Gary King

Attorney General Gary King has invited members of the media to attend a Friday news conference at which he plans to talk about corruption cases.

The news conference will be held at 10 a.m. at King’s Albuquerque office. Because I’m in Las Cruces, I won’t be able to attend, but I’ll post an article directing you to others’ coverage of the news conference.

A news release says King will “address media representatives and respond to questions related to recent inquiries regarding the Vigil-Giron, Foy, Region III, and other cases.”

The news conference comes after a weekend editorial in which The Santa Fe New Mexican wrote that King has lately been “dragging his public trust to political depths previously unplumbed” with his handling of corruption cases and should consider “recusing himself from office.”

Attorney General Gary King (Photo by Heath Haussamen)

Attorney General Gary King has lately been “dragging his public trust to political depths previously unplumbed” and should consider “recusing himself from office,” The Santa Fe New Mexican wrote in an editorial published Saturday.

The newspaper says nobody is “so naive as to think the position of New Mexico attorney general is above politics,” but King’s recent actions go beyond what’s reasonable and are “certainly beneath his once-praiseworthy self.”

Why? For starters, his office “so completely fumbled the prosecution of ex-Secretary of State Rebecca Vigil-Girón, accused of misusing public money, that the courts threw him off the case.”

In that case, the judge didn’t say there was an actual conflict, but said perceptions of a potential conflict were enough to ruin King’s ability to prosecute. King turned the case over to the 2nd Judicial District attorney, who is looking for a special prosecutor to take the case.

‘Running interference’ for Democrats?

There’s more. The New Mexican is offended by King’s actions in the case brought by whistleblower Frank Foy alleging corruption in the Richardson administration. Foy initially took his allegations to King’s office, as required under state law, and only hired an attorney to pursue the case on his own after King’s office declined to act.

King is, meanwhile, supposedly investigating potential corruption in state investment agencies (his office rarely comments on such cases, so the status is unknown), and The New Mexican characterizes that as “King taking his sweet time acting against corrupt manipulation of the State Investment Council and the Educational Retirement Board.”

At the same time, Foy and his attorney, Victor Marshall, have pursued the separate whistleblower case. Marshall has “lately has found King belatedly butting in on the act,” the newspaper wrote. King’s office is now trying to take over efforts to recover money lost in state investment deals tainted by politics.

“Is he trying to foul up the case against a bunch of power-abusing Democrats who might include former Gov. Bill Richardson?” the newspaper asks about King.

One of the defendants, former ERB Chairman Bruce Malott, was treasurer for King’s 2004 congressional campaign. And, as the Albuquerque Journal reported this weekend, Malott’s signature appears on King’s finance reports as recently as last year. (King kept filing reports because he had to pay off a $122,000 loan.)

The Journal’s Thomas J. Cole called that a possible violation of federal election law, because Malott’s signature continued to appear on finance reports even after his work for the committee ended, and because King was required to report Malott’s departure from the committee to the FEC, but he didn’t.

The New Mexican calls King’s relationship with Malott “clearly a conflict of interest” with the whistleblower case in which King is trying to intervene.

“His involvement in the investment-council case comes off as running interference for several Democrats who abused their power — and that might yet include former Gov. Bill Richardson, whom Malott also served as campaign treasurer,” The New Mexican writes. “There’s at least the appearance of the Democratic AG as a convenient accessory for fellow Democrats.”

‘This is crazy’

Last, there’s King’s relationship with the state auditor, Hector Balderas:

“He has turned a deaf ear to Balderas’ call for further and faster action on what the auditor says is contract fraud in the Corrections Department and at the state’s housing authority. Instead, King’s operatives are persecuting Balderas — on the basis of what appear to be groundless and/or petty accusations of misbehavior.”

As NMPolitics.net recently reported, King’s office declined to investigate bribery allegations against a former Corrections Department employee who is now facing federal felony charges. Balderas recently released a damning audit related to the situation.

And King has long faced allegations that he didn’t dig deep enough or act quickly enough in the case of corruption in the state housing authority system, even though he did indict four people in a case that’s pending.

As for the “persecution” of Balderas, the paper is referring to an ongoing AG investigation into allegations based on complaints received through a hotline set up by Balderas’ office. Those include that Balderas “used workers in his office as baby-sitters and (gasp!) put in a time-clock system to keep employees from goofing off,” the newspaper wrote.

“Balderas has offered over and over to meet with King or his deputies about the complaints, so far to no avail,” the editorial states. “The Balderas case is being treated as a hot one — while readily provable corruption, uncovered by Balderas, goes ignored? This is crazy.”

What a difference a few months can make

The newspaper’s conclusion? While Marshall says King should recuse himself from the Foy case, “We’d go a step further, suggesting that he consider recusing himself from office, where he’s been less than intensively attentive to his duties between trips abroad — but that’s another story…”

That’s a story NMPolitics.net has written. As of October 2010, King had traveled overseas on personal business at least nine times since taking office in January 2007. Most of those trips were to accompany his wife, who was serving on a NATO panel.

