTICES, NO EVIDENCE THAT THESE ARE -- HE'S ACTING IN THE INTEREST OF NATIONAL SECURITY.

UNFORTUNATELY, HE'S ACTING IN WAYS THAT I THINK ARE GOING TO BE INFLATIONARY AND I THINK THEY'RE GOING TO BE LESS LIKELY TO CREATE JOBS.

>> LET'S TALK ABOUT ARIZONA, DALE.

AS FAR AS US BEING A BORDER STATE.

THE IMPACT OF WHAT'S GOING ON NOW, AS WE MENTIONED, THE TARIFFS THAT ARE GONE, AND NOW THE TARIFFS THAT ARE ARRIVING.

>> WELL, IT'S LIKELY TO BE WORSE BECAUSE THIS IS BEING APPLIED UNIVERSALLY, AND REALLY, WHEN THEY HAD HIM BY DIFFERENT COUNTRIES, IT WASN'T FAIR AND IT WAS UNCONSTITUTIONAL.

NOW GOING THROUGH A FLAT 15%.

THE OTHER THING, IT THROWS INTO CHAOS, ALL OF THE MANUFACTURERS AND RESELLERS AND SO ON, WHO THOUGHT, OKAY, THERE'S A TRADE DEAL NEGOTIATED AND NOW THAT'S UP IN THE AIR, YOU KNOW, EUROPE WAS GOING TO VOTE ON THE NEGOTIATED AGREEMENT WITH TRUMP, NOW THEY'RE GOING TO SAY WAIT A MINUTE, WHAT CAN HE REALLY DO?

IT ACTUALLY BOTH INCREASES THE RATE, BUT THE UNCERTAINTY, WHICH IS WHAT YOU REALLY WANT TO AVOID.

TED: THAT'S THE WORD, UNCERTAINTY, DENNIS.

>> IT'S BACK.

TED: AND IT'S BACK.

>> IT'S BACK.

SO, YOU KNOW, WE SAW WALL STREET HAS BLED NOW, TWO DAYS IN A ROW ON THIS NEWS, AND YOU KNOW, IT'S VERY, VERY DIFFICULT TO SEE THE ENDGAME HERE.

TED: ARIZONA'S ECONOMY, DENNIS.

IMPACT HERE?

>> I WANT TO PUT THIS IN PERSPECTIVE.

WE HAD VERY LOW INFLATION STARTING IN THE FALL.

YEAR-OVER-YEAR IN THE FALL WAS BELOW 2 IN AZ, IN THE FALL OF 2024 AND GOT BELOW 1 IN EARLY 2025.

NOW WE'RE GOING TO THE -- THE NEXT TREND IS PROBABLY 3.

SO THERE IS AN INFLATIONARY UNDERPINNING THAT IS DIRECTLY ATTRIBUTABLE TO TARIFFS.

SOME PEOPLE SAY TARIFFS WEREN'T INFLATIONARY.

YOU HAVE TO SET THE CLOCK AT WHAT WOULD INFLATION BE WITHOUT THE TARIFFS?

AND ALMOST EVERYBODY AGREES IT WOULD BE AT LEAST A PERCENTAGE POINT LOWER.

AND TED, THE OTHER THING SMALL BUSINESSES NEED TO THINK ABOUT, YOU KNOW.

PEOPLE SAY, OH, WELL, HE'S DOING THE TARIFFS TO SAVE MANUFACTURING JOBS.

THERE'S NO EVIDENCE OF THAT.

IN FACT, A STEEL AND ALUMINUM KILL MANUFACTURING JOBS.

HIS TARIFFS ON STEEL AND ALUMINUM ABSOLUTELY KILL IT.

THE POINT OF THE HARM IN TARIFFS IS IT TAKES MONEY OUT OF THE POCKETS OF CONSUMERS.

THEY HAVE TO PAY MORE FOR IMPORTED GOODS, WHICH, TED, MEANS, THEY HAVE LESS MONEY IN THEIR POCKETS TO SPEND ON ARIZONA SMALL BUSINESSES.

THAT'S REALLY WHERE IT COMES CIRCLES AROUND.

TED: AND I WAS GOING TO ASK ABOUT SMALL BUSINESS VERSUS BIG BUSINESS, AND SEEMS LIKE THE SMALL BUSINESSES WERE HIT INITIALLY PRETTY HARD BY THE TARIFFS.

