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Former state tax secretary arraigned

Former Secretary of Taxation and Revenue Demesia Padilla sits in court before her arraignment in 1st District Court in Santa Fe on Friday. The New Mexico Attorney General’s Office filed public corruption charges against Padilla. (Eddie Moore/Albuquerque Journal)

Copyright © 2018 Albuquerque Journal

SANTA FE – A state judge has set an Oct. 29 start date for a preliminary hearing to determine whether Demesia Padilla, the former head of New Mexico’s Taxation and Revenue Department, should face trial on public corruption charges.

Padilla, 58, was largely stoic during a Friday arraignment hearing and quickly exited the Santa Fe courthouse with her husband after it ended.

She was released on her own recognizance by District Judge Mary Marlowe Sommer. She was ordered not to contact witnesses in the case, excessively drink alcohol or return to the agency she led for nearly six years.

A not guilty plea is expected to be entered during the preliminary hearing. Her attorney, Paul Kennedy, declined to comment further.

One of the original members of Gov. Susana Martinez’s Cabinet, Padilla was charged last month by Attorney General Hector Balderas’ office with embezzling more than $25,000 from a former client and using her Cabinet position to push for favorable tax treatment.

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

Much of the case hinges on allegations that Padilla, while the tax agency’s director, sought to remove penalties against a Bernalillo trucking company that had been a client of her accounting firm. She also allegedly took money from the trucking company through unauthorized fund transfers.

Former Taxation and Revenue Secretary Demesia Padilla talks to her attorney, Paul Kennedy, during her arraignment in District Court in Santa Fe on Friday. (Eddie Moore/Albuquerque Journal)

The Attorney General’s Office interviewed nearly a dozen current and former tax department employees and obtained a search warrant for bank records before filing charges.

Padilla 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.”

The Attorney General’s Office had first received a referral about possible criminal activity on the part of Padilla after an investigation by then-state Auditor Tim Keller – now Albuquerque’s mayor.

In a Friday statement, an AG’s Office spokesman said Balderas, a Democrat, is focused on preparing the case for the preliminary hearing. He did not provide additional details about the office’s strategy for prosecuting the case.

Padilla could face up to 25 years in prison and as much as $30,000 in fines if convicted of all eight charges – three felonies and five misdemeanors – against her.

Before being appointed Cabinet secretary, Padilla was the Republican Party nominee for state treasurer in 2006. She lost in that year’s race to Democrat James Lewis.

Her tenure at the helm of the Taxation and Revenue Department was marked by policy initiatives that critics complained targeted immigrants, such as the Martinez administration’s effort to take driver’s licenses away from undocumented immigrants.

Meanwhile, the charges against Padilla represent the latest ethics allegations 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.

New Mexico voters will decide in November whether to approve creation of an independent state ethics commission to review future allegations against candidates, elected officials and lobbyists.

Former state Taxation and Revenue Secretary Demesia Padilla sits with her attorney, Paul Kennedy, left, and her husband, Jessie Medina Jr., during her arraignment Friday in state District Court in Santa Fe. (Eddie Moore/Albuquerque Journal)