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Sunday, March 15, 2009
How an Accountant Helped Unravel Crime
By Mike Gallagher
Copyright © 2009 Albuquerque Journal
Journal Staff Writer
Accountant Judith Wagner had indications that taking on the receivership of an Albuquerque engineering firm in 2004 wouldn't be just any other job.
The civil lawsuit between the partners who owned P2RS was bitter, and there were allegations of political payoffs in the record.
If that wasn't enough, the large political shadow of former State Sen. Manny Aragon fell across the case.
But Wagner had no idea that the court-appointed assignment to sort out the company's finances would lead to the Metropolitan Court construction scandal that shook the state's political foundations and sent shock waves all the way to Washington, D.C.
It would lead to eight people pleading guilty in federal court to plundering $4.2 million from the project for their own gain. In addition to Aragon, the list of wrongdoers included a former Albuquerque mayor, a top court administrator and one of the state's most high-profile architects.
Delay in prosecuting the case after the FBI had done its work was at least a factor in then-U.S. Attorney David Iglesias losing his job. His termination became part of a wider probe of alleged political firings of U.S. Attorneys by the Bush White House that continues to this day.
That investigation, and ethics complaints in Congress, ensnared both Sen. Pete Domenici and Rep. Heather Wilson, both Republicans, who called Iglesias before indictments were returned.
Both denied pressuring Iglesias, a Republican who got the job at Domenici's behest, and Domenici apologized publicly for making the call.
On alert
Wagner was appointed as receiver of P2RS by state District Judge Geraldine Rivera, who had been hearing the lawsuit between company owners Harvey Peel and Raul Parra for two years.
Peel accused Parra of forcing him out of the firm, hiding assets and racketeering, among other charges.
P2RS was still a going concern, and one of Wagner's jobs was to maintain the company's value while sorting out its finances. Rivera gave her very broad powers.
Wagner was aware Peel had alleged that his partner, Parra, had made improper payments to Aragon for work done on the state District Court building.
"I was hyper alert to anything that seemed wrong," Wagner said.
And it didn't take long for that alertness to pay off.
Manuel Guara, the owner of a company called DatCom Inc., was also the administrator for P2RS' computer systems. He was under orders to back up all the systems. Wagner found that data was missing, and Guara resigned.
"There wasn't one thing that led me to say 'Eureka,' " Wagner said.
As she went through a new backup of all the computer systems, information started to become available showing Parra making payments to Aragon and a company called Smart Solutions Inc.
Aragon's relationship with P2RS was obscure — somewhere between a consultant and a lawyer — and not well-documented.
Wagner, in a recent interview, said that determining Parra's relationship with Smart Solutions took time and only became clear during a computer search of Parra's campaign contributions.
She found that Parra, Aragon and Toby Martinez, who by then had moved on from his job as administrator of the Metropolitan Court, had made sizeable campaign contributions to California Lt. Gov. Cruz Bustamante, a Democrat running for governor.
The contributions linked Martinez to Smart Solutions — which turned out to be a company Martinez and his wife set up to launder money from the courthouse scam.
For a variety of reasons, Wagner had to stay on as receiver longer than she expected but continued to gather documents that led her to the disturbing conclusion that a lot of money had been siphoned out of public projects — although no charges were ever brought for a project other than Metropolitan Court — for political payoffs and personal gain.
She compiled and organized an extensive file of canceled checks, incorporation papers and other documents.
In the summer of 2005, Wagner carried that file into the U.S. Attorney's Office.
The contents were politically explosive, so much so that word of what she was finding had reached Gov. Bill Richardson's office months before she showed the records to federal prosecutors and FBI agents.
FBI agents interviewed by the Journal said Wagner provided investigators with a road map to political corruption in public works projects in New Mexico, including the Metropolitan Courthouse.
Last year, she received a letter from FBI Director Robert Mueller offering personal thanks for sticking with the case.
"Over the course of the next three years — despite the risk of professional repercussions to your career — you selflessly gave of your time in support of this case. As a result of your courageous efforts, Aragon and his co-conspirators pled guilty. Your involvement was essential to the success of this investigation. ..."
Targeting Martinez
In December 2005, FBI agents finished following Wagner's road map.
They had bank records showing $2 million flowing from Parra to Toby Martinez's company, Smart Solutions. They documented more than $600,000 being transferred from Parra to Aragon.
Agents had to decide which conspirator they wanted to confront.
The decided Martinez was the most likely candidate.
The agents had the canceled checks from Parra to Smart Solutions, and there appeared to be no credible reason for them.
So they went to Martinez's house for a talk.
Martinez was cooperative and agreed to meet with FBI agents.
Martinez and his lawyer at the time met with the agents on Dec. 22, 2005, and confirmed many aspects of the scheme to steal more than $3 million from the installation of the court's audio-visual system.
Among them:
• How Aragon agreed to pass legislation paying for the system in exchange for a piece of the pie.
• How he misled Aragon into thinking the pie was $1 million when it was actually more than $3 million.
• How various members of the conspiracy were recruited.
The day after Christmas 2005, Martinez took the agents to Parra's house.
According to court records, Parra confirmed Martinez's story and added details like a meeting at Aragon's house in late 2001 or early 2002 where the project and proposed division of spoils were discussed — $400,000 for Aragon, $200,000 to $250,000 to Parra and the remainder to Martinez.
Parra recruited Guara and his firm DatCom to be the subcontractor on the audio-visual contract, submitting inflated invoices for the project. They were approved by Martinez, the court administrator, and architect Marc Schiff, who was also in on the scheme.
Some other things Martinez told the agents:
• The project was skimmed from its inception through the architectural contract, a lobbyist contract and a construction management contract.
• In 1998, Aragon directed Martinez to hire the architectural firm, Design Collaborative Southwest if Aragon was successful in getting the money approved to build the courthouse. Martinez told the agents the company won the bidding without manipulating the bids.
• Once hired, the firm's managing partner, Marc Schiff, got involved in a scheme in which he submitted almost $1 million in phony invoices and used the money to make payoffs to Martinez and Aragon through the company's lobbyist, former Albuquerque Mayor Ken Schultz.
Martinez's revelations about the architectural invoice conspiracy led the FBI into more months of investigation.
The agents found Schiff difficult.
One moment, he was overcome with remorse, the next, he tried to downplay his involvement in the scheme. He initially withheld details, but ultimately agreed to wear a recording device to a meeting with Schultz.
At that meeting, Schultz talked — too much for Schiff's liking, because Schultz kept bringing up other projects in which similar schemes were carried out.
That taped meeting led to a confrontation between the agents and Schiff, but it also provided a nice bow on what they saw as a very neatly wrapped up investigation into the Metropolitan Courthouse scheme.
The only thing remaining was the part of the investigation they could not keep secret — the construction records taken from the court and interviews with judges and other public officials.
So on a sunny March day in 2006, the agents went to the courthouse to ask for the construction records.
They barely made it to the elevators before word of the investigation exploded onto the scene.
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