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State auditor alleges ‘abuse of power’ in secret settlements

State Auditor Brian Colón shows an exhibit of the demand letter that led to a secret $200,000 settlement with a New Mexico State Police officer. (Greg Sorber/Albuquerque Journal)

Copyright © 2019 Albuquerque Journal

State Auditor Brian Colón announced Monday that a special audit uncovered nearly $3 million in legal settlements from Gov. Susana Martinez’s administration that were fast-tracked, approved with little to no investigation or documentation, and then buried under illegal confidentiality agreements.

“This is about an abuse of power. It’s about a lack of transparency, and particularly as it relates to political appointees by our former governor,” Colón said. “We should never settle matters and use taxpayer dollars to protect political interest, political legacies and personal agendas.”

An outside auditing firm hired by Colón’s office examined 18 civil rights cases settled out of court by the Martinez administration since about 2014. Of those $5 million worth of settlements, two-thirds were “high dollar” and failed to follow internal controls designed to ensure taxpayer money was protected, he said.

Two of the settlements involved claims by State Police bodyguards assigned to protect Martinez and her husband, Chuck Franco. One was settled for $200,000 in a span of two months with no proof of investigation. It appears all it took was a two-paragraph letter threatening to file a lawsuit, Colón said.

“What’s heartbreaking, what’s truly concerning and what really is disgusting is that $2.7 million of those $5 million in settlements were done in secret without process and without a proper investigation,” Colón told reporters.

Colón, a Democrat, said his office will be forwarding the audit results to the state Attorney General’s Office, the 1st Judicial District Attorney’s office in Santa Fe, and the new state Ethics Commission.

“These are not anomalies that don’t matter,” he said. “These are anomalies that actually represent secret payouts to protect the administration’s reputation.”

Colón said the audit “in no way evaluated the merits of the claims.”

The cases included several involving the state Department of Public Safety and top officials at the state Department of Finance and Administration. In those cases, a group of mostly female employees complained of sex discrimination and retaliation.

“There was virtually no proof in the files and in the records as to why these high dollar amounts were approved (by Martinez officials),” he added.

Two former officials who ran the state Risk Management Division under Martinez either didn’t return phone calls Monday or declined to comment. Martinez, whose spokesman in the past said she had nothing to do with the secret settlements, couldn’t be reached for comment.

Among the findings:

• Settlements of total civil rights claims from fiscal year 2015 to current averaged from 607 days and higher. Yet, the claims examined in the audit were settled much faster, most under 200 days.

• In a number of the settlements examined in the audit, confidentiality periods and damages assessed for violating those agreements exceeded what is mandated by state law.

• A 2015 settlement agreement that led to the $200,000 payment to Ruben Maynes, the former State Police bodyguard for Martinez, included a provision that required Maynes to repay a debt to a “fellow public official.”

“Having practiced law for 18 years, I don’t have to tell you how unusual that is. I have never seen it before,” Colón said. “This is unbelievable.”

The official was State Police officer Tony Fetty, who is now suing the state and DPS. Fetty had loaned Maynes money to pay gambling debts.

The audit recommends tight controls that include requiring a documented second review of any and all settlements before they are resolved.

Colón said the auditors looked at the paper trail for each settlement and tried to speak with the outside attorneys hired to defend the state, along with former Risk Management Division officials and plaintiffs attorneys.

“They cooperated at different levels,” he added.

The state Republican Party responded to the findings:

“The Party believes all public officials should be held accountable for their actions, held to the highest standard and that all governmental activity should be honest and transparent. No one is above the law. In addition, it is imperative that any such settlements never be a burden on New Mexico taxpayers.”

Colón ordered the special audit in late May after retired New Mexico State Police Chief Pete Kassetas went public to expose $2 million worth of settlements of claims – filed against him and the DPS – that were reached in the final weeks of the Martinez administration with lengthy gag orders attached.

Kassetas protested the settlements back then saying the claims hadn’t been investigated thoroughly.

Kassetas on Monday said, “The Office of the State Auditor validated the information I brought forward in a factual manner that cannot be disputed. This has always been about public corruption and exposing the fraud perpetrated against the New Mexico taxpayers.”

Attorneys for the DPS claimants contended they had proof to back their allegations of discrimination and retaliation.

They say they protested the state’s requirement for confidentiality until at least 2022.

In settling one DPS lawsuit last December for $900,000, the Martinez administration agreed to pay an additional $100,000 to resolve claims that the state violated the public records law.

The DPS defendants sought records about payouts related to other state agency department heads alleged to have escaped discipline for bad behavior. Most records were never produced.

The DPS litigation also raised the issue for the first time, said Santa Fe attorney Linda Hemphill, “that the settlement to Ruben Maynes was improper.”

Colón said he is “encouraged” by the new managers at the state Risk Management Division, and its parent organization, the state General Services Department. They were appointed by the administration of Gov. Michelle Lujan Grisham, who opted not to enforce the lengthy confidentiality agreements imposed by Martinez’s office.

Current GSD and Risk efforts have improved transparency, he said, including posting settlements online.

Risk officials, in a statement issued Monday, said claims “are examined thoroughly, objectively and consistently.”

“The Risk Management Division no longer enters into settlements with confidentiality periods that extend beyond those established by state law,” the statement said. “It also no longer threatens claimants with excessive monetary penalties to keep them quiet.”

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