THEY GOING TO GET HIT HARD BY TARIFFS 2.0?

>> YEAH, IN MANY CASES IN A GOOD SUPPLY CHAIN, THE SMALL BUSINESSES WHO CAN BE DIRECT INTERFACING THE CONSUMER, BUT OFTENTIMES UPSTREAM IN THE SUPPLY CHAIN, AND THE LARGE FIRMS HAVE BEEN, AS WE TALKED ABOUT BEFORE, PUSHING THE INVENTORY BACK ON THE SMALL- AND MEDIUM-SIZED SUPPLIERS AND MAKING THEM EAT IT.

SO THIS WOULD BE A -- I MEAN, THE LITTLE GUYS ALWAYS GET HURT.

THIS IS ONE OF THOSE CASES AGAIN.

TED: FOR PRICES, DALE, WE'LL STICK WITH YOU, IS THIS THE KIND OF THING PRICES DIP A LITTLE BIT OR NOT HAVE A CHANCE BEFORE NEW TARIFFS COME INTO PLAY?

>> I THINK SO MUCH UNCERTAINTY AND YOU ARE ALREADY ABLE TO CHARGE HIGHER PRICES WHY WOULD YOU DROP IT?

>> GOING TO CONTINUE TO PASS THROUGH.

NO REASON NOT TO PASS THROUGH, YOU'RE GOING TO CONTINUE TO DO THAT.

WHETHER OR NOT FIRMS LIKE COSTCO GET PAID BACK BECAUSE THEY'RE GOING TO FILE LAWSUITS.

PROBABLY WILL, BUT IT WILL TAKE YEARS.

TED: HOW DOES REIMBURSEMENT WORK WITH THIS?

>> WELL, THEY HAVE TO REIMBURSE THE IMPORTERS.

WHOEVER REMITTED THE TAX, THAT'S WHERE THE MONEY WILL GO BACK, BUT THEY'RE CONTRACTUALLY OBLIGATED OR CONNECTED TO THE RETAILERS THAT ACTED ON THEIR BEHEST, SO IT'S A MESS.

IT IS A MESS.

TED: KAVANAUGH SAID IT WAS A MESS.

>> HE DID SAY THAT.

IF YOU THINK ABOUT THIS PRESIDENT, IS HE KNOWN FOR PAYING PEOPLE WELL IN HIS PRIVATE CAREER BEFORE?

I'M NOT SURE.

WE'RE GOING TO SEE A LOT OF PAYMENTS COME, YOU KNOW -- MAYBE NOT IN OUR LIFE TIMES BUT NOT GOING TO COME RIGHT AWAY.

TED: LAST QUESTION, DENNIS, FOR YOU.

WHAT DO WE WATCH FOR NEXT?

>> OH, WHAT DO WE WATCH FOR NEXT?

I WOULD WATCH FINANCIAL MARKETS.

I WANT TO SEE FINANCIAL MARKETS, DID THEY GET RATTLED THE WAY THEY WERE LAST MARCH AND APRIL?

DO WE -- WE ALSO WATCH FOR THE WAY FIRMS RESPOND AND THE COURTS RESPOND.

IF YOU ACTUALLY LOOK AT THESE SECTIONS THAT HE'S USED TO IMPOSE THESE NEW TARIFFS, THERE'S SUPPOSED TO BE SOME SERIOUS PROBLEMS OUT THERE, AND IT WOULD SEEM TO ME INCUMBENT UPON THE ADMINISTRATION TO DEMONSTRATE THAT THOSE PROBLEMS EXIST AND THAT NUMBER TWO, THAT THE REMEDY IS TARIFFS, AND THINGS WILL SOMEHOW GET BETTER.

TED: DENNIS HOFFMAN, DALE ROGERS, ASU ECONOMISTS BOTH.

THANK YOU FOR JOINING US.

APPRECIATE IT.

>> THANKS, TED.

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TED: DOCUMENTS CONFIRM THAT THE FEDERAL GOVERNMENT PURCHASED A 400,000-SQUARE-FOOT WAREHOUSE IN SURPRISE WITH THE ATTENTION OF TURNING THE FACILITY INTO AN IMMIGRATION DETENTION CENTER, HOUSING THOUSANDS OF DETAINEES.

