Demesia Padilla’s sudden resignation as Taxation and Revenue Department secretary last week sent a jolt through state government. It was also a blow to Republican Gov. Susana Martinez, who had stood by Padilla, one of her longest-serving Cabinet members, as the Attorney General’s Office carried out a monthslong investigation into Padilla’s personal finances and allegations that she tried to thwart a state audit into one of her former tax clients.
That changed last week as the contours of the investigation came into focus with the release of a stunning search warrant affidavit. The document, released a day after agents raided Padilla’s state offices, revealed that investigators were looking into a host of possible criminal activities, including tax evasion and embezzlement.
Martinez, who had once challenged the investigation as a politically motivated attack, accepted Padilla’s resignation and said she had ordered the tax department to fully cooperate with investigators.
But Padilla was only the latest member of Martinez’s Cabinet to cause headaches for the governor, who in the past year has seen her approval ratings drop and influence in the state Legislature dwindle.
Since taking office in 2011, Martinez has had to deal with a human services secretary who stormed out of a legislative committee and later made headlines claiming there is no hunger in New Mexico, one of the poorest states in the nation. She’s had homeland security secretaries accused by former staffers of rendering dysfunctional the state’s emergency relief efforts and a corrections secretary whose live-in boyfriend discharged a gun on prison grounds.
But while several other Martinez Cabinet secretaries have been controversial, Padilla is the only one known to have been investigated for possible criminal activity. She has not been charged with any crimes, and the investigation is continuing.
Former Secretary of State Dianna Duran pleaded guilty last year to fraud charges and served 30 days in jail, but she was an elected official who was not appointed by the governor.
It’s not unusual for Cabinet officials to take heat over policy issues. The state Senate took five years to confirm Public Education Secretary Hanna Skandera, who is a frequent target of teachers unions and Democratic legislators sympathetic to them. Skandera, who came to New Mexico from Florida, where she was a top education figure in Gov. Jeb Bush’s administration, currently is being considered by President-elect Donald Trump’s transition team for a high position in the U.S. Education Department, Politico reported Friday.
“I’ve seen many Cabinet officials who become controversial but are good public servants,” said former Gov. Garrey Carruthers. “They tend to become lightning rods for implementing a governor’s policies.”
But Carruthers, a Republican who was governor between 1987 and 1990, said, “Cabinet members getting into legal problems is not very common.”
Both Carruthers and Toney Anaya, a Democrat who served as governor between 1983 and 1986 — said last week that governors normally choose Cabinet officials with the best intentions, and that most are honorable people. But, Anaya added, “Human beings are human beings.”
Anaya said he met with Martinez shortly after she first took office in 2011. “I told her you have to select the best people, give them a strong message about what you expect. And then you pray,” he said.
“Either people are ethical or they’re not,” Carruthers said. “Every time you appoint someone, you take a risk. If I could develop a test [to see if someone is ethical], I’d sell it everywhere.”
Carruthers, who now serves as chancellor and president of New Mexico State University, said that during his four years as governor, he only had to fire one Cabinet secretary. “But that was a performance issue, not an ethical problem,” he said.
One agency that stirred some controversy during Carruthers’ term was the Corrections Department. The former governor praised his corrections secretary, Lane McCotter, as a capable secretary. But he said the department came under major scrutiny following a prison break in 1987. Seven inmates, including two convicted murderers, escaped from the penitentiary south of Santa Fe.
Anaya said one of his biggest problems during his four years was keeping a health secretary. None had ethical problems, he said, but he went through six during his term.
Other high-ranking members of Anaya’s administration got in trouble with the law. State Investment Officer Phil Troutman and deputy State Treasurer Ken Johnson were convicted in 1985 of conspiracy to commit extortion after telling a New York bank that state money wouldn’t be invested there unless the bank made a political contribution. Both were sentenced to two years in prison and a $5,000 fine. Meanwhile, Anaya aide John Ramming was convicted on 13 counts of bribery, fraud, conspiracy and racketeering for steering a reported $2.8 million in disaster relief contracts to a friend.
Climate and communists
Martinez’s first Cabinet controversy was her nomination of former Apollo astronaut and former U.S. Sen. Harrison Schmitt to be secretary of the Energy, Minerals and Natural Resources Department. Schmitt, a Republican who was one of the last people to walk on the moon in 1972, immediately was denounced by environmentalists because of his views on climate change. He wasn’t shy about expressing his belief that climate change wasn’t man-made and once called the “global warming scare” a “political tool to increase government control over American lives.”
