The report, obtained by The Associated Press ahead of its release, is a result of the U.S. Justice Department's three-year investigation of Arpaio's office amid complaints of racial profiling and a culture of bias at the agency's top level.
The Justice Department's conclusions in the civil probe mark the federal government's harshest rebuke of a national political fixture who has risen to prominence for his immigration crackdowns and became coveted endorsement among candidates in the GOP presidential field.
Apart from the civil rights probe, a federal grand jury also has been investigating Arpaio's office on criminal abuse-of-power allegations since at least December 2009 and is specifically examining the investigative work of the sheriff's anti-public corruption squad.
The civil rights report said federal authorities will continue to investigate complaints of deputies using excessive force against Latinos, whether the sheriff's immigration efforts damage trust with the Hispanic community and a large number of sex-crimes cases that were assigned to the agency but weren't followed up on or investigated at all.
The report took the sheriff's office to task for launching immigration patrols, known as "sweeps," based on complaints that Latinos were merely gathering near a business without committing crimes. Federal authorities single out Arpaio himself and said his office, known as MCSO, has no clear policies to guard against the violations, even after he changed some of his top aides earlier this year.
"Arpaio's own actions have helped nurture MCSO's culture of bias," wrote Thomas Perez, who heads the Justice Department's civil rights division, adding that the sheriff frequently gave such racially charged letters to some of his top aides and saved them in his own files.
"MCSO is broken in a number of critical respects. The problems are deeply rooted in MCSO's culture," he said Thursday.
If the sheriff's office doesn't turn around its policies and practices, the federal government could pull millions of dollars of federal funding.
Arpaio's office did not immediately respond to AP requests for comment.
The report will require Arpaio to set up effective policies against discrimination, improve training and make other changes that would be monitored for compliance by a judge. Arpaio faces a Jan. 4 deadline for saying whether he wants to work out an agreement. If not, the federal government will sue him and let a judge decide the complaint.
Arpaio, the self-proclaimed toughest sheriff in America, has long denied the racial profiling allegation, saying people are stopped if deputies have probable cause to believe they have committed crimes and that deputies later find many of them are illegal immigrants.
Arpaio has built his reputation on jailing inmates in tents and dressing them in pink underwear, selling himself to voters as unceasingly tough on crime and pushing the bounds of how far local police can go to confront illegal immigration.
The report also said he and some top staffers tried to silence people who have spoken out against the sheriff's office by arresting people without cause, filing meritless lawsuits against opponents and starting investigations of critics.
One example cited by the Justice Department is former top Arpaio aide David Hendershott, who filed bar complaints against attorneys critical of the agency along with bringing judicial complaints against judges who were at odds with the sheriff. All complaints were dismissed.
The anti-corruption squad's cases against two county officials and a judge collapsed in court before going to trial and have been criticized by politicians at odds with the sheriff as trumped up. Arpaio has defended the investigations as a valid attempt at rooting out corruption in county government.
The civil rights report said Latinos are four to nine times more likely to be stopped in traffic stops in Maricopa County than non-Latinos and that the agency's immigration policies treat Latinos as if they are all in the country illegally. Deputies on the immigrant-smuggling squad stop and arrest Latino drivers without good cause, the investigation found.
A review done as part of the investigation found that 20 percent of traffic reports handled by Arpaio's immigrant-smuggling squad from March 2006 to March 2009 were stops -- almost all involving Latino drivers -- that were done without reasonable suspicion. The squad's stops rarely led to smuggling arrests.
Deputies are encouraged to make high-volume traffic stops in targeted locations. There were Latinos who were in the U.S. legally who were arrested or detained without cause during the sweeps, according to the report.
During the sweeps, deputies flood an area of a city -- in some cases, heavily Latino areas -- over several days to seek out traffic violators and arrest other offenders. Illegal immigrants accounted for 57 percent of the 1,500 people arrested in the 20 sweeps conducted by his office since January 2008, according to figures provided by Arpaio's office.
Police supervisors, including at least one smuggling-squad supervisor, often used county accounts to send emails that demeaned Latinos to fellow sheriff's managers, deputies and volunteers in the sheriff's posse. One such email had a photo of a mock driver's license for a fictional state called "Mexifornia."
The report said that the sheriff's office launched an immigration operation two weeks after the sheriff received a letter in August 2009 letter about a person's dismay over employees of a McDonald's in the Phoenix suburb of Sun City who didn't speak English. The tip laid out no criminal allegations. The sheriff wrote back to thank the writer "for the info," said he would look into it and forwarded it to a top aide with a note of "for our operation."
Federal investigators focused heavily on the language barriers in Arpaio's jails.
Latino inmates with limited English skills were punished for failing to understand commands in English by being put in solitary confinement for up to 23 hours a day or keeping prisoners locked down in their jail pods for as long as 72 hours without a trip to the canteen area or making nonlegal phone calls.
The report said some jail officers used racial slurs for Latinos when talking among themselves and speaking to inmates.
Detention officers refused to accept forms requesting basic daily services and reporting mistreatment when the documents were completed in Spanish and pressured Latinos with limited English skills to sign forms that implicate their legal rights without language assistance.
The agency pressures Latinos with limited English skills to sign forms by yelling at them and keeping them in uncomfortably cold cells for long periods of time.
The Justice Department said it hadn't yet established a pattern of alleged wrongdoing by the sheriff's office in the three areas where they will continue to investigation: complaints of excessive force against Latinos, botched sex-crimes cases and immigration efforts that have hurt the agency's trust with the Hispanic community.
Federal authorities will continue to investigate whether the sheriff's office has limited the willingness of witnesses and victims to report crimes or talk to Arpaio's office.
"MCSO has done almost nothing to build such a relationship with Mariciopa County's Latino residents," Perez wrote.