“We are dealing with an era of corruption,” King’s opponent in last year’s election, Republican Matt Chandler, told NMPolitics.net. “We need an attorney general that’s on the job and in tune with what’s happening in New Mexico.”

Voters re-elected King. In fact, The New Mexican endorsed him in that race, writing that, “When it comes to competence and honesty, few of our state’s public servants can match Attorney General Gary King.”

What a difference a few months can make.

The AG’s communications director recently set up a blog designed to “expand upon, clarify, and provide correct information about the NM Attorney General’s Office (AGO) that may also appear in media sources such as television, radio, newspaper, blogs, etc.” It will be interesting to see whether the blog addresses The New Mexican’s editorial.

NMPolitics.net has also asked for comment. If the AG’s office does comment, you’ll read it here.

Attorney General Gary King (Photo by Heath Haussamen)

The N.M. Supreme Court has given Attorney General Gary King’s office a green light to proceed with prosecution of the case against defendants in the housing authority scandal, the Albuquerque Journal is reporting.

From the Journal:

“The state Supreme Court on Friday refused to get involved — at least for now — in the AG’s prosecution of a former legislator, a prominent lawyer and two others in the Region III Housing Authority case.”

King’s office was quoted by the Journal as saying this:

“We join many New Mexicans who are glad that the procedural roadblock in front of prosecuting the Region III proceedings is finally removed. We will continue to press forward and have these cases decided on the evidence by fair and impartial juries.”

Former Region III Housing Authority Director Vincent “Smiley” Gallegos, former Region III accountant Dennis M. Kennedy, and former Region III bond attorney Robert Strumor are facing felony charges including fraud and money laundering. A fourth defendant, former Region III attorney David N. Hernandez, is charged with tampering with evidence.

The case centers on the misspending of bond money issued by the State Investment Council. Read more about the scandal here.

The question of whether King can prosecute the case has significantly delayed trial. The appeal to the state’s high court came after the Court of Appeals ruled that King can prosecute the case even though his office also represents, in a civil capacity, the housing authorities and the State Investment Council.

That dual role created, as the very least, a negative appearance, the defendants argued in a Feb. 14 filing with the Supreme Court.

King is currently fighting to prosecute another public corruption case his office has brought forward. Earlier this month, a district judge ruled that King’s office can’t prosecute the corruption case against former Secretary of State Rebecca Vigil-Giron and others because of perceptions of a conflict.

Lawyers for the defendants had alleged a conflict because the AG’s office provided counsel to the secretary of state on contracts related to the indictment, and also because one of the defendants used to work in the AG’s office.

King’s options in that case are to appeal the ruling or hand the case over to a special prosecutor.

State Auditor Hector Balderas

Balderas says board members, employees were using agency money ‘as their own private ATM cash machine;’ King says he’s still reviewing January 2009 report

State Auditor Hector Balderas has made public a January 2009 special audit of the Region III Housing Authority that identified “considerable violations” of the state per diem law and other problems.

Those violations by Region III and a related entity, Housing Enterprises, Inc. (HEI), include board members collecting per diem “when official meetings did not take place,” collecting per diem beyond what is allowed by law and collecting it twice for attending meetings held on the same day and in the same place.

Other questionable expenses include Region III paying for the wives of two former employees currently under indictment to travel with their husbands to Las Vegas, Nevada, even though auditors found “no evidence” that the trip benefited or was “related to the mission of” Region III.

It’s difficult to calculate exactly how much misused money is identified in the audit, which looked at expenses from 2005 and 2006, but it appears to be in the range of tens of thousands of dollars.

“Members were using these funds as their own private ATM cash machine,” State Auditor Hector Balderas told NMPolitics.net. He called that “the final insult” in a scandal that already includes indictments against four people.

You can read the full audit here.

AG is ‘reviewing the document’

Gary King

Many of the issues identified in the newly released audit haven’t been made public before and aren’t part of the criminal case Attorney General Gary King has brought against former employees accused of fraud, money laundering and other felonies.

The issues that led to King’s indictments of former employees of the Albuquerque-based Region III authority – Director Vincent “Smiley” Gallegos, accountant Dennis M. Kennedy, bond attorney Robert Strumor and attorney David N. Hernandez – led to the collapse of much of the state’s affordable housing system in 2006 and reform to try to clean up the mess.

Gallegos, Strumor and Kennedy are facing the fraud and money laundering charges. Hernandez faces a felony charge of tampering with evidence. All have pleaded not guilty. (Read a primer on the housing authority scandal here.)

But the AG has yet to attempt to seek recovery of the lost funds identified in the special audit, even though his office has had the report for 25 months – since January 2009. King spokesman Phil Sisneros said his office is “reviewing the document,” but said he can’t comment further about the housing authority case because it’s pending.

‘New Mexicans deserve accountability’

Joseph Cervantes

In the meantime, Rep. Joseph Cervantes, D-Las Cruces, is sponsoring legislation that would allow the state auditor to contract with outside counsel to try to recover misused funds identified in this and other audit reports.

