Judge denies request to place WNMU's severance payment into a trust

A state judge ruled Monday against the state attorney general’s request to place Western New Mexico University President Joe Shepard’s $1.9 million severance payment into a trust to prevent him from spending it.

Sixth Judicial District Court Judge Jarod Hofacket made the decision after hearing arguments made virtually in court between Shepard’s attorney, John C. Anderson, and NMDOJ attorney Rose Bryan, who argued on behalf of AG Raúl Torrez. Shepard was in attendance, but did not comment.

Bryan argued that Shepard, who will step down as president on Wednesday amid a string of state ethics investigations, should not be able to hold onto his severance payment, processed on Jan. 2, at least until the investigations are complete. She said the university’s Board of Regents failed in its fiduciary duties in the way it awarded the payment.

Anderson argued in court that Shepard does not have a fiduciary duty to the public when negotiating a contract. In a court filing prior to the hearing, he said Shepard’s payment was not processed while the university was closed, nor did the president expedite it or pressure anyone to do so.

Bryan responded in court on Monday by telling Hofacket that if he did not take action against the board’s decision, he would be sending a signal to other public officials that if they “don’t answer the phone” they can simply deposit funds into their bank account and buy “a couple year’s relief.” Bryan was referencing the NMDOJ’s request for documents related to Shepard’s contract during the campus winter break.

But Hofacket ruled on Monday he did not have the authority to establish a trust.

The hearing originally came in response to Torrez’s emergency motion for a temporary restraining order, filed Jan. 6. Torrez requested the payment, approved by the then-five-member board on Dec. 20, be withheld from Shepard until a special audit requested by WNMU is complete and the report becomes available.

But on Jan. 8, Torrez announced a supplemental motion asking the payment be placed into a trust after learning the day before that it had been processed to Shepard on Jan. 2, once the university came back from winter break. Torrez said his office is investigating who processed the payment.

But in a court filing prior to the hearing, Anderson said since Jones acts as treasurer in addition to his board member duties, his signature was required with Kelly Riddle, WNMU vice president for business affairs, in order for the payment to be processed.

At the request of the governor, Jones tendered his resignation on Jan. 2, but later rescinded it after speaking with Shepard, who told him it would be difficult for the university to make payroll if he stepped down, Anderson said in his filing. Shepard also told Jones about the severance payment, but the student board member never felt he was being pressured by the president, the filing said.

Shepard's severance payment was calculated by Riddle at the request of the university's personnel committee, comprised of then-board members Daniel Lopez, a former cabinet secretary, and Dal Moelenberg, a private attorney, Anderson said in his filing. Shepard asked Riddle that the university process the payment on Jan. 2 for tax purposes, as opposed to Dec. 20, when it first could have been made available, the filing said.

Anderson said in a statement following the hearing that he is gratified by Hofacket’s decision.

“We look forward to fully presenting the facts as this case moves forward and demonstrating that the negotiations between Dr. Shepard and the Regents were conducted fairly and legally,” Anderson said.

NMDOJ spokesperson Lauren Rodriguez said in a statement following the hearing that the judge’s decision was disappointing, but the agency respects the decision and is encouraged that Hofacket acknowledged the case could be resolved.

“We will not stop fighting to rectify this unjust payment to Dr. Shepard and will continue to work toward ensuring there is accountability over New Mexico taxpayer dollars through legislation,” Rodriguez said.

Hofacket asked Bryan, Johnson and Kilgore to meet and try to come to an agreement in the case before coming to court again. A new hearing was not immediately scheduled, according to court records.