NOW THE MOVE HAS SPARKED CONCERN AMONG RESIDENTS AND CITY LEADERS, AND TO LEARN MORE, WE WELCOME THE MAYOR OF SURPRISE KEVIN SARTOR.

GOOD TO HAVE YOU HERE.

THANK YOU FOR JOINING US.

>> THANKS FOR HAVING ME, TED.

TED: WHERE EXACTLY IS THIS THING?

>> THIS IS LOCATED ON THE FAR EASTERN, SOUTHERN SIDE OF OUR CITY ON DYSART ROAD AND SWEETWATER.

TED: HOW CLOSE TO SCHOOLS?

NEIGHBORHOODS?

STORES?

>> DYSART ROAD IS ON THE BORDER BETWEEN SURPRISE AND EL MIRAGE.

IF YOU GO EAST OF DYSART, THAT'S EL MIRAGE, WEST IS THE CITY OF SURPRISE.

YOU GO HALF MILE SOUTH IS DYSART HIGH SCHOOL, AND THEN JUST ON THE OTHER SIDE OF DYSART ROAD IS EL MIRAGE AND RESIDENTIAL.

TED: OTHER THAN THE FACT THERE'S A WAREHOUSE WAITING TO BE BOUGHT, WHY DO YOU THINK YOUR CITY WAS CHOSEN?

>> TED, WE'RE TRYING TO FIGURE THAT OUT RIGHT NOW.

I SENT A LETTER TO THE DHS SECRETARY TO GET ANSWERS.

TED: WHEN DID YOU LEARN THEY BOUGHT THE FACILITY?

>> SOMETIME LATE JANUARY, IN MEDIA REPORTS MORE THAN ANYTHING.

TED: DO YOU KNOW ANY MORE ABOUT THE PLANS FOR THE FACILITY?

I'VE SEEN 1500-BED PROCESSING TO 10,000-BED DETENTION CENTER, WHAT DO YOU KNOW?

>> I THINK THE SIZE OF IT IS CLOSER TO THE 1500-BED CENTER, AND IT'S MORE OF A PROCESSING CENTER MORE THAN A DETENTION CENTER.

TED: OKAY.

PHYSICAL CHANGES, WE'RE LOOKING AT IT RIGHT NOW, PHYSICAL CHANGES TO THE WAREHOUSE?

HOW MUCH DO YOU EXPECT?

I KNOW WHEN I ASK HOW MUCH DO YOU HEAR IT'S A BIG OLD QUESTION MARK FOR YOU?

>> IT IS.

WE'RE TRYING TO FIGURE OUT WHAT'S GOING ON, TRYING TO START DIALOGUE WITH HOMELAND SECURITY.

WE'VE HAD A LOT OF SUPPORT FROM FEDERAL ELECTED.

CONGRESSMAN GOSAR IS WAITING TO SEND A LETTER.

ONCE WE GET THE INFORMATION, IT WILL HELP FIGURE OUT WHAT'S GOING ON IN THE FACILITY AND FOR US IS A CITY, WE HAVE TOP-NOTCH POLICE AND FIRE, IF SOMETHING HAPPENS, WE WANT TO MAKE SURE WE KNOW WHAT'S GOING ON.

>> I WAS GOING TO ASK ABOUT ADDED LAW ENFORCEMENT AND SECURITY RESPONSIBILITIES, FIREFIGHTING SERVICES, TRAFFIC.

THAT'S ALL GOING TO BE INVOLVED HERE.

>> IT IS.

OUR CONCERN IS THE CITY.

WE PROVIDE SERVICES.

WE WANT TO MAKE SURE WHILE THE HOMELAND SECURITY IS OPERATING THAT FACILITIES, WE CAN DO THE THINGS WE NEED TO DO FOR THE RESIDENTS, MAKE SURE THEY ARE SAFE AND PROVIDING THE SERVICES WE NEED TO.

TED: PHYSICAL CHANGES TO THE WAREHOUSE, YOU ARE UNAWARE OF ANYTHING JUST YET?

>> CONGRESSMAN GOSAR SHARED COSTS, CONSTRUCTION COSTS, NOTHING SPECIFIC WHAT THEY'RE GOING TO DO OR RETROFIT A WAREHOUSE FACILITY FOR A PROCESSING CENTER.

TED: YOU GOT PARKING, YOU GOT UTILITIES, YOU GOT FENCING, FLOODWATER AND STORM WATER CONCERNS.