“Stealing money intended to help shelter lower income families deserves our strongest condemnation, and an aggressive effort to recover those public funds,” Cervantes said. “This theft was pervasive.  Now that we have this accounting, New Mexicans deserve accountability.”

“I am working to provide the auditor with tools to recover the misappropriated public funds, and to restore public trust and confidence in our state government,” Cervantes said.

The audit findings

Several of the state’s regional housing authorities collapsed in 2006 after Region III defaulted on $5 million on bonds it owed the state. At the time, the Legislature and governor charged Balderas’ office with compiling an accounting of the financial status of the housing authorities.

To get a full picture, Balderas’ office had to perform a number of annual audits several of the regional housing authorities had failed to complete in the years leading up to the collapse. Those audits were released to the public in January 2009.

The special audit was completed at the same time, but it was kept secret in accordance with state law because Balderas referred it to the AG and FBI.

More than two years later, in response to a records request from an agency that was given oversight over Region III, the auditor’s office decided enough time had passed to consider the audit a public record, said Evan Blackstone, the state auditor’s general counsel.

Most of the findings contained in the audit have never before been made public. Among them:

• Region III and HEI – an entity Gallegos created to be the construction arm of the housing authorities – had some of the same board members, and members were inappropriately collecting per diem twice when meetings were held on the same day and in the same location.
• Board members and employees were collecting per diem in excess of what is allowed under state law – $114 per day instead of the maximum allowed at the time, $95.
• Board members also inappropriately collected per diem “when official board meetings did not take place and overnight stays did not occur,” the audit states.
• There were several “questionable payments and reimbursements,” including “purchases of alcohol, payments for private club dues,” and the trip to Las Vegas.

Under state law, those who violate the Per Diem and Mileage Act must repay the state “in an amount twice the excess payment.” There’s no additional criminal penalty.

More details on the audit

The allegedly misused money identified in the audit appears to add up to at least tens of thousands of dollars. For example, the audit states, Region III and HEI board members were given a combined $45,213 in per diem “when an official meeting did not take place and an overnight stay did not occur.” In addition, some board members of one entity received per diem for attending a meeting of the other entity’s board as a guest – even though they weren’t on that board.

The audit identifies unlawful per diem payments to individual board members. The board member receiving the largest unlawful amount was Filo Sedillo, who the audit states was “unlawfully paid $10,886.” Several board members were found by auditors to have received much smaller unlawful totals, with the smallest being $114.

One issue that has been made public before, but that’s also in the audit: Gallegos was reimbursed twice for the same business trips – once by Region III and once by HEI. The total he was paid was nearly $46,000, the audit states. It calls the double payments a “significant” violation of the Per Diem and Mileage Act.

The audit also identified “questionable,” but not necessarily illegal, expenses. For example, Region III paid for Kennedy’s Albuquerque Petroleum Club membership dues – more than $500 in 2006. And it identified alcohol expenses that include Kennedy purchasing alcohol during the Las Vegas trip attended by him, Gallegos and their wives.

The total cost of the three-day Las Vegas trip, the audit states, was $1,211.60, which included “flights and stays at the Monte Carlo.”

Referred to investigatory agencies

The state auditor referred the report to the FBI and AG after having discovered violations of the Per Diem and Mileage Act and “suspected” violations of the Governmental Conduct Act, “criminal statutes related to misconduct by public employees and officials,” and fraud, the audit states.

Balderas told NMPolitics.net that the issues identified in the audit “really speak to the casual culture of abuse that we’re still hoping will be investigated.”

King’s case against the housing authority defendants is on hold pending a question before the New Mexico Supreme Court. The defendants are arguing that the AG can’t prosecute the case because his office his office also represents, in a civil capacity, the housing authorities and the State Investment Council (SIC) – whose bonding on behalf of the housing authorities is at the center of the case.

King has never been one to talk about pending cases, and Sisneros, his spokesman, would say little in this instance. But, asked about Cervantes’ bill that would let the auditor try to recover funds himself, Sisneros did say that the AG “successfully sued Region III in civil court several years ago and undid all sorts of things without the help of the auditor.”

Asked for details, Sisneros pointed to former AG Patricia Madrid bringing lawsuits against three people – two then-Region III employees and one board member – who were living in Region III houses even though they didn’t qualify for low-income housing. The case was taken over by King when he took office, and he won. All three tenants were required to vacate the houses.

‘More entities need the ability to recover funds’

Though Madrid, and later King, acted in that instance, Balderas said his office has a difficult time getting any oversight agency to even contact his office when it identifies funds that may be recoverable. That means fund recovery is rare, he said.

“It’s not been a high enough priority for oversight agencies,” Balderas said in explaining why his office needs the authority Cervantes’ bill would grant it. “I think when you are battling a systemic problem of corruption and waste, more entities need the ability to recover funds.”

Balderas already has the authority to seek recovery of funds. The new legislation would make doing so more practical by allowing him to contract with outside counsel. The auditor’s office doesn’t have the staff to seek recovery otherwise.