Two years before Martinez nominated him, Schmitt appeared on a radio show hosted by famed conspiracy purveyor Alex Jones. During the interview, he didn’t dispute Jones when the host called climate change a “government hoax.” Talking about environmentalists, Schmitt said there are individuals “and a fairly large number, who … captured the environmental movement and turned it into what previously was considered the communist movement.”
Martinez said she hadn’t heard the Jones interview but told The New Mexican that she didn’t believe the environmental movement contained a large number of communists.
But these weren’t the reasons that led to Schmitt taking himself out of consideration for the Cabinet job. In early February 2011, about a month after Martinez nominated him, Schmitt informed the governor that he was leaving the administration because he did not want to submit to a required background investigation by the Senate Rules Committee.
Martinez didn’t question the committee’s right to conduct background investigations as her predecessor, Democrat Bill Richardson, had done during his tenure. In 2008, Richardson ordered the state Department of Public Safety to stop conducting background checks for the Rules Committee. The Attorney General’s Office stepped in and agreed to do background investigations for the committee.
Guns and rattlesnakes
Former Corrections Secretary Lupe Martinez, no relation to the governor, was another early departure from Susana Martinez’s original Cabinet. Lupe Martinez previously had been had been warden at the Fort Stanton Correctional Center. She resigned in August 2011, just six days after her boyfriend, who lived with her on the prison grounds, prompted a police investigation by shooting a gun on the state prison property south of the city.
The boyfriend, Larry Flynn, was at the time an official with the state Probation and Parole Division. He told investigators that he’d been firing at a nest of rattlesnakes he’d found under a doghouse. At the time, Flynn was on administrative leave because of allegations that he padded his timecard. Flynn filed a wrongful termination suit that later was dropped.
Lupe Martinez resurfaced in the news nearly a year later, shortly after The New Mexican reported that Gov. Martinez and many top members of her administration were communicating through private emails, rather than government emails open to public inspection. In an affidavit, the former secretary said that at a Cabinet meeting, the governor’s chief of staff, Keith Gardner, told Cabinet secretaries and others in the room to “whenever possible, use our private emails when communicating, because by doing such would prevent them from being discovered through public records requests.” A spokesman for the governor denied the former secretary’s claims.
Another early Cabinet departure in Gov. Martinez’s first term was Rick May, secretary of the Department of Finance and Administration. Martinez announced in August 2011 that May was leaving the department to become chief executive officer of the New Mexico Finance Authority, which issues bonds and makes loans to provide low-cost financing for governmental projects such as drinking water systems.
There had been few if any public signs of tension between May and Martinez at the time of May’s job switch. But in the summer of 2012, it was discovered that the Finance Authority’s former controller had submitted a fake audit of the agency. May himself never was accused of any wrongdoing, but he took the fall and was fired by the agency’s board. The Finance Authority was sharply criticized in a special report for an alleged “massive failure of oversight” — a charge May vehemently disputed.
In an interview in the spring of 2013, May told The New Mexican that his short tenure in the Martinez administration was a miserable time. He said he routinely was cut out of important decisions concerning the state budget, excluded from meetings and endured what he says was a major lack of communication from the Fourth Floor.
During Martinez’s first legislative session, May said, “Legislators were coming up to me and saying, ‘Hey, we were at this budget meeting. Why weren’t you there?’ I was told of budget meetings, and I’d say, ‘I’d like to be invited,’ and then I’d get a call [from the governor’s staff] saying, ‘Well, no, you’re not invited.’ ” He also said he was forced to hire people he did not want for key positions in the department.
A spokesman for the governor denied May’s claims in 2013, saying May was “clearly disgruntled following his dismissal from [the Finance Authority] over the audit situation.”
In 2014, May was hired as the staff director of the U.S. House of Representatives’ Budget Committee, a position he still holds.
Hunger in New Mexico?
One of the most controversial Cabinet members Martinez ever appointed was Sidonie Squier, who headed the Human Services Department during most of Martinez’s first term.
With Martinez’s blessings, Squier led the charge in the administration’s shake-up of the state’s mental health system, pulling the Medicaid funding for 15 of the top behavioral health providers because of an audit she said showed evidence of billing fraud. But even before the audit, an investigation by The New Mexicanrevealed that Squier’s department was recruiting providers from Arizona to move in and take on the caseloads of the New Mexico providers. The funding freeze caused many of those providers to go broke.
