Federal investigators had focused their inquiry on conflicts among county officials, but The Arizona Republic has learned FBI special agents also have questioned potential witnesses about Hendershott's business dealings.
Sources said the Internal Revenue Service has been intimately involved in the inquiry and confirmed that agents were looking into Hendershott's business ties with vendors who contract with the county. They are trying to answer numerous questions about his financial activities.
An attorney representing Hendershott declined to respond to a request for comment.
In some instances, IRS investigators have been present during FBI witness interviews or have led the questioning.
Loretta Barkell, Arpaio's chief financial officer, recently acknowledged the IRS had been present and asked questions during interviews related to federal and state inquiries involving Hendershott.
"Yes, the IRS was there," she said. "Questions were asked about his personal finances."
Hendershott has been on paid administrative leave since November pending an internal investigation into allegations of mismanagement, retaliatory behavior against those who disagreed with him, and claims that he used the agency for personal financial gain.
Questions about Hendershott's management of Sheriff's Office resources have arisen in recent years. For example, the Board of Supervisors and the county Office of Management and Budget have publicly alleged he may have directed the misuse of as much as $80 million in detention funds, abused county credit cards and misspent jail-enhancement funds.
Hendershott earns at least $267,000 annually, counting his salary and his pension from a previous job. He and his wife have experienced financial hardship. Last year, they joined thousands of other Valley residents whose homes were foreclosed upon.
Hendershott's 4,500-square-foot home in north Peoria is scheduled for a trustee's sale on March 14 to cover the balance of a $774,500 note taken out on the home. Tax records in the Maricopa County Treasurer's Office placed the home's 2010 value at $376,500.
Public records show the couple has long had financial woes:
- They filed for bankruptcy protection in 1986 and 1997, discharging tens of thousands of dollars in debt.
- Public records show the couple owed at least $69,766 in unpaid state and federal income taxes from 1986 to 1992. The state tax liens of $14,915 were released in 1995 and 1996, while federal IRS liens of $54,851 were released in 1998.
- Last August, Sheriff's Deputy Chief Frank Munnell accused Hendershott of abusing office resources to enrich himself.
Information obtained by The Republic through a public-records request to the Sheriff's Office indicate Hendershott frequently accessed online-shopping sites such as eBay, Craigslist and apparel companies during his last four months in office.
In a 63-page memo alleging a wide variety of misdeeds within the Sheriff's Office, Munnell asserted that Hendershott coordinated off-duty jobs for sheriff's deputies that resulted in monthly payments to Hendershott; that he used posse resources to benefit himself and his family, including a trip to Alaska for a baseball tournament; and that Hendershott coordinated the sale of sheriff's promotional items for personal benefit.
Those allegations and others are under investigation by the Pinal County Sheriff's Office and the U.S. Attorney's Office in Arizona.