LEGAL NEWSLINE

PHOENIX (Legal Newsline) -- A state criminal investigator who has alleged Arizona Attorney General Tom Horne, along with other state officials, are engaging in a cover-up has reportedly sued Horne and Deputy Attorney General Rick Bistrow.

The Arizona Republic obtained a copy of the suit, filed Tuesday in Maricopa County Superior Court.

According to the Republic, Supervising Special Agent Margaret "Meg" Hinchey's lawsuit says the two continue to retaliate against her and have ruined her reputation. Hinchey still works for the attorney general.

Horne has been under investigation for allegations that he worked with an independent expenditure committee to run ads against his 2010 Democratic opponent -- which is not permitted under Arizona law.

The attorney general has denied being involved with Business Leaders for America, which raised and spent $500,000 to run television advertisements attacking Felecia Rotellini.

Horne, a Republican, defeated Rotellini in 2010 to become the state's top lawyer.

The attorney general has said the accusations were "conjured up" by a disgruntled employee and former campaign supporter, Don Dybus.

But Hinchey, in a notice of claim filed in June, says she reported criminal activity revealed by two witnesses implicating Horne to the FBI.

Hinchey, who says the attorney general's behavior and actions were overlooked, alleges he then tried to destroy her files and that he undertook a "smear campaign" to discredit her and destroy her career.

"The conduct has been intentional, malicious and negligent, and is motivated by AG Horne's desire to protect himself and his associates from potential criminal liability arising from illegal campaign activities," Suzanne Dallimore, Hinchey's attorney, wrote in the June notice.

Hinchey also alleges that Bistrow went as far as hire an outside attorney to conduct a special investigation of allegations against her -- after, she contends, she was branded a "liar" by Horne and certain staff members.

"According to current and former tenured high ranking AGO employees, this has never been done before and there is only one reason to do it now," Dallimore wrote in the notice.

"AG Horne needs to discredit SAS Hinchey to throw up a defense to potential charges of criminal campaign funding violations.

"He wants to be able to claim that if SAS Hinchey was not credible, any follow-up investigation was built on feet of clay."

In the notice of claim -- which led to her lawsuit filed this week -- Hinchey demanded $10 million in damages for the "likely loss of her career," for future earning losses and personal injuries, including pain and suffering.

A spokeswoman for Horne told the Republic Wednesday that she could not comment in detail on Hinchey's lawsuit because she hadn't yet seen a copy.

However, she called the allegations "baseless."

"We expect that the state and the employees of the Attorney General's Office will be fully vindicated in a court of law," spokeswoman Amy Rezzonico told the newspaper.

"The AG's Office treats its employees with dignity and respect, and that principle has been applied to Ms. Hinchey."

In a statement back in June, Horne himself called Hinchey's allegations that he was part of a cover-up "false, absurd and completely without merit."

"This is an attack from a partisan Democrat who enjoyed working under Democrats, and resented working for a Republican who was elected by the people of Arizona," the attorney general said at the time.

"It is sad that good and honest people have to be dragged through the mud."

Horne argues that his office's refusal to cover-up an investigation charging that Hinchey had fabricated evidence in testimony she gave to a grand jury, which resulted in an indictment of a number of police officers, "appears to be what led to" Hinchey's notice of claim.

The attorney general also contends that Hinchey -- who says in her notice that she feared Horne would come to focus on her party affiliation and fire her -- misrepresented herself.

"Tom Horne did not and does not pay attention to the political party of employees of the Attorney General's Office," his office said in a more detailed statement. "When he took office, the prior attorneys general had been Democrats for 12 years, and there were obviously a great number of Democrats employed.

"Unlike many of his predecessors, Tom Horne fired no one upon taking office. He treats all employees as professionals, regardless of political party."

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.