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Auditor alleges misuse of funds

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In 2011, many Tierra Amarilla Land Grant heirs were in an uproar after learning members of their board accepted payment for a waiver of mineral rights to an oil company.

Now, the State Auditor’s Office is calling for a criminal investigation into what happened to the $233,000 in proceeds from the deal. The payments were not for individual leases for oil and gas exploration, but for the waiver of claims to future mineral rights by the land grant heirs.

BALDERAS: Has contacted FBI, New Mexico AG (Dean Hanson/Albuquerque Journal)

BALDERAS: Has contacted FBI, New Mexico AG (Dean Hanson/Albuquerque Journal)

According to a recent letter from State Auditor Hector Balderas to the Legislature’s Land Grant Committee, questionable use of the money by now-deceased T.A. Land Grant board president Dennis Wells included:

  • Bank fees, including foreign currency exchange charges.
  • Purchases at casinos, gas stations, hotels, retail stores and online prescriptions, including for penis enhancement drugs.
  • Checks for dental work, a used car and residential carpet.

Balderas said this week that the questionable spending by Wells amounted to $233,000, but Evan Blackstone, the auditor’s chief of staff, said he could not comment on specific amounts when asked if any money remained from the mineral rights transaction.

Balderas also said others may be involved in the alleged misuse of the funds.

“There needs to be a thorough criminal investigation following up on the questionable purchases,” said Balderas.

He referred “potential criminal violations” to the FBI, the New Mexico Attorney General, the Santa Fe District Attorney’s Office, and the Fraud Investigations Division of the state Taxation and Revenue Department, as outlined in his April 29 letter to the Land Grant Committee chairman, Rep. Miguel P. Garcia, D-Albuquerque.

“I have made contact specifically with the FBI about the case,” Balderas said in an interview.

An FBI spokesman, as is the agency’s policy, wouldn’t confirm or deny the existence of any investigation. The matter is being reviewed by the investigations division of the New Mexico Attorney General’s office, said spokesman Phil Sisneros.

The Land Grant Committee “started sharing information with the auditor and the AG” after its July 2011 meeting in Abiquiu when Wells and other were questioned, said Garcia. The committee is helping to restructure the T.A. board because it became a “non-functional board” after Wells’ death in 2012, he said.

Balderas said he will testify soon to the Land Grant Committee “and give them a briefing on this case and what reforms are necessary.”

The allegations concern $233,000 paid to the land grant – or to Wells and others as representatives of the land grant – in 2011 by Denver-based Wind River Energy Corporation. The deal was intended to waive any mineral rights claims by the land grant to help clear the way for potential oil and gas exploration, using hydraulic fracturing, or “fracking,” on about 93,600 acres.

The energy company was trying to avoid a potential cloud over mineral rights in the sometimes complicated legal space where private property and land grant claims collide. Claims on privately held land that land grant heirs contend was stolen or swindled away decades ago have clouded property titles in other cases in northern New Mexico in recent years.

Wind River never did any drilling.

At a Land Grant Committee meeting in 2011, many heirs objected to the deal and questioned what would happen to the money. Wells and other land grant board members said the money would be used to fight for land grant rights and for administrative costs. They said few had been interested in the land grant’s business or attended meetings before the controversy erupted.

Balderas said the allegations about use of the proceeds from the mineral rights deal came to his attention in the fall of 2013. “Citizens did walk into our office and provide information, and we began fact-finding and talking to various witnesses pretty extensively in the fall of last year,” he said.

Attempts to access land grant bank records were at first resisted but, with the use of subpoenas, “we gained further evidence and that’s how we were able to verify that many of the purchases included questionable activities, including male enhancement drugs,” said Balderas.

“I’m concerned that, in the transactional patterns, there is a high risk that others may be involved,” he added.

A bigger issue could be the lack of state funding for training and oversight for the land grants. “I am hoping to work with the Legislature and the governor to tighten up front-end accountability,” Balderas said.

The Legislature’s Land Grant Committee was advised of suspicions about the misuse of the Tierra Amarilla Land Grant funds by Blackstone at a Nov. 19-20 meeting, according to the minutes of that meeting at the Roundhouse.

Blackstone told the committee that “under the Audit Act, a political subdivision such as a land grant must report its revenue and account for that revenue,” the minutes state. The committee asked for the State Auditor’s help in looking into the case.

Previous probe

The Rio Arriba County Sheriff’s Office uncovered possible wrongdoing in a preliminary investigation into the land grant in 2011, said sheriff’s office spokesman Jake Arnold. He alleged the deceased Wells “hijacked” the land grant “and created a bogus group … that didn’t have a single piece of real estate.”

Arnold says that Wells was not a legitimate representative of any land grant association when he and two others agreed to the waiver agreement.

The sheriff’s office “sought to proceed with a criminal investigation based on some facts/documents we uncovered in 2011, but the First Judicial District Attorney squelched our initiative, although she was aware of these same facts/documents,” said Arnold.

GARCIA: Current Land Grant Committee chair

GARCIA: Current Land Grant Committee chair

District Attorney Angela “Spence” Pacheco did not respond to phone calls from the Journal requesting a comment.

The auditor’s office never got any notification of any sheriff’s office inquiry, Blackstone said on Wednesday.

A reconstituted Tierra Amarilla Land Grant board wants to do things differently, according to the minutes of the November 2013 Land Grant Committee meeting. “The current Tierra Amarilla Land Grant board of trustees proposes to amend the land grant bylaws to prevent the board from signing documents on behalf of the land grant without the support of the heirs, as determined by a majority vote,” according to the minutes.

The land grant also formed a subcommittee “because people were unhappy with and confused about the actions of the previous Tierra Amarilla Land Grant board of trustees.”

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