>> A LOT THAT GOES WITH IT, TED.

TED: HOW MUCH IS YOUR RESPONSIBILITY?

>> I THINK GENERALLY WHEN ENTITY COMES INTO THE CITY OF SURPRISE, IF IT WAS A PRIVATE, WE'VE HAD A LOT OF SAY IN IT.

WE'D WORK THROUGH THE PROCESS WITH THEM.

BECAUSE IT'S A FEDERAL FACILITY, THEY REALLY HAVE THE FEDERAL SUPREMACY CLAUSE THAT SUPERSEDES ANYTHING THE CITY OR STATE HAS.

TED: THERE WAS VANDALISM WITH THE FACILITY.

>> THERE WAS.

TED: TALK TO US ABOUT THAT.

AND WHO IS MINDING THE STORE OUT THERE?

>> IT HAPPENED SATURDAY MORNING, AND OUR POLICE RESPONDED TO IT BUT QUICKLY THE FBI AND DHS TOOK OVER THE INVESTIGATION.

OUTSIDE THE CITY'S RESPONSE, THE CITY OF SURPRISE HASN'T DONE MUCH WITH THE INVESTIGATION.

>> THE INITIAL RESPONSE WAS YOUR RESPONSIBILITY?

>> IT WAS.

TED: AND THEN THE FEDS NOW ON-SITE?

THIS IS A -- SOUNDS LIKE IT WAS ATTEMPTED ARSON?

>> IT WAS.

FROM WHAT I WAS TOLD.

WE'VE SEEN MORE FEDERAL PEOPLE OUT THERE, AGENTS.

TED: SO I GET THE IMPRESSION THAT YOU HAVE NOT BEEN IN CONTACT WITH DHS REGARD ANYTHING PLANS FOR THIS?

>> NO, THE ONLY INFORMATION IS FROM FEDERAL ELECTED OFFICIALS.

IT IS FRUSTRATING.

JUST LIKE ANY OTHER BUILDING THEY PURCHASE, THEY DON'T HAVE TO FOLLOW ANY OF OUR ZONING.

FOR ME IT'S ABOUT BEING A GOOD PARTNER.

THEY'RE GOING TO OPERATE THERE, HOW DOES THE CITY OF SURPRISE BETTER PREPARE FOR WHAT THEY'RE DOING IN THE CITY TO MAINTAIN SAFETY FOR OUR RESIDENTS.

TED: THERE'S A RESPONSE FROM THE RESIDENTS IS A LOT STRONGER.

THEY ARE NOT HAPPY WITH YOUR RESPONSE, THEY THINK YOU SHOULD BE STRONGER.

HOW DO YOU RESPOND?

>> IT'S A TOUGH LINE TO WALK.

SOME RESIDENTS DON'T WANT IT AT ALL, OTHERS DO WANT IT.

FOR THE SURPRISE MAYOR, IT'S ABOUT INITIATING CONTACT WITH THE HOMELAND SECURITY AND WHEN THEY'RE GOING TO START OPERATING SO WE CAN PLAN TO BE ABLE TO HAVE OUR PART IN THIS AND -- NOT JUST ENFORCEMENT BUT CONTINUE TO OPERATE THE CITY.

TED: THE REST OF THE COUNCIL ARE THEY IN LINE WITH YOUR THINKING OR DIFFERENT?

>> WE'RE ALL ON THE SAME PAGE.

TED: OKAY, YOU'RE NOT FIGHTING THIS, PER SE.

>> I DON'T THINK IT'S OUR PLACE TO FIGHT IT.

I'VE SEEN OTHER CITIES HAVE DONE IT ACROSS THE COUNTRY.

I THINK WHEN THOSE CITIES, IT'S THE PRIVATE SALE THEY'VE STOPPED.

A LOT OF THE DHS FACILITIES FROM BEING PURCHASED.

SOME OF THE CITIES ENACTED ORDINANCES, AS FAR AS WHAT I KNOW AND HAVE BEEN TOLD, THEY HAVEN'T GOTTEN FAR.

>> THE PURCHASE IS A DONE DEAL.

>> THE PURCHASE IN SURPRISE.

TED: THE ATTORNEY GENERAL IS THINKING OF USING THIS AS A PUBLIC NUISANCE -- WE'LL HAVE HER ON TOMORROW AND ASK HER ABOUT THAT.