Attorney General Gary King (Photo by Heath Haussamen)

The defendants in a case involving the state’s housing authorities have asked the N.M. Supreme Court to remove Attorney General Gary King and his office from the case.

The appeal to the state’s high court comes after the Court of Appeals ruled that King can prosecute the case even though his office also represents, in a civil capacity, the housing authorities and the State Investment Council (SIC) – whose bonding on behalf of the housing authorities is at the center of the case.

That dual role creates, as the very least, a negative appearance, the defendants argue in a Feb. 14 filing with the Supreme Court.

“At a minimum, the AGO acting as prosecutor and counsel for the interested parties such as the alleged victim SIC and several witnesses creates impermissible opportunities for conflicts to arise, and thus creates the appearance of impropriety,” the filing states.

“The longer this prosecution continues, particularly with the AGO at the helm, the more damage is done to the system’s integrity,” it states.

Former Region III Housing Authority Director Vincent “Smiley” Gallegos, former Region III accountant Dennis M. Kennedy, and former Region III bond attorney Robert Strumor are facing felony charges including fraud and money laundering. A fourth defendant, former Region III attorney David N. Hernandez, is charged with tampering with evidence.

A ‘Chinese wall’

Defendants in the housing authority case and another high-profile case against former Secretary of State Rebecca Vigil-Giron allege that King’s attorney/client relationship with state agencies creates a conflict when he has to investigate corruption allegations involving one of those agencies.

King defends his office by saying that a “Chinese wall” exists between his civil and criminal divisions. The civil divisions report to King, and the criminal investigations and prosecutions divisions report to Chief Deputy Attorney General Al Lama.

A recent job posting from the AG’s office seeking a new government accountability division director – the employee responsible for investigating public corruption cases – states that the director “reports directly to the attorney general with oversight by the chief deputy attorney general.”

AG spokesman Phil Sisneros said Lama is the director’s “immediate supervisor,” even though all division directors “have some responsibility to report to the attorney general since he is the chief executive of the office.”

“This system has no effect upon our efforts to ensure that no conflicts occur between civil and criminal investigations,” Sisneros said. “… The AG supervises all division directors in the sense that we all take his direction on policy and other matters. But again, on a day-to-day basis, the chief deputy serves as our immediate supervisor.”

Time to ‘draw the line’

The AG told NMPolitics.net last year that his office is fighting the conflict-of-interest allegations in both cases because he believes it is “time to draw the line and say look, this is what has to be done to go after these cases.”

King pointed to the housing authority case and the case against Vigil-Giron as evidence that his office can bring forth public corruption indictments even when the office’s civil side is involved in attorney/client issues with the agencies the criminal side is investigating.

Attorney General Gary King (Photo by Heath Haussamen)

The N.M. Court of Appeals has ruled that Attorney General Gary King can prosecute the defendants in a case involving the state’s housing authorities even though his office also represents the authorities in a civil capacity.

The ruling is significant because it’s the first time the appeals court has ruled on whether the attorney general can wear both civil and criminal hats when there’s a potential conflict between the two. The defendants in the housing authority case could still appeal the ruling to the state Supreme Court.

An appeal to the state’s high court would further delay trial.

King’s spokesman, Phil Sisneros, confirmed the ruling from the appeals court, but he provided no additional details. One of the defendants, Robert Strumor, would say only that he has “been wrongfully accused of crimes that never occurred and I will continue to mount a vigorous defense.”

Former Region III Housing Authority Director Vincent “Smiley” Gallegos, former Region III accountant Dennis M. Kennedy, and Strumor, a bond attorney, are facing felony charges including fraud and money laundering. A fourth defendant, former Region III attorney David N. Hernandez, is charged with tampering with evidence.

Defendants in the housing authority case and another high-profile case against former Secretary of State Rebecca Vigil-Giron have said King’s attorney/client relationship with state agencies creates a conflict when he has to investigate corruption allegations involving one of those agencies.

King defends his office by saying that a “Chinese wall” exists between his civil and criminal divisions. The civil divisions report to King, and the criminal investigations and prosecutions divisions report to Chief Deputy Attorney General Al Lama.

The AG told NMPolitics.net last year that his office is fighting the conflict-of-interest allegations in both cases because he believes it is “time to draw the line and say look, this is what has to be done to go after these cases.”

King pointed to the housing authority case and the case against Vigil-Giron as evidence that his office can bring forth public corruption indictments even when the office’s civil side is involved in attorney/client issues with the agencies the criminal side is investigating.

Susana Martinez

After being called out last week for falsely saying Lt. Gov. Diane Denish has done nothing to combat corruption, Republican gubernatorial candidate Susana Martinez is toning down the rhetoric a bit, now saying Denish has “failed to lead on the issue of corruption.”

The shift comes after NMPolitics.net called Martinez out on Friday for falsely claiming that Denish has done nothing to stand up to corruption, “not even a whisper.” As I wrote last week, Denish played an integral role in standing up to corruption in the state’s housing authority system and in winning legislative approval of reform of the system.

