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Undercover strip club sting leads to AZ Liquor Department resignations

Skin cabaret
Posted at 9:50 PM, Jul 30, 2021
and last updated 2021-08-02 15:15:53-04

The resignations of two top officials and a detective at the Arizona Department of Liquor Licenses and Control this year are linked to a bungled undercover operation at Scottsdale’s Skin Cabaret, in which the detective was accused of a sex crime.

Both Director John Cocca and Deputy Director Mike Rosenberger resigned in April with no public explanation. The ABC15 Investigators have now obtained internal affairs reports, conducted by the Arizona Department of Public Safety, and a Scottsdale police report. The Scottsdale report outlined allegations of unlawful sexual conduct by a peace officer against DLLC Det. Mike Sanchez. An erotic dancer claimed Sanchez got "handsy" and tried to touch her genitals during an undercover investigation of COVID-19 health and liquor violations. The detective and dancer were alone in a VIP room at the time.

The case was forwarded to the Maricopa County Attorney’s Office for review, which declined prosecution due to the unlikelihood of conviction.

Internal investigation found dishonesty, disregard for rules

According to DPS records, Det. Mike Sanchez was untruthful during the internal investigation and recommended for termination. He resigned in lieu of firing. He also claimed in a written statement to DPS that he had never been dishonest, and he answered questions to the best of his recollection. He also denied the exotic dancer’s allegations and claimed he “was never at any time sexually motivated to touch” the woman’s “buttocks and possibly her breasts.”

DPS internal affairs investigators found Director Cocca acted inappropriately by discussing the case with Sanchez over the phone after the criminal investigation closed but the internal investigation was still open. In a Google Meets meeting in January, which included other witnesses in the case, Cocca told Det. Sanchez “he was sorry he [Sanchez] had to go through the investigations and praised him for how he handled the situation,” according to the report.

The DPS internal affairs investigations also found Deputy Director Mike Rosenberger engaged in “willful disobedience” because he also violated admonition rules to not discuss the case. In addition, the internal affairs investigation indicates Rosenberger and other DLLC employees were immediately tipped off by the Scottsdale Police Department that Sanchez was under criminal investigation. Days later, according to the DPS investigation, Rosenberger either assisted or directed Sanchez in rewriting his final DLLC investigative report about what happened in the VIP room.

Rosenberger and Cocca both worked as supervisors at the Scottsdale Police Department before moving to the Department of Liquor Licensing and Control.

The internal investigator concluded that “police executives, who in fact have been the issuers of such admonition to employees, to commit such a violation, conveys a blatant and gross disregard for the practices and integrity of an internal law enforcement investigation.”

A spokesman for Governor Doug Ducey said Friday this was "unacceptable behavior that falls far short of our standards and expectations for DLLC."

Conflicting Accounts from the VIP Room

On October 24, 2020, Det. Sanchez and Det. Chris Allard went to Skin Cabaret and posed as customers. They were investigating a complaint that the adult entertainment club was violating Governor Doug Ducey’s executive order, which laid out health and safety rules for bars to reopen during the pandemic. Violations of the order could lead to the suspension of an establishment’s state liquor license.

The anonymous tip, forwarded by the Arizona Department of Health Services, claimed Skin Cabaret’s “VIP areas being used for dances, called massage shows. Masks not required in those areas.”

Det. Allard noted in his report that dancers in the main room were not maintaining social distancing from customers.

However, since the original complaint also alleged violations in the VIP room, Det. Sanchez paid $260 to gain access to the room for a private show from “Cali.” ABC15 is not using the woman’s legal name because she is the alleged victim of a sex crime.

Allard remained outside the VIP area. After both men left the establishment, they issued a notice suspending the liquor license of Skin Cabaret, citing COVID-19 executive order violations.

Accounts of what happened in the VIP room differ, and Sanchez’s story changed throughout the investigation.

The Notice of Suspension issued early the next morning, written by Sanchez and approved by Rosenberger, said the dancer “allowed” Det. Sanchez to touch her breast and buttocks, in violation of social distancing and liquor license rules for adult entertainment clubs.

The day after the undercover investigation, October 25, Skin Cabaret management called the Scottsdale Police Department. Cali alleged Det. Sanchez attempted to touch her genitalia and exposed breasts during the VIP show without permission. Skin management told police this was inappropriate for a law enforcement officer. Scottsdale police investigated the case as an allegation of unlawful sexual conduct by a peace officer.

Other club employees who watched a live video feed of the VIP room backed up Cali’s story that Sanchez was “handsy.” One employee said she interrupted, cutting the show short, due to the undercover detective’s behavior.

Neither the club nor DLLC had a recording of the VIP room interaction. Sanchez’s backup officer, Det. Allard, remained in the main room. He did not witness what happened.

Conflicting stories about altered reports

Det. Sanchez was allowed to write and rewrite his own investigative reports about the undercover operation after he knew of the sex crime allegation against him, according to the internal investigation.

DLLC supervisors were told about the Scottsdale police investigation the same day Cali made her report. There were also questions about whether SPD and DLLC officials inappropriately discussed details of the criminal case as it progressed.

Sanchez submitted a draft of his full Skin Cabaret liquor license investigation report on October 26, which continued to say Cali “allowed” the contact to her breasts and buttocks. When initially questioned by internal investigators, he denied that he used the word “allowed,” and he denied that supervisors made anything more than grammatical corrections to his report.

Det. Sanchez was put on administrative leave on October 27.

Internal investigators later learned that Sanchez revised the liquor license investigation report with the help of Rosenberger on October 28 during Sanchez's administrative leave. The word “allowed” was removed. Instead, the report said, “l placed my hands on her buttocks in an attempt to keep her buttocks away from my face,” and “l put my hands on top of her breasts to prevent her from moving in again and placing her breasts on my lips.”

Sanchez and Rosenberger gave investigators conflicting accounts of whether they directly discussed removing the word “allowed” and whether they talked about how Sanchez’s narratives in his DLLC report may impact the criminal investigation against him. Sanchez’s version of events changed after he was made aware that internal investigators had obtained deleted emails the included the October 26 draft.

Skin Cabaret issued a statement Friday:

"We find this situation very disturbing. The expectation is that law enforcement and regulatory agencies remain impartial fact collectors. Public trust is betrayed when police reports are unethically manipulated. Unfortunately, improper procedures effectively tip the scales of justice unfairly."

A Scottsdale Police spokesman said a member of their command staff was formally counseled for poor decision-making in regard to communication in this case.

One Rule: Don’t Get Naked

The Arizona Department of Liquor Licensing and Control had no policies or training relevant to the Skin Cabaret undercover investigation, according to the internal affairs investigation.

The detectives said part of their job that night was to investigate any prostitution at the club, but supervisors said they were only looking for COVID-19 executive order violations.

According to records released to ABC15, the only restriction given prior to the operation was, "Don't get naked," by Director Cocca.

None of the DLLC chain of command acknowledged they gave any direction or guidance to the detectives prior to conducting the operation, according to the internal affairs report. Detective Sanchez told investigators he had no training or experience in conducting undercover vice or prostitution investigations.

Former Det. Sanchez declined to discuss the case when contacted by the ABC15 Investigators Friday. ABC15 reached out to Cocca and Rosenberger and did not receive a response.

Lawyers for the exotic dancer indicated she did not want to comment.

As sworn Arizona police officers, Rosenberger and Sanchez could be placed on a Brady list or lose their police certification entirely if they act dishonestly or break the law. DPS told ABC it provided the internal affairs investigation to the Maricopa County Attorney's Office and Arizona POST for review.