THE IDEA OF A PUBLIC NUISANCE LAW, THIS IS NOT GOOD FOR THE COMMUNITY IN A VARIETY OF WAYS, HEALTH, SAFETY, WELFARE, WHAT DO YOU THINK ABOUT THAT?

>> I HAVEN'T TALKED TO HER ABOUT THAT.

TED: WHAT DO YOU THINK ABOUT IT?

>> IS IT A PUBLIC NUISANCE?

TED: YEAH.

>> IT'S HARD TO SAY BECAUSE, AGAIN, WE'RE JUST TRYING TO GET INFORMATION FROM DHA.

WE DON'T KNOW, I DON'T WANT TO SPECULATE THE NUISANCE IT WILL BE, HOW MANY PEOPLE COMING IN AND OUT.

IT'S TOO EARLY TO SAY IF IT'S A NUISANCE.

TED: FOR RESIDENTS WHO ARE A RESPONSE, I NEED SOMETHING STRONGER OUT HERE, WHAT DO YOU SAY?

>> I WOULD TELL THE RESIDENTS THAT WE HEAR THEM.

WE'VE HAD TWO COUNCIL MEETINGS WHERE THEY'VE COME OUT.

ONE WAS FOUR HOURS LONG, AND SO WE'RE GOING TO CONTINUE TO LISTEN, CONTINUE TO WORK WITH, ENGAGE WITH, HOMELAND SECURITY AND ANYBODY WHO WANTS TO GIVE INFORMATION, FEDERALLY ELECTED, CONGRESSMAN GOSAR OR ANYONE ELSE.

TED: MAYOR KEVIN SARTOR, THANK YOU FOR JOINING US.

>> THANK YOU.

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TED: A PROGRAM THAT ALLOWS NONLAWYERS TO OWN LAW FIRMS IN ARIZONA IS RUNNING INTO PROBLEMS INCLUDING COMPLAINTS THAT THE LAW FIRMS ARE TURNING INTO NATIONWIDE CALL CENTERS, ACCORDING TO INVESTIGATIVE REPORT BY "THE ARIZONA REPUBLIC," FILED BY OUR NEXT GUEST, REPORTER LAURA GERSONY.

THANK YOU FOR JOINING US.

>> THANKS FOR HAVING ME.

TED: THIS IS THE ALTERNATIVE STRUCTURES PROGRAM.

HOW LONG HAS THIS BEEN AROUND?

>> IT'S BEEN AROUND FIVE YEARS.

I WANT TO GIVE YOU THE BIG PICTURE.

TED: PLEASE.

>> IN ALMOST EVERY U.S.

STATE, ONLY A LAWYER IS ALLOWED TO OWN A LAW FIRM.

THERE'S A REASON FOR THAT RULE.

IT'S A LONGSTANDING ETHICS RULE IN THE LEGAL BUSINESS, AND YOU WANT THE PERSON AT THE TOP OF A LAW FIRM TO KNOW WHAT THEY'RE DOING, KNOW THE LAW, BUT ALSO HAVE A LAW LICENSE THAT CAN BE REVOKED IF SOMETHING WITHIN THE FIRM GOES SIDEWAYS.

TO PUSH FIRMS TOWARDS UPSTANDING BEHAVIOR.

ARIZONA CHANGED THAT IN 2021, WE CREATED THE ALTERNATIVE BUSINESS STRUCTURE PROGRAM THAT ALLOWS NONLAWYERS, WALL STREET EXECUTIVES, TO OWN A LAW FIRM.

TED: WHY IS IT A GOOD IDEA?

>> IF WE CUT RED TAPE IN THE LEGAL BUSINESS, IT WILL LET MONEY FLOOD ARIZONA'S LEGAL.

NOT EVERYBODY AGREES WITH THE THEORY, THAT WAS THE IDEA.

TED: SOUNDS LIKE THE SUPREME COURT, A POLICY EXPERIMENT WITH THE SUPREME COURT, AND THEY'RE THINKING IT'S OKAY FOR THE MOST PART?

>> THAT'S RIGHT.

YOU KNOW, WHAT I FOUND LOOKING INTO THE PROGRAM WERE STUNNING OVERSIGHTS IN THE IMPLEMENTATION OF THIS PROGRAM.

