State AG seeks to restrain WNMU president from spending payout, invalidate contract

Learning that Western New Mexico University processed the $1.9 million severance payment to departing President Joseph Shepard, state Attorney General Raúl Torrez said Thursday that he filed a motion for a new court order to place the funds in a trust at least until legal disputes surrounding the Silver City institution are resolved.

Torrez also filed a lawsuit against WNMU Board of Regents’ five members — who recently resigned with the exception of a student — and Shepard, who will step down on Wednesday, to invalidate the outgoing president’s separation agreement. The agreement also includes a paid sabbatical and a full professorship within the School of Business, where he would make $200,000 a year for five years.

The announcement from Torrez comes as he awaits a hearing on the matter Monday in 6th Judicial District Court.

Torrez held the news conference at his office in Downtown Albuquerque alongside House Speaker Javier Martínez, D-Albuquerque, who said lawmakers will introduce legislation to reform the duties of board members for the state’s higher education institutions and how they award severance packages for their leaders.

The developments are the latest involving WNMU, which has been embroiled in ethics investigations over the last year. The investigations stem from the board’s alleged wasteful spending of public funds before taking the fallout for awarding Shepard a severance deal last month once he agreed to step down.

Shepard, his wife, Valerie Plame, and members of the board are accused by State Auditor Joe Maestas of spending more than $360,000 on foreign business trips and furniture for the president’s residence between 2018 and 2023.

Shepard, who has served in the top role since 2011, has denied wrongdoing, but said he would step down on Jan. 15 to avoid being a distraction to WNMU. Board Chair Mary Hotvedt said during a meeting last month that the board has complied with all audits and made reforms to university policies, but was being treated unfairly in the court of public opinion.

The state Ethics Commission, the Higher Education Department and the university itself are conducting their own audits into the alleged spending. HED’s audit and report is expected to be complete before the start of the legislative session on Jan. 21, an agency spokesperson said. The university and commission have not said when their audits would be complete.

Torrez said on Thursday that the actions of Shepard and the board “will not stand.”

In a prepared statement following the news conference, WNMU spokesperson Mario Sanchez said the university’s legal counsel has been “in regular contact with the AG’s office and has been cooperative to provide documents and insight,” including in a news release. He refused to answer other questions by the Journal.

Shepard payout already made

Torrez announced Thursday that he filed a supplement to his previous motion in court to prevent Shepard from spending his payout and instead place it in a trust until legal disputes are resolved.

He added that when state Department of Justice officials approached Shepard’s attorney, John Anderson, about the funds, that he allegedly refused to place them in a trust. Anderson could not be reached by the Journal for comment on Thursday.

The issuance of the check to Shepard on Jan. 2 came before Torrez filed a motion on Jan. 6 to get the university to halt the payment. Torrez told reporters he had just learned of the payment processing on Wednesday.

“We don’t yet know where the money is,” Torrez said. “We’re certainly disappointed, though maybe not surprised.”

He said if the AG’s office prevails in court, the state has the ability to recover the funds regardless of whether they’ve been spent.

Sanchez said in a prepared statement that WNMU was planning to make the payment on Dec. 20, following the board’s approval of the separation agreement, but Shepard asked that payment be delayed until Jan. 2. Sanchez did not provide a reason why Shepard made the request, but he said that once the university returned from winter break on that day, the payment was processed “as a part of regular accounting processes.”

Anderson said in a statement to The Associated Press that Shepard “did not expedite his payment” and “any allegations to the contrary have no legal or factual basis.”

He added that the board had appointed a subcommittee to negotiate the separation agreement before the board approved it.

Torrez said Thursday that he is not sure which university employee processed the payment, but his office is investigating.

New lawsuit against WNMU regents and Shepard

Torrez filed a complaint against the former regents and Shepard, alleging a “breach of fiduciary duty, lack of consideration, unconscionable contract, violations of the anti-donation clause, violations of the Open Meetings Act and unjust enrichment,” according to an NMDOJ news release. The complaint seeks to recover Shepard’s $1.9 million payment and invalidate his contract, the release said.

Under questioning from reporters about whether the AG’s actions could impact other aspects of Shepard’s agreement, such as his professorship, Torrez said it’s his office’s intention to set aside the entire contract, not just the payment.

“We’ll be looking at all aspects of that as we move forward,” Torrez said.

New legislation for higher education governance

Torrez originally scheduled the news conference with Sen. Antonio “Moe” Maestas, D-Albuquerque, to announce legislation aimed at addressing cyberbullying and hazing. But that changed on Wednesday, when the AG’s office announced Torrez would provide an update for reporters regarding his probe into WNMU, and he invited Martínez.

During the news conference, Martínez issued a stern warning to existing board members, saying they are “on notice.”

“The time for playing political games with our institutions is coming to an end,” Martínez said.

He said he would like lawmakers to “tackle the underlying issues” involving higher education governing boards, including the issue of political appointments.