Here’s today’s statement from Martinez that contains the new rhetoric:

“For seven plus years, Lieutenant Governor Diane Denish has been part of an administration that has wasted taxpayer dollars, defrauded New Mexico citizens and abused the public trust. Now, as a gubernatorial candidate, Denish believes voters will ignore the fact that she failed to lead on the issue of corruption. As governor, I will put a stop to the nonsense and identify the corruption, remove it and my administration will hold to account those who have broken the law. Denish can claim anything she wants, but New Mexico voters understand that I am the candidate who will deliver bold change and get our state back on track.”

The statement comes in response to a new Denish ad that highlights the role the lieutenant governor – who is now the Democratic nominee for governor – played in reform of the housing authority system.

Heath Haussamen

I recently heard Republican gubernatorial candidate Susana Martinez say Lt. Gov. Diane Denish has done nothing during her tenure to combat or speak out against corruption, “not even a whisper.”

Martinez isn’t alone in making that claim. One of her primary opponents, Allen Weh, has made similar accusations, as have a number of other Republicans who are trying to tie Denish to corruption and other problems that have plagued the Richardson administration.

Martinez, Weh and the others, however, are wrong. Whether Denish has done enough to combat corruption is up for debate, but to say that the Democratic Party’s nominee for governor has done nothing in 7.5 years as lieutenant governor is patently false.

I know because I watched Denish publicly stand up against corruption within her party three years ago when no other Democrats would.

Speaker tried to kill housing authority reform

It was during the 2007 regular legislative session. I and other journalists had spent months writing about the scandal in the state’s affordable housing system that exploded when the Albuquerque-based Region III Housing Authority defaulted on $5 million in bonds it owed the state in 2006. The controversy centered on a former legislator who was a close ally of House Speaker Ben Luján.

Denish had taken the lead in lobbying for approval of legislation that would reform the housing authority system and fund an audit. But Luján and others, including state Rep. Joe Campos of Santa Rosa, were working to kill the proposal.

Campos was doing it openly, using outdated audits to argue that the housing authorities didn’t have problems even though I and other journalists had already documented the issues.

Luján was working behind the scenes – you know, doing what he does. He walks into a committee meeting and whispers in a committee chair’s ear, and then a bill dies. The speaker was working to protect a political ally who was in a heap of trouble.

Luján already had a committee kill the House version of the reform bill, and the Senate version was coming before the same committee. Some Democratic lawmakers complained to me that the Senate bill was headed for the same fate and asked me to shine light on it so the bill could get a fair hearing.

I called around asking someone – anyone – who believed that Luján was trying to kill housing authority reform to go on the record. None would, until I spoke with Denish’s office.

Denish stood up to Luján

Denish’s spokesman told me it appeared that Luján was attempting to kill the bill sponsored by Sen. Mary Kay Papen, just as he had killed the bill from Rep. Janice Arnold-Jones.

Denish speaking with Sen. Mary Kay Papen about the housing authority reform bill in 2007. (Photo by Heath Haussamen)

“The overall impression we’re getting is that this bill is following in the footsteps of Rep. Arnold-Jones’ bill,” Denish spokesman Michael Henningsen said.

Denish also spoke up against Campos’ efforts to kill the reform proposal using outdated audits. And she was working to help coordinate efforts between representatives and senators to find a compromise.

Denish succeeded. Her work, along with public threats from then-House Minority Whip Dan Foley and some intense behind-the-scenes politicking by a handful of House Democrats, combined to create a greater force than Luján. The speaker was eventually forced to accept a compromise and allow the reform bill to pass.

Denish speaking with Rep. Al Park about the housing authority reform bill in 2007. (Photo by Heath Haussamen)

Denish later signed the reform bill into law.

Denish made a difference

The state auditor has released a damning report on what happened in the housing authorities. The AG has indicted several people in the scandal – including former state Rep. Vincent “Smiley” Gallegos, the close friend of Luján.

Let there be no doubt that there was an attempt to bury corruption in this instance, and that Denish stood up against it.

Let there also be no doubt about the speaker’s ties to the scandal. In 2006 we learned that a top aide to Luján was living rent-free in a home owned by the Region III Housing Authority, even though she was earning more than $71,000 per year. The agency was supposed to be providing housing for low-income New Mexicans.

Gallegos became a lobbyist after he left office in 1996, and he spent a lot of time in Luján’s office during legislative sessions. The aide, Luján’s office manager, later said that’s how she and Gallegos came to work out a deal for the house. She claimed she and her boyfriend were “defrauded and victimized” by the housing authority.

There’s no doubt in the minds of most people who were involved in this situation – and in my mind – that the speaker tried to kill housing authority reform. Denish stood up when other Democrats would not and challenged the speaker, the second most powerful official in state government and a leader in her own political party.

Her willingness to do so made a difference.