TO ME THE TOP LINES ARE THE PROGRAM HAS BECOME A NATIONWIDE EPICENTER FOR CONSUMER COMPLAINTS.

I FOUND MORE THAN A DOZEN LICENSEES ACCUSED IN COURT OF HURTING ORDINARY CONSUMERS LIKE YOU AND ME OR BREAKING CONSUMER PROTECTION RULES, AND THIS PROGRAM IS SPILLING ACROSS STATE LINES.

CONSUMERS, NO MATTER WHERE THEY LIVE IN THE UNITED STATES ARE EXPOSED TO THE BUSINESS MODELS THOUGH THEY ARE ONLY LEGAL PROPERLY IN ARIZONA YOU.

>> REPORTED HALF OF THE THINGS DO BUSINESS OUTSIDE OF ARIZONA.

>> EXACTLY RIGHT.

AND THAT'S A TREND THAT REGULATORS HAVE SAID THROUGHOUT THE PROCESS AS I'VE DONE MY INTERVIEWS THAT THEY DON'T WANT BUT ONLY AFTER MY REPORT CAME OUT THEY ARE STARTING TO CHANGE THAT.

TED: LET'S DISCUSS THAT.

BEFORE WE GET TO THAT ASPECT, THE IDEA OF THE THINGS, SOME OF THE THINGS BECOMING NATIONWIDE CALL CENTERS, THAT CAN'T BE WHAT THE ORIGINAL INTENT WAS?

>> NO, THE MOST ASKED QUESTION I GOT WHILE WRITING THE STORY IS, IS THIS WHY ARIZONA HAS SO MANY BILLBOARD LAWYERS?

NOT EVERY BILLBOARD LAWYER IS PARTICIPATING IN THE PROGRAM, BUT WE'RE TURBO CHARGING THAT BUSINESS MODEL MAKING ARIZONA THE DELAWARE OF BILLBOARD LAWYERS.

TED: YEAH, BUT IT SOUNDS TO ME YOU TALK ABOUT CUTTING RED TAPE, AND I GET THAT, THIS SOUNDS LIKE A MIDDLE MAN.

>> THAT'S EXACTLY WHAT I FOUND.

REGULATORS DON'T WANT THAT MODEL, AS YOU CAN IMAGINE, IT GIVES THE FIRMS A PERVERSE INCENTIVE TO SHOP CASES AROUND AND SELL THEM TO THE LOWEST BIDDER, IT'S HAPPENING ANYWAY.

TED: FROM YOUR REPORTING, SOME OF THESE FIRMS AREN'T DOING A LOT OF LEGAL WORK BUT A WHOLE LOT OF ADVERTISING, HUH?

>> EXACTLY RIGHT.

AND I THINK WHAT'S IMPORTANT TO PULL OUT HERE, TED, THAT'S A BUSINESS MODEL THAT LET'S THEM DO LITTLE LEGAL WORK BUT TAKE A CUT OF THE PROFITS, MAYBE WHY IT'S INTEREST TO WALL STREET INVESTORS.

TED: I WOULD THINK IT IS OF INTEREST TO ARIZONA OFFICIALS AS WELL.

THIS SOUNDS LIKE A BACKOFFICE FOR ARIZONA.

IT'S BECOME -- WE'VE BECOME A CALL CENTER, A DATA CENTER.

>> ABSOLUTELY RIGHT.

MY REPORTING FOUND THAT ARIZONA IS A NATIONAL CLEARING HOUSE FOR THE PROGRAMS, AND WHILE I'M ON THAT, I WANT TO GIVE A SENSE OF THE ALLEGATIONS WE'VE SEEN.

MORE THAN A DOZEN LICENSEES ACCUSED IN COURT OF MISCONDUCT, THAT RANGES ON ROBOCALLING IN TEXAS.

ONE FIRM SETTLED A LAWSUIT THAT ACCUSED THEM OF LEAVING 16 CALLS FOR A WOMAN ON THE DO-NOT-CALL REGISTRY EVEN AFTER SHE SAID DO NOT CONTACT ME.

ALABAMA PROSECUTORS ARE CALLING IT A DECEPTIVE SCHEME THAT MONETIZED CAR ACCIDENT VICTIMS IN ONE OF THE POOREST STATES IN THE COUNTRY.

