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Secretary of state accused of fraud, money laundering

Secretary of State Dianna Duran during an interview in her office in Santa Fe on Tuesday, August 19, 2014. (Eddie Moore/Albuquerque Journal)

Secretary of State Dianna Duran during an interview in her office in Santa Fe on Tuesday, August 19, 2014. (Eddie Moore/Albuquerque Journal)

Copyright © 2015 Albuquerque Journal

SANTA FE – Secretary of State Dianna Duran was charged Friday in state District Court with fraud, embezzlement, money laundering and other crimes related to allegedly converting thousands of dollars in campaign contributions to her personal use in 2013 and 2014.

At the same time, it appears she was frequenting casinos across the state and withdrawing hundreds of thousands of dollars at them from accounts in her name.

Attorney General Hector Balderas

BALDERAS: AG alleging 64 violations

Democratic Attorney General Hector Balderas alleged 64 violations in a criminal complaint and information that said Duran shifted money between campaign and personal accounts and withdrew sums at eight casinos.

Duran is a Republican in her second term; she was elected in 2010 and re-elected last year. The secretary of state, who oversees elections and campaign finance, has the role of state government ethics regulator.

The complaint says Duran violated “the ethical principles of public service” by converting intended campaign contributions to her own use.

Duran’s lawyer, Erlinda Johnson, issued a statement saying “we have identified some serious potential violations of law by the New Mexico Attorney General’s Office, in conducting the investigation.

“We hope this is not a politically motivated case and that the attorney general is not engaging in a selective prosecution of a political adversary. We ask the public to not jump to conclusions and we look forward to addressing the allegations in Court,” she said.

Preliminary hearing

Balderas’ office did not provide any information beyond what was in the filed documents.

“Our office will proceed transparently by way of preliminary hearing,” Balderas’ spokesman, James Hallinan, said in a statement. “Through that process, all facts supporting these allegations will be presented.”

The alleged crimes – ranging from petty misdemeanors to third-degree felonies – mainly occurred in 2013 and 2014.

a01_jd_29aug_Casino_ripped-paperThey also include violations of campaign laws, tampering with public records, conspiracy and a Governmental Conduct Act violation, according to the complaint.

Republican Gov. Susana Martinez said she had spoken to Balderas about the charges.

“These allegations are deeply troubling and concerning, and all relevant state agencies have and will continue to assist the attorney general throughout the process,” she said. “It’s important that New Mexicans understand that no one is above the law and that every New Mexican is treated equally under our system.”

Confidential tip

According to the complaint, the AG’s office in July 2014 received a confidential tip that numerous cash deposits were made into Duran’s bank accounts that “appeared to be incongruent when compared to known sources of income.”

An investigation revealed a pattern of large amounts of cash and campaign contributions deposited into personal and campaign accounts, the subsequent transfer of funds between the accounts, and “large debits for cash expenditures” at casinos throughout the state, the complaint said.

According to the complaint, Duran withdrew a total of $147,641 in 2013 and $282,807 in 2014 at Buffalo Thunder Casino, Camel Rock Casino, Casino Apache, Inn of the Mountain Gods, Ohkay Casino, Ruidoso Downs, San Felipe Casino and Sandia Casino from her personal accounts.

The largest chunks of the withdrawals, totaling $95,700 in 2013 and $150,256 in 2014, were at Sandia Casino.

The complaint outlines more than a dozen alleged incidents of misappropriation and misreporting of campaign contributions.

In one instance, for example, a $500 check to her campaign from lobbying firm Shoats and Weaks Inc., given after the November 2014 election, was allegedly put into Duran’s personal checking account as part of a deposit to cover an overdrawn balance.

Some other examples from the complaint:

  • In the earliest of the alleged incidents, the complaint says Duran wrote a $600 check in March 2010 to Sean Davis of Tularosa and listed it on her campaign expenditures as being for “Equipment & work on campaign.” Davis told investigators he hadn’t worked on the campaign, didn’t get the money and didn’t endorse the check.
  • In November 2014, a check was issued from Duran’s campaign account to her husband, Leo Barraza, for $2,850 for “reimbursement,” according to the complaint, but was not reported on her campaign expenditure report. The check was deposited in their joint checking account the same day a withdrawal of $4,500 was debited from the account at Sandia Casino. “Without the deposit of $2,850.00, the withdrawal at Sandia Casino could not have been realized without overdrawing the account,” the complaint said.
  • The complaint says a $5,200 contribution from oil and gas company Mack Energy Corporation in August 2014 was reported as a $2,900 contribution on Duran’s campaign finance reports. The effect of the misreported contribution was to keep the total reported contributions from the company to Duran that year at $10,400, rather than the $12,700 it actually gave, according to the complaint. The $10,400 figure is the maximum a statewide candidate can take from a contributor.

Officials at odds

There has been a rift in recent months between Duran and the Democratic attorney general over campaign finance reporting and enforcement.

The two formed a task force in February to study the issue. It met twice, and Balderas issued final recommendations on his own, including mandatory fines for violating the Campaign Reporting Act. He also said he was concerned about lack of enforcement in the Secretary of State’s office.

Duran, in turn, accused Balderas of filing three late campaign finance reports a few years ago. She was wrong about two of them – which was blamed on a staffer – and Balderas said the errors pointed up flaws in her office’s operation.