GOP claim is false

I understand why Republicans want the public to believe Denish has never fought corruption. It would be easier to tie her to the scandal-plagued Gov. Bill Richardson if she had never spoken a word against the powers-that-be in Santa Fe and in her own party.

Tying Denish to corruption – or at least convincing voters that she stood by and did nothing while it was happening – would help Republicans win the governor’s race in November.

There are other situations Republicans will cite in claiming Denish hasn’t done enough to fight corruption. But to say she’s done nothing is simply untrue.

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Photo by Heath Haussamen

A judge has agreed to dismiss the State Investment Council’s civil case against a bond attorney involved in the housing authority scandal and that attorney’s counterclaims against the state agency.

The investment council (SIC) had been suing bond attorney Robert Strumor, along with former Region III Housing Authority Director Vincent “Smiley” Gallegos, to try to recover some or all of the $5 million in bond money that was lost when Region III defaulted on the bonds in 2006.

The SIC had accused Strumor, once one of the most prominent bond attorneys in the state, of misrepresenting the facts as he sold the SIC on the bond proposal and negotiated the terms of those bonds.

In response to the SIC lawsuit, Strumor filed a counterclaim alleging that the SIC failed “to exercise reasonable care selecting and purchasing bonds which are at issue in this case.” Strumor claimed that he had incurred attorneys’ fees and been exposed to liability as a result of the SIC’s actions, and he sought damages.

On Feb. 19, Strumor, his law firm – which was also a party in the lawsuit – and the SIC filed a joint motion to dismiss the claims against Strumor and Strumor’s counterclaims. District Judge Nan Nash approved an order to dismiss three days later.

The claims and counterclaims were dismissed with prejudice, meaning they cannot be refilled.

The SIC’s civil lawsuit against Gallegos remains – as does the attorney general’s pending criminal case against Gallegos, Strumor and two others – which is why SIC spokesman Charles Wollmann said he could not comment on the dismissal of the claims and counterclaims involving Strumor.

Much of the state’s housing authority system collapsed in 2006 when Region III defaulted on the bonds. Though the bond money was only supposed to be spent on housing, much of it was spent to prop up the administration and operations of Region III and some other housing authorities across the state and on other questionable activities.

In addition to the SIC lawsuit and the criminal charges brought by the attorney general, the state auditor has released a report that he said indicates the housing authorities were “a colossal failure.”

The Roundhouse in Santa Fe (Photo by Peter St. Cyr)

Public corruption took a big hit in New Mexico in 2009 with the indictments of several people in high-profile cases including the housing authority scandal. In addition, the state Legislature finally moved on some long-sought transparency issues, which proponents say will make it more difficult to engage in the sort of in-the-dark decision making that can breed corruption.

The worst economic downturn since the Great Depression also consumed many headlines and much of the public debate in New Mexico in 2009. However, the Legislature and governor have yet to take concrete steps to fully address the state’s ominous budget shortfall.

Heading into 2010, public corruption, the economy and the November election loom large. In the meantime, here are my picks for the top 10 political stories of 2009:

10. Health-care reform

The debate over health-care reform consumed a great deal of time in Washington in 2009, and U.S. Sen. Jeff Bingaman, D-N.M., was at the center of it. As one of the so-called “Gang of Six” – a bipartisan group of senators trying to negotiate a compromise – Bingaman fought hard, albeit unsuccessfully, for a public option to be included in the Senate version of the bill.

The year ends with the House and Senate passing very different reform bills and a lot of negotiating left to be done before the president has an opportunity to sign any health-care reform in to law. There are already signs that the House might abandon its approval of a public option in a compromise with the Senate.

What will the final version of the bill look like? Time will tell.

A scene from the first tea party held in Las Cruces on April 15. (Photo by Heath Haussamen)

9. Tea parties

About 400 people showed up at the first tea-party rally held in Las Cruces in April. That was part of the movement’s first nationwide rally and was a show of force from those fed up with government spending, taxation and other issues.

But across much of the nation, tea-party events on the Fourth of July and at other times appeared to shrink, and the question became whether the tea parties were a one-time event or a new movement. A week after the April rally, supporters of the tea party movement in Las Cruces failed to show up at a meeting about a proposed quality-of-life tax increase and prove that they were ready to do more than stand on street corners and wave signs.

In September, the tea party movement showed new life in Las Cruces. At least 1,200 people showed up for a protest when the Tea Party Express rolled through town. FOX News broadcast live from the event.

Similar rallies in Albuquerque and El Paso were much smaller.

With the libertarian-leaning former N.M. Gov. Gary Johnson doing nothing to quell calls for him to run for president in 2012, the support the tea party movement appears to enjoy in cities like Las Cruces keeps things interesting.

8. Death penalty repeal

It wasn’t much of a surprise when Gov. Bill Richardson signed a long-sought repeal of the death penalty into law in March, but it was a relief and an emotional moment for opponents of the death penalty who had sought the ban for a long time.