REGULATORS ARE PAINTING A PICTURE OF A BUTTONEDUP PROGRAM.

TED: BY THE WAY, UTAH HAD ONE OF THESE DEALS AND NO MORE, HUH?

>> EXACTLY RIGHT.

ARIZONA HAS BARRELLED AHEAD WITH THE REFORM.

THE PROGRAM HAS GROWN OVER THE LAST COUPLE YEARS TENFOLD FROM 15 TO MORE THAN 150 PACIFIC NORTHWESTING FIRMS.

UTAH WAS THE ONLY FIRM WITH A COMPARABLE LICENSING PROGRAM BUT SCALED IT BACK AFTER REGULATORS THERE FOUND IT WENT SIDEWAYS.

THEY FOUND A LOT OF THE SAME THINGS THAT SURFACED IN MY REPORTING THAT FIRMS WERE OPERATING ALL OVER THE COUNTRY NOT JUST DELIVERING FOR UTAH CONSUMERS AND PEOPLE WERE MISUSING LICENSES.

>> YOU ARE REPORTING, BRINGING THIS UP, HAS TO BE A CONCERN TO FOLKS IN THE LEGAL PROFESSION.

WHAT RESPONSE ARE YOU GETTING?

.

>> A COUPLE DAYS AFTER THE REPORT CAME OUT, AN ARIZONA SUPREME COURT COMMITTEE THAT OVERSEES THIS PROGRAM VOTED THROUGH A COUPLE RULES THAT WOULD MODESTLY REIN IN THE PROGRAM, CREATING A NEW REQUIREMENT THAT COURT STAFF HAVE PROPOSED A RULE SPECIFICALLY DESIGNED TO, IN THE WORDS OF THE STATUTE, PROTECT THE PUBLIC, BUT ONE OTHER THING I WANT TO MENTION IS THE STATE BAR OF ARIZONA IS OUT WITH A PUBLIC COMMENT SAYING THAT THE PROPOSED RULE CHANGES DON'T GO FAR ENOUGH TO ADDRESS THE ISSUES RAISED IN MY REPORTING AND AS A MATTER OF FACT, SAYING THE CURRENT TRAJECTORY THAT THE ARIZONA SUPREME COURT IS ON MAY INCREASE THE RISK OF CONSUMER HARM BECAUSE THEY DON'T HAVE THE RESOURCES TO REGULATE NATIONAL ACTIVITY.

TED: HOW IS THE SUPREME COURT RESPONDING TO THIS?

>> IN AN INTERVIEW, THE CHIEF JUSTICE OF THE SUPREME COURT WAS NONCOMMITTAL, DID NOT ACKNOWLEDGE ISSUES AROUND CONSUMER HARM, WITHIN THIS PROGRAM, BUT HER WORDS WERE THIS IS A NEW PROGRAM.

THE ODDS ARE SLIM THAT WE'VE CREATED A PERFECT PROGRAM FROM THE GET-GO.

TED: BEFORE YOU GO HERE, HOW DID YOU GET STARTED ON THIS?

>> YOU KNOW, I FOUND THE STORY BECAUSE MEMBERS OF THE FINANCIAL PRESS "WALL STREET JOURNAL," REUTERS, BLOOMBERG HAD WRITTEN STORIES ABOUT IT BUT WERE EXPLORING IT AS A WINDFALL, A MONEY MAKING OPPORTUNITY FOR INVESTORS AND NOBODY EXPLORED THE IMPACT ON ORDINARY PEOPLE LIKE YOU AND ME.

TED: IS THERE MORE TO EXPLORE?

>> THERE SURE IS.

I'M GOING TO BE OUT WITH FOLLOW-UP REPORTING LOOKING FOR WAYS THAT WALL STREET INVESTORS ARE LOOKING FOR WAYS AROUND THE ARIZONA PROGRAM TO LET INVESTMENT IN WITHOUT HAVING TO ABIDE BY THE REGULATIONS.

>> OF COURSE, THEY ARE.

LAURA GERSONY, "ARIZONA REPUBLIC" AND AZCENTRAL.COM, GREAT REPORTING, THANKS FOR SHARING THE STORY.

>> THANKS AS ALWAYS, TED.

TED: YOU BET.

THAT IS IT FOR NOW.

I'M TED SIMONS.

THANK YOU FOR JOINING US.

YOU HAVE A GREAT EVENING.