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Sunday, April 1, 2007

Metro Court Scandal Likely to Grow

By Mike Gallagher
Copyright © 2007 Albuquerque Journal; Journal Investigative Reporter
    For politicians and judges reeling over last week's indictments in the Metropolitan Court construction scandal, there could be more bad news on the way.
    An attorney for one of the main defendants in the corruption case said he doesn't think federal investigators are close to completing their investigation.
    "They didn't call it 'Black Robe' for nothing," Albuquerque attorney Billy Blackburn said in an interview with the Journal on Friday. "This thing is far from over."
    At one point, "Black Robe" was the name FBI agents used to describe the investigation into the Metro Court project. At this point, no judges have been accused of wrongdoing.
    "I was surprised not to see more names on the indictment," Blackburn said.
    Blackburn represents former Metro Court administrator Toby Martinez and his wife, Sandra.
    Both were charged Thursday in a federal indictment alleging that Martinez, former state Sen. Manny Aragon and engineer Raul Parra helped loot more than $4.2 million from the $83 million construction project.
    The project's architect, Marc Schiff, and his lobbyist, former Albuquerque Mayor Ken Schultz, have pleaded guilty in the scheme. So has subcontractor Manuel Guara, who ran a company called Datcom. All three are cooperating with the U.S. Attorney's Office.
    There are indications from the indictment that others might have been involved in the Metro Court scheme, and there are indications that other public works projects are under scrutiny.
    The indictment returned last week puts former court administrator Martinez at the hub of the conspiracy from its inception in 1999 and indicates that he was still involved after he left Metro Court in 2003.
    Martinez was fired as court administrator in 2003 after he was indicted for a 2002 domestic violence incident with his former wife. The charges were later dismissed and Blackburn was his attorney in that case.
    The indictment alleges that Toby Martinez and Sandra Martinez, who he subsequently married, continued to receive large amounts of money after he was fired.
    Sandra Martinez is charged with setting up a company, Smart Solutions Inc., out of the couple's home a month after her husband was fired.
    In what it describes as a money-laundering scheme, the indictment alleges that more than $1.3 million in checks from Raul Parra, an engineering subcontractor to architect Schiff, were written to Smart Solutions on one account from September 2003 through June 2004.
    Another $620,000 was transferred from another Parra account to either Toby Martinez or Smart Solutions between August and December 2004.
    By 2005, Martinez was project manager on an $80 million to $90 million state Department of Transportation project in Santa Fe. He left that job early last year.
    According to the indictment, the money Martinez and his wife received came from false and inflated invoices on an audio/visual and wiring contract submitted by Guara's company, Datcom, which then turned the money over to Parra.
   
Honor system
    How the inflated and fraudulent invoices got through the court's construction oversight isn't addressed in the indictment.
    Current Chief Judge Judith Nakamura said outside auditors "didn't catch anything."
    She said mechanisms were in place to catch any fraud but the system relies on the honesty of the court's employees.
    "The architect was supposed to be the court's representative," Nakamura said. "Obviously, that was not happening.
    "You have to remember these people were deceitful," she said. "This wasn't about sloppiness, it was about deceit and an elaborate scheme where people in positions of trust are the ones who design the scheme.
    "The architect was supposed to protect the public from this sort of thing," she said.
    The indictment alleges that Schiff used Schultz to make cash payments to Toby Martinez. Schiff maintained he made the payments to keep the contract and to get other no-bid contracts from the court.
    In his plea agreement, Schiff recounts a meeting at a restaurant with Martinez, Schultz, Parra and then-Sen. Manny Aragon.
    Prior to the meeting, Schiff gave Schultz $30,000 in cash that was given to Aragon when they met at the restaurant.
    According to his plea agreement, Schiff stated, "I continued to make the cash payments to Schultz because I feared that DCSW (Schiff's firm) would be removed from the contract if the payments stopped."
    No other information is given about the meeting in the plea agreement, but the indictment says the same group met in December 2001 at an Albuquerque restaurant.
    Nakamura said the FBI was "given the keys to the courthouse when the judges learned of the investigation."
   
The probe goes on
    Blackburn was reluctant to say much about the case. But like many others familiar with it, he said corruption allegations don't stop at Metropolitan Court.
    They say FBI agents and federal prosecutors are continuing to investigate corruption in other public works projects, including the Metropolitan Detention Center, where many of the same players were involved.
    Schiff, who has pleaded guilty to mail fraud and conspiracy charges in the court investigation, was part of the county jail design team.
    On the county jail job, county officials voted to allow Schiff's firm, Design Collaborative Southwest, to work on stages of the jail without public bids.
    Parra was hired as a subcontractor by the architects on the jail project, which like the Metro Court had numerous problems during construction.
    Attorneys familiar with the investigation say their clients have been questioned extensively about the jail project.
    They also point to paragraph 39 in the indictment, which they said makes it clear the U.S. Attorney's Office is far from finished: "The defendant Manny Aragon would exercise and appear to exercise influence over the selection of contractors and subcontractors on other publicly funded construction projects and other public works."
    That raises an important issue for defendants in the Metro Court investigation who decide to plead guilty but refuse to cooperate with investigators.
    Attorneys familiar with the case say the defendants could face another indictment on similar charges involving a different construction project.
    In addition to the jail, investigators have also been looking into construction of the state District Courthouse.
   