Many, including the GOP’s Darren White, aren’t ready to give up the fight yet. White started a political action committee in March with the goal of repealing the state’s death penalty repeal. The PAC’s goal may not have much momentum, at least in the short term (at least it hasn’t shown momentum yet), but look for the GOP to try to make this an election-year issue in 2010.

Diane Denish

7. 2010 election looms

Politics never seem to stop anymore. The 2010 election got into full swing in 2009. Republicans set their sights on the Democrats’ likely nominee for governor – Lt. Gov. Diane Denish – knowing that defeating her next year is critical if the state’s minority party is to have any say in the redistricting that will take place in the next decade.

Tying Denish to scandals that have plagued the Richardson administration is the primary tactic of the state Republican Party and at least two of four Republican gubernatorial candidates.

The GOP’s other primary target appears to be U.S. Rep. Harry Teague, D-N.M. It became clear early in 2009 that the race between Teague and his predecessor, Steve Pearce, R-N.M., will be one of the hottest U.S. House contests in the nation in 2010. Anger over Teague’s support of cap-and-trade legislation earlier this year only makes this race more interesting.

In addition to the Republican primary for governor, there are hotly contested primaries for both parties’ nominations for lieutenant governor and land commissioner. 2010 promises to be a fascinating election year in New Mexico.

6. Progressives gain more ground in Las Cruces

Progressives took control of city government in Las Cruces in 2007 and 2008 with surprising election victories. They grabbed even greater influence in 2009 when progressive-backed candidates unseated two more incumbents.

Progressives now control five of six seats on the city council, and the mayor also enjoys the support of progressives. The state Democratic Party was quick to tout the November election as a sign of good things to come for Democrats in 2010.

Las Cruces appears to be bucking the national trend that is currently swinging toward the GOP in many areas. That’s especially important to consider in the context of next year’s race between Teague and Pearce. Pearce is certain to do well on the conservative east side of the district. Teague needs a significant win in Las Cruces.

Richard Berry

5. GOP takes over Albuquerque

In October, voters unseated longtime Albuquerque Mayor Martin Chávez, replacing him with Richard Berry, the city’s first Republican mayor since the 1980s. But that wasn’t the extent of the GOP gains: Republicans also took control of the Albuquerque City Council.

In a state in which Republicans have seen so few victories in recent years, and coming off the Barack Obama wave that was 2008, Republicans in New Mexico and nationally looked to their success in the Albuquerque election as a sign of good things to come in 2010. Are they right? Time will tell.

Regardless, the contrast between the GOP’s big wins in Albuquerque and progressives’ big wins in Las Cruces is stunning. The big question for 2010 is whether new voters who came out for Obama in 2008 will vote again in 2010 – and if they do, will they stick with Democrats or more around the political map?

One thing is likely: Berry won in part because the city’s public financing system leveled the playing field. Look for many Republicans in the state Legislature to express less resistance to expanding the state’s public financing system in the future. Were there money in the budget – which there isn’t – we might even see an expansion in 2010.

4. Government transparency increases

State Rep. Janice Arnold-Jones webcasting a committee meeting earlier this year. (Photo by Heath Haussamen)

New Mexico took a surprising and refreshing leap forward in the area of government transparency in 2009. It started when State Rep. Janice Arnold-Jones, R-Albuquerque, took a Web cam with her to legislative committee meetings and started webcasting, coming close to breaking House rules and daring leadership to stop her.

With the public and media watching, leadership didn’t stop her. As the New Mexico Independent, KUNM radio, two other Republican lawmakers and others joined in the webcasting, the House and Senate were quick to regulate the new fad, with the House approving official, audio-only webcasting and the Senate approving audio and video – from one camera in the back of the chamber.

Baby steps forward, to stay the least, but still steps forward.

The Legislature took other steps forward in the area of transparency. They approved a long-sought proposal to open legislative conference committees to the public, which immediately proved to be a good thing; increased the frequency that candidates must submit campaign finance reports; and changed the state’s Inspection of Public Records Act to require that government agencies respond to records requests submitted via e-mail.

In addition, there were some visible victories for transparency this year when three agencies that had previously refused to release subpoenas they’d received as part of ongoing investigations — the New Mexico Finance Authority, State Investment Council and Educational Retirement Board — reversed courses and released them (The ERB first, then the NMFA, then SIC).

The lone holdout? Richardson’s office. He played fast and loose with the public records act, blacklisted me and gave other journalists a hard time. Richardson’s refusal to be transparent leaves him with a black eye as the Legislature and even some government agencies under his control are doing the opposite.

With the scandals surrounding Richardson continuing to taint close friends of the governor, I can’t help but wonder if he’s refusing to be transparent because he has something to hide.

3. Mr. Richardson doesn’t go to Washington

Barack Obama and Bill Richardson sharing a laugh in Las Cruces in 2008. (Photo by Heath Haussamen)

We knew in August 2008 that the FBI was investigating allegations that CDR Financial Products received a state investment contract that paid almost $1.5 million in exchange for $110,000 in contributions to two Richardson political committees and his 2006 gubernatorial re-election campaign. Despite the warning signs, we knew in November 2008, or at least when it became official in December 2008, that Obama had chosen Richardson to be his commerce secretary.

