Former tax secretary Padilla faces criminal charges - Albuquerque Journal

Former tax secretary Padilla faces criminal charges

Demesia Padilla
Demesia Padilla

SANTA FE – Demesia Padilla, the former head of New Mexico’s tax department, became the latest state official to face public corruption charges after prosecutors in Attorney General Hector Balderas’ office filed a criminal complaint Thursday alleging that Padilla embezzled more than $25,000 from a former client and used her Cabinet position to push for favorable tax treatment.

The charges were filed roughly 18 months after state investigators raided the New Mexico Taxation and Revenue Department in search of tax documents connected to Padilla and her husband. Padilla resigned shortly afterward.

Balderas, a Democrat, said in a statement that Padilla, a Republican, had violated the public trust, as the alleged actions occurred while she was running the tax department.

“Serving in a position of financial trust as a regulator over $7.4 billion of revenue for the state of New Mexico carries with it great responsibilities that should never be breached or abused for personal interests,” Balderas said.

Specifically, the charges filed in state District Court in Santa Fe include embezzlement, engaging in an official act for personal gain and violating the ethical principles of public service. Three of the eight counts against her are felonies, and the other five are misdemeanors.

Padilla could face up to 25 years in prison and as much as $30,000 in fines if convicted of all charges, according to the Attorney General’s Office.

Her attorney, Paul Kennedy of Albuquerque, declined to comment Thursday, saying neither he nor Padilla had seen the charges.

Padilla, one of Gov. Susana Martinez’s first Cabinet appointees after Martinez was elected in 2010, initially denied allegations that she pressured department employees to give preferential treatment to a former client of hers, telling the Journal in July 2015 that the allegations were just a “bump in the road.”

However, Padilla resigned abruptly after a search warrant affidavit filed in December 2016 by the Attorney General’s Office indicated that she could be under scrutiny for multiple criminal acts.

The office first received a referral about possible criminal activity on the part of Padilla in July 2015 from then-state Auditor Tim Keller, who is now Albuquerque’s mayor.

In a Thursday statement, Keller said his original investigation revealed a pattern of behavior that put state revenue, whistleblowers and ethical standards in jeopardy.

“There is no place for abuse of power from our highest-ranking officials,” Keller said. “That’s why we refused to sweep it under the rug in the face of intense pressure due to the fact that she was a powerful appointee of Gov. Martinez.”

According to the criminal complaint, the Attorney General’s Office interviewed nearly a dozen current and former tax department employees, obtained a search warrant for bank records and searched Taxation and Revenue Department records before filing charges.

AG’s Office investigators also interviewed Padilla in December 2016, just before her resignation, during which Padilla told them she and her husband had burned past tax documents from clients after a former business partner left them in disarray.

“Thank God I live in the South Valley, where we could burn, and so he burned,” Padilla said at one point during the interview, according to the complaint.

Much of the attorney general’s case against Padilla’s centers on payments made to Padilla and her husband during a roughly 14-month period – from December 2011 until February 2013 – by a Bernalillo-area trucking company.

A company official said Padilla, a certified public accountant, handled the company’s financial affairs until February 2013 – when she was already a Cabinet secretary – but that she was fired after unauthorized transactions were noticed, according to a search warrant affidavit.

The charges filed Thursday allege that Padilla embezzled more than $25,000 from the company via 40 or so unauthorized fund transfers. In addition, the complaint cited a 2014 letter sent to the Taxation and Revenue Department by Padilla – then the agency’s director – in which she sought to remove penalties against the trucking company that had been imposed after a tax audit.

The corruption charges against Padilla mark the latest ethics scandal involving a New Mexico public official.

Former state Sen. Phil Griego, a Democrat from rural San Miguel County, was sentenced last fall to 18 months in prison and more than $47,000 in fines after being convicted of fraud, bribery and other public corruption charges.

And former Secretary of State Dianna Duran, a Republican, resigned from office in 2015 and pleaded guilty to illegally using campaign contributions to fuel a gambling habit.

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