Two months before a federal grand jury probe ended without an indictment of her chief political adviser, Jay McCleskey, Gov. Susana Martinez gave federal prosecutors a detailed defense of payments McCleskey received from her 2010 inaugural committee.
Whether that affidavit had any impact on the closing of the investigation is hard to determine. The U.S. Attorney’s Office said it can’t comment on investigative or grand jury matters.
Former Supreme Court Justice, Paul Kennedy, who represented McCleskey during that investigation, said Martinez’s sworn declaration was just one of hundreds of documents submitted to prosecutors in the case to show nothing wrong had occurred with the handling of inaugural committee money.
“I would say it was an important document, but it wasn’t critical to the outcome,” Kennedy said.
And the investigation was often mired in large amounts of paperwork and meetings among defense attorneys, local federal prosecutors and officials at the Department of Justice in Washington, D.C., where the final decision to end the investigation was made in February 2016.
No indictments were ever returned, and Martinez was never a target of the grand jury.
Disaffected Republicans had been talking to the FBI and federal prosecutors since at least 2013, complaining about more than $100,000 in checks issued by the committee without invoices to support them. Those included payments to businesses either controlled by or linked to McCleskey.
Kennedy currently represents Martinez and was authorized to talk about the case.
“Everything that was done was totally legitimate,” Kennedy said. “It is done the same way in every other state and at the federal level. We looked at both the Bush and Obama inaugurals in setting up the committee.”
The committee raised more than $960,000 in private donations and spent about $860,000. More than $100,000 was donated to SAFE houses – shelters for domestic violence victims – throughout the state.
Most of the inaugural money was raised in donations of $25,000 and $10,000 from energy companies doing business in the state. The amounts contributed were well above the state’s campaign contribution limits of $5,000, but there are no limitations on inaugural donations.
Another key issue in the federal investigation was whether money from the inaugural committee was used to pay for campaign expenses.
Kennedy acknowledged there was at least one payment of $3,000 to a fundraiser who raised money for both the campaign and the inaugural committee.
The worker was paid out of the inaugural fund for campaign work, although that money should have come from campaign funds. Kennedy attributed the payment to a clerical error. He said the invoice came in a month after the campaign had ended and said federal investigators were satisfied with the explanation.
Martinez’s sworn declaration, dated Jan. 5, 2016, makes it clear that inaugural committee money was used to pay for “transition” expenses as well as inaugural expenses.
That was a key distinction in the investigation, because the Republicans angry with Martinez and McCleskey argued that the people who raised the money said the money would be used exclusively for the inauguration.
But Patrick Rogers, the attorney for the “Susana Martinez Inaugural Committee,” told the Journal on Friday that the articles of incorporation made it clear that money raised could be used for “transition” purposes as well.
Martinez says in the document that McCleskey received $57,000 directly from the committee for work he did on the inaugural events and for the transition, including advising “me with regard to numerous final interviews of high level and other administration and staff and appointees.”
The checks went to CD Production and Public Relations and McCleskey Media Strategies, both owned by McCleskey.
“I would certainly have approved a significantly higher figure for Jay’s compensation had additional funds been available,” she said in the affidavit. Other campaign workers were also paid for working on Martinez’s inauguration.
“While the hard work of certain individuals who had distinguished themselves on the campaign was rewarded through paid positions on the inauguration and transition, every individual who received compensation performed legitimate and valuable services to the inaugural and transition to earn their pay,” she said in the declaration.
During the investigation, Martinez blamed the inquiry on her political opponents and called it a “smear campaign” against McCleskey, who has been her close political adviser since running her successful 2010 campaign for governor.
McCleskey has been a major player in getting Republicans elected in state and local elections. He also headed Martinez’s re-election bid in 2014. Known for his aggressive, rough-and-tumble campaign tactics, he has aroused the ire of Democrats – and some Republicans.
According to copies of checks attached to the governor’s declaration, Lincoln Strategy Group, an organization McCleskey worked for when he signed on to the Martinez campaign, was paid $58,700 by the inaugural committee for performing administrative support including accounting and payroll services.
That is in addition to the $57,000 paid directly to the other two McCleskey companies.
Martinez said in her sworn statement that Lincoln Strategy was reimbursed for paying some inaugural staff salaries as well as administrative services.
Martinez addressed the issue of campaign money in the sworn declaration, and Kennedy said he estimated that Martinez’s 2010 campaign funds paid for about $100,000 in unreimbursed inaugural and transition expenses.
“That is a completely legal use of campaign money,” Kennedy said.
The decision was made not to reimburse the campaign because it would look bad.
In her affidavit, Martinez pointed out that a company called Targeted Victory built and hosted her campaign website and provided web services to her 2010 campaign.
The same company created another website for the inaugural and transition.
For the inaugural and transition, she said, the website handled announcements, press releases and set a system that allowed people to apply for jobs in her administration.
“The transition received, reviewed and processed upwards of 3,000 applicants through the website,” she said. Targeted Victory was paid $17,778 for its services for the inauguration and transition.
“From the beginning, the proclamation and common sense made clear that the smooth transition of administrations was part of the inaugural process and there is absolutely nothing improper about spending inaugural funds for transition activities, as they are necessarily intertwined,” Rogers said.
Kennedy said no rules govern donations or spending of inaugural committees.