Richardson’s political ambitions collided with the investigation in January when he withdrew his nomination to be commerce secretary. At the time, Richardson and Obama portrayed the move as temporary.

“I look forward to his future service to our country and in my administration,” the president said of Richardson.

That made the dramatic plunge Richardson took in the following weeks and moths even more shocking. Obama made a joke on national television at Richardson’s expense days after the governor withdrew his nomination. Richardson’s approval rating tanked. The media started more intensely scrutinizing the governor and his administration.

Two more cases – a whistleblower lawsuit filed by former ERB Investment Officer Frank Foy and the national investment scandal that’s already led to convictions in New York – further tainted the Richardson administration. When the U.S. attorney confirmed in August of this year that Richardson wouldn’t be charged in the CDR probe, political analysts were quick to point out that the governor wasn’t yet in the clear.

In making known that Richardson and others his office investigated were not exonerated, the U.S. attorney reserved the right to reopen the case at any time. CDR officials were later indicted in a separate case not related to New Mexico.

At the end of the year, the man who came back to New Mexico in 2002 with his eyes on winning the presidency in 2008 remains instead a lame-duck governor whose future is unclear.

2. Economic downturn

Bailouts in Washington appeared to begin to stabilize – at least temporarily – the nation’s economy in 2009. But the situation remained bad throughout the year, and New Mexico wasn’t immune to the greatest economic downturn since the Great Depression.

This isn’t the top New Mexico political and government story of 2009, in my opinion, because the state’s leaders haven’t yet dealt with the situation – meaning much of the hard work and much of the pain is yet to come.

Lots of pain has already been felt. For example, many newspapers made drastic cuts this year. The housing market has tanked. Oil and gas revenues are still down. But government, by far the largest employer in New Mexico, avoided making the most difficult decisions, in part because it used one-time, federal stimulus money to help prop up the state budget.

The governor started making painful moves recently with the announcements of mandatory furloughs and layoffs of 59 political appointees, but there’s more to come. Left to deal with in the upcoming session is a budget shortfall of at least several hundred million dollars. Some say the shortfall could be as much as $1 billion.

Many agree that tax increases or other revenue raisers and massive cuts will be necessary. The debate over both threatens to create gridlock in the Legislature, and the fact that 2010 is an election year introduces another dynamic — some will be thinking more about doing what’s politically wise than what’s necessary.

Regardless, lawmakers and the governor failed to make the hard choices in 2009, so, unless more federal stimulus money is approved, they’ll have to make those decisions in 2010.

1. Public corruption

Former Region III Housing Authority Director Vincent "Smiley" Gallegos

Though rumors of pending indictments of Richardson or others in the CDR case never came to fruition, several other public corruption cases led to criminal indictments in 2009:

• In April, the attorney general secured the indictments of Public Regulation Commissioner Jerome Block Jr. and his father, a former PRC member, on felony charges related to misusing the state’s public financing system.

• In June, former Region III Housing Authority Director Vincent “Smiley” Gallegos and others were indicted in the long-standing housing authority scandal. The charges against three of the four, including Gallegos, include fraud and money laundering.

• In July, former Secretary of State Rebecca Vigil-Giron and three others were indicted on 50 counts including money laundering, fraud, soliciting or receiving kickbacks and tax evasion in the alleged theft of millions of dollars.

Those three cases — plus the now-defunct probe into the Richardson administration and CDR, the investment scandal and a massive embezzlement in the Jemez Mountain School district — made corruption an even more prominent story in 2009 than the economy.

In the case of the investment scandal, here’s what we know: Former State Investment Office Gary Bland, according to SIC member and Land Commissioner Patrick Lyons, was allegedly pushing investment firms to hire certain placement agents. Aldus Equity’s Saul Meyer, when he was the state’s investment adviser, was recommending that the state make investments that were pushed on him by politically connected individuals even though, by his own admission, those investments may not have been in the best interest of the state.

And Marc Correra, a politically connected placement agent (his father is a close friend of the governor) who shared in as much as $22 million in finders’ fees for helping investment companies win business with the state, has apparently gotten out of Dodge.

Meyer, who has already pleaded guilty to charges in New York, is reportedly cooperating with investigators in New Mexico. Look for something to happen with this case in 2010.

The scandals pushed the Legislature to approve campaign contribution limits earlier this year that will take effect shortly after the 2010 election. Many are laying the groundwork for another push to create a state ethics commission to educate public officials on how to behave (yes, they apparently need such education) and punish them when they don’t.

There are calls for other reforms too, including the creation of a whistleblower protection law and the banning of contributions from state lobbyists and contractors. And the AG is coming under pressure to act on almost 100 cases filed under the Fraud Against Taxpayers Act that remain sealed.

Starting with the indictments of two state treasurers in 2005, the second half of the decade has exposed deep-rooted public corruption in New Mexico. But have we started turning things around?

That may be the biggest question as we enter 2010.