By David Schwartz

PHOENIX (Reuters) - An Arizona county prosecutor will pursue a civil complaint against state Attorney General Tom Horne and a political associate, accusing them of violating campaign finance laws in 2010 when Horne ran for office, the prosecutor said on Monday.

Maricopa County Attorney Bill Montgomery said the enforcement action accuses Horne, a Republican, of orchestrating the efforts of an independent committee run by ally Kathleen Winn that pumped an estimated $500,000 into campaign advertisements against Horne's opponent.

"The conduct in question is expressly prohibited by Arizona's election laws, and we will work to hold those responsible accountable," Montgomery said in a statement.

Horne, the state's top prosecutor and former state schools chief, denied the allegation in a statement, calling the charges "totally false."

The decision to pursue a civil action comes after an 11-month investigation by the FBI's Phoenix office. Officials said the findings were sent to Arizona Secretary of State Ken Bennett, who forwarded them to Montgomery for possible prosecution.

Montgomery said the money spent by the supposedly independent Business Leaders of Arizona was used to buy television ads against Horne's Democratic opponent, Felicia Rotellini.

Montgomery initially said that neither Horne nor Winn could be held personally liable for any financial penalties.

But a Montgomery spokesman, Jerry Cobb, later said that Horne and Winn could be held liable, along with their campaigns, with possible penalties of up to $1.5 million

Any campaign violations found to be committed must be corrected by refunding donations in excess of campaign limits, disclosing donor names and refiling reports, Cobb said. But he said the law still allows for civil penalties to be assessed.

Montgomery, a Republican, said Arizona election law does not provide for any criminal sanctions to be brought by prosecutors involving such campaign violations.

Horne said Winn, the chairman of Business Leaders of Arizona, was responsible for all aspects of the committee, and the $500,000 was spent "independently and without any input" from him.

"There was no coordination between the campaign and the independent campaign. This will be completely proven to be true during the legal process," he said.

(Editing By Cynthia Johnston and Philip Barbara)