Complexity issues
    The indictment also shows that federal prosecutors hope to avoid the complexity that dogged their prosecution of former state Treasurer Robert Vigil.
    Vigil was charged with racketeering and extortion, which carry heavy penalties. But they also impose a heavy burden of proof on prosecutors.
    The Metro Court indictment avoids the issue of whether Aragon used his official position to extort payments from the contractors, which was a key challenge for prosecutors in the Vigil case.
    It took two trials to get Vigil convicted of one count of attempted extortion last year— despite videotape of an investment banker handing Vigil thousands of dollars in cash.
    The first lengthy trial ended with a hung jury, with many jurors wanting to convict on at least some charges. The second trial, which lasted four weeks, ended with Vigil's conviction on one count and acquittal on 22 charges.
    Instead, in the Metro Court case, Aragon is charged as one player in two relatively simple plans to plunder millions of dollars out of the construction of Metro Court. His alleged cut was $700,000.
    Most of the defendants are charged with conspiracy and mail fraud.
    Instead of getting over the high hurdle of extortion, prosecutors only need to prove there was a scheme and the mail was used to execute it. The law no longer differentiates between public or private postal carriers.
    According to the indictment, many payments, invoices and vouchers were sent through the mail.
    The tradeoff for prosecutors is lighter sentences for anyone convicted.
    On paper, the penalties are the same: 20 years in prison.
    But sentencing guidelines show that a public official convicted of extorting payments in the type of scheme alleged in the indictment would face close to 20 years in prison.
    The sentence for a mail fraud conviction in the same scheme would be around eight years.
    The complex sentencing guidelines are advisory, but federal judges have to give the guidelines great weight in determining how long they may send someone to prison.
   
This $90 million project was completed in 2003.
    Bernalillo County supervised construction, using revenue bonds.
    The architects were a partnership of Design Collaborative Southwest, headed by Marc Schiff, and Custer Basarich LLC, headed by Roger Basarich.
    Raul Parra headed an engineering firm that had a subcontract with the architects. The county brought in Private Public Partnerships owned by Michael Murphy to help oversee the final stages of construction.
    Various stages of construction were mired in disputes between the county and contractors. Parra's company was sued by the county over problems with drainage systems.
   
Where the money went
    According to the federal indictment, here are the dates and recipients of some of the money transfers.
    RAUL PARRA
    Received funds from Datcom, Inc.
    02/07/03 $142,000
    06/13/03 $30,000
    07/18/03 $50,000
    08/28/03 $522,000 (Parra & Gagnon Consulting)
    09/29/03 $368,500
    10/28/03 $282,000
    11/24/03 $500,000
    12/22/03 $200,000
    01/05/04 $850,000
    04/14/04 $633,753.26
    Received checks from MANUEL GUARA drawn from the bank account of ICS:
    On or about March 5, 2004 $36,120
    On or about March 5, 2004 45,120
    On or about March 5, 2004 $500
    PARRA transferred funds to Manny Aragon, Toby Martinez and Sandra Martinez, or their businesses. Here are some of those dates and amounts:
    MANNY ARAGON
    He or his law office received the following funds from Raul Parra or Parra & Gagnon Consulting:
    04/14/03 $7,500
    02/06/03 $22,000
    06/17/03 $16,500
    08/28/03 $100,000
    09/30/03 $38,500
    10/29/03 $29,000
    11/30/03 $41,000
    12/27/03 $45,500
    03/01/04 $50,000
    04/07/04 $50,000
    06/24/04 $50,000
    12/31/04 $200,000
    SANDRA MARTINEZ
    Her company, Smart Solutions, received funds from Raul Parra or Parra's firm on the following dates:
    08/28/03 $150,000
    09/30/03 $241,000
    10/29/03 $182,000
    11/30/03 $245,000
    12/31/03 $194,000
    03/04/04 $210,000
    04/07/04 $150,000
    06/21/04 $82,728
    08/02/04 $10,000
    09/06/04 $50,000
    12/16/04 $200,000
    12/29/04 $345,949
    Sandra Martinez signed checks drawn upon the Smart Solutions bank account to herself on the following dates.
    09/24/03 $43,195.50
    12/30/03 $55,850
    12/30/03 $16,755
    09/09/04 $6,000
    12/30/04 $105,650.20
    TOBY MARTINEZ
    He received funds from Raul Parra on the following dates:
    04/06/04 $5,000
    08/02/04 $5,000
    09/02/04 $5,000
    10/19/04 $5,000
    11/30/04 $5,000
    11/30/04 $5,000