It took nearly three years, but earlier this year, state Attorney General Hector Balderas cleared the last of the providers of any criminal wrongdoing.
In one heated meeting of the Legislative Health and Human Services Committee in July 2013, Squier refused to answer questions from at least one state senator and ended up angrily leaving the meeting while one state representative was asking questions.
Not long after that, Squier caused an uproar by telling state officials in an email that “there has never been and is not now any significant evidence of hunger in New Mexico.” Her department was the agency in charge of the federal food stamp program in the state and the emergency food assistance program.
Martinez stood by Squier during this controversy, but she agreed that the “email was worded very poorly and inarticulately.”
Squier resigned two days after Martinez was re-elected in 2014.
Her successor at Human Services, Brent Earnest, has enjoyed a far better relationship with the Legislature. But he, too, was the center of a scandal earlier this year.
At an April court hearing, five Human Services employees testified under oath that the department had falsified income information on emergency applications for people seeking welfare benefits to make the department look better in federal audits. This resulted in food assistance wrongly being denied to some of the poorest citizens in the state.
Earnest testified that the department had not met deadlines in court orders that required his agency to do things such as train employees on how to properly screen immigrants for benefits. At a subsequent hearing, several Human Services supervisors invoked their Fifth Amendment rights against self-incrimination when asked under oath whether they had falsified emergency benefit requests.
When state Sen. Jerry Ortiz y Pino, D-Albuquerque, called for Earnest’s resignation in May, Earnest’s spokesman Kyler Nerison said, “This is a blatant political stunt from an out-of-touch extremist.”
A federal judge in September held Earnest in contempt for failing to comply with court orders aimed at improving the administration of food aid and Medicaid health care benefits. Nerison said the judge’s rebuke “doesn’t take into account all of our efforts to resolve long-standing issues — some of which are three decades old and occurred under several administrations.”
Jon Barela, Martinez’s first secretary of economic development, was sued in 2014 by two former high-level department employees — Kurt Saenz, the department’s former chief financial officer, and Brent Eastwood, the former director of the Office of International Trade. The two claimed they were interviewed by an unnamed federal agency about complaints they had made against Barela and Deputy Secretary Barbara Brazil, the lawsuit says.
Both plaintiffs had been fired in 2012 after they had reported their suspicions about Barela to the Department of Finance and Administration and the Attorney General’s Office.
The suit claimed that Barela and Brazil conspired to recruit investors for Cerelink, a company Barela co-founded, promising a tax credit for their investments. It also claimed that the agency had improperly hired the wife of prominent Republican lawyer and Martinez ally Pat Rogers to build the department’s website — on orders from the Governor’s Office.
A department spokeswoman said the claims were baseless and that the employees were disgruntled. She said Barela had cut his ties with Cerelink years before. Barela hung on at the department for more than two years after the suit was filed. He stepped down in September to head an El Paso nonprofit promoting commerce on the U.S.-Mexico border.
The case is pending in state District Court in Santa Fe.
In December 2014, a New Mexican investigation of the state Department of Homeland Security and Emergency Management revealed “an agency rife with dysfunction and overwhelmed by even relatively modest requests for relief.” The investigation was based on internal reports, emails, audits and interviews with current and former employees.
Former staff members and people from other agencies who have dealt with the department said that while the department has suffered from “a chaotic culture and administrative instability” since it was founded, the previous two years had been particularly bad under former department Secretary Gregory Myers. Myers had been appointed in October 2011 and stayed on until November 2014.
Some local governments waited months, sometimes more than a year, before receiving money to fix public works damaged by fires, floods or other natural disasters.
A spokesman for Martinez in 2014 defended the department. “In the last four years, the department has leveraged resources from across the state and engaged FEMA to ensure recovery projects were done quickly and correctly,” Michael Lonergan told The New Mexican.
Though Myers is gone, problems at Homeland Security continue, State Auditor Tim Keller said last month. Keller said he was so concerned about the financial management of the department he was recommending the governor direct a separate agency begin overseeing its financial functions.
Current Homeland Security Secretary Jay Mitchell disputed Keller’s allegations, saying they are “uninformed, outdated and not entirely true.”