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Monday, November 20, 2006
Well-Paid N.M. Officials Lived Rent-Free
By Thomas J. Cole
Copyright © 2006 Albuquerque Journal; Journal Investigative Reporter
A state judge and a top aide to House Speaker Ben Lujan have been living rent-free in homes owned by a government affordable housing agency that has been rocked by scandal in recent months.
Bernalillo County Metropolitan Judge Theresa Gomez, who earns more than $93,000 a year, resides in a government-owned, ranch-style home in southwest Albuquerque.
Lisa Ortiz, who earns more than $71,000 a year working in Lujan's office at the Capitol in Santa Fe, lives in a manufactured home on nearly 78 acres just north of Stanley.
The Albuquerque-based Region III Housing Authority purchased both homes in 2004. Its mission includes acquiring homes and selling them to qualified low-income buyers.
Vincent "Smiley" Gallegos, the ousted executive director of the housing agency, is a former House member, Lujan friend and lobbyist who frequents the speaker's office when the Legislature is in session.
Lawrence Rael, who was named by Gov. Bill Richardson to head the agency after Gallegos was forced out, said Wednesday that those who allowed Gomez and Ortiz to live rent free in the homes may have done so in hopes of future favors.
"There may have been a political reason, I don't know ...," Rael said. "It just looks that way."
Rael added, however, that he doesn't believe Gomez or Ortiz knowingly took part in an influence-peddling scheme.
"My general perception at this point is that these individuals were misled," he said.
Rael is also executive director of the Mid-Region Council of Governments based in Albuquerque and a former chief administrative officer for the city.
After Rael took over, the housing authority demanded that Gomez and Ortiz pay back rent.
Gomez said Wednesday that she moved into her home nearly two years ago, then tried repeatedly to formalize a deal to lease, then purchase the property.
She said that Gallegos sought her advice on two legal matters involving his children and that she dismissed a traffic ticket issued to him after Gallegos claimed someone else had used his identity in getting the ticket.
Gomez also canceled an arrest warrant that had been issued for Gallegos in the case by another judge.
Gomez said she "would have done the same for anybody" but also said: "I know the whole issue of not paying rent looks bad, smells. ... I don't think it was because I was a judge or I was given any special consideration."
The judge signed an agreement in July to buy the home for $170,000, but Rael has canceled the sale at least temporarily.
Ortiz said in a letter to Rael in October that she and her boyfriend were "defrauded and victimized" by the Region III Housing Authority.
Ortiz wrote that she signed an agreement in September 2005 to purchase the home for nearly $137,000, began grazing horses there in November 2005 and moved into the home in March expecting to close the deal.
She said Thursday that she hadn't given any special treatment to Gallegos in her job for Lujan.
"The only thing I'm guilty of is trusting someone," Ortiz said.
Asked to explain why Gomez and Ortiz lived rent-free in the homes, Gallegos told a reporter Friday, "You're asking stupid questions again, and I don't want to talk to you."
The Region III Housing Authority is one of seven regional agencies created by state law to provide housing for low-income people.
The authority began to unravel in April when the Journal reported on a legally questionable home-buyer assistance program and Richardson ordered a review of all regional housing agencies.
The Region III Housing Authority later defaulted on repayment of $5 million in bonds it had sold to the State Investment Council to fund purchases and renovations of single-family homes.
An investigation by the State Investment Council found that bond money had been diverted to pay generous salaries and retirement benefits to authority employees, make a loan to a company owned by Gallegos and purchase vehicles.
The investigation also found the housing agency had sold homes to two employees and a board member, in possible violation of income rules and a law on insider dealing.
Richardson proposed Nov. 13 that the regional housing agencies be shuttered and that their work be taken over by the state Mortgage Finance Authority.
Lease-to- purchase plan
According to records provided by the Region III Housing Authority, the home that Gomez lives in was purchased for $157,000 in October 2004 by Housing Enterprises Inc., an authority sister corporation.
The brown stucco home in the South Valley has three bedrooms and two baths and sits on six-tenths of an acre.
Gomez said she moved into the home after being approached by Region III Housing Authority property-buyer Tom Sarate and later told she qualified for the agency's lease-to-purchase program.
Under the program, a person with a poor credit rating leases a home while working to improve his or her rating, then buys the property when able to qualify for a mortgage.
Gomez, a Metro Court judge for nearly 16 years, publicly announced in August 2001 that she had suffered financial troubles due to a gambling problem.
The judge said she "never signed anything" before moving into the home and later called the housing agency several times about what steps she needed to take as part of the lease-to-purchase program.
Gomez said that she was told to take care of her credit and that details would be worked out.
Sarate, who no longer works for the housing agency, said Friday that his job at the authority didn't extend past buying homes and that he wasn't involved with the paperwork in lease-to-purchase deals.
"That was out of my realm," he said.
Sarate said that he didn't believe Gomez had received special treatment but that he didn't know of another case in which a person in a lease-to-purchase deal was able to live in a home rent-free.
According to Gomez, Sarate told her early this year that the lease-to-purchase program was ending and that she would have to buy the home.
In July, the judge signed an agreement to purchase the property for $170,000, with Housing Enterprises paying $2,640 of her closing costs, according to records provided by the Region III Housing Authority.
Gomez and Sarate said they believed the $170,000 included back rent for her stay in the home.
The deal was to be closed Aug. 24, but Rael canceled the sale.
Gomez said being allowed to live rent-free in the home has the appearance of impropriety and said she was perhaps naive and foolish in not pursing more aggressively why the authority permitted her to do so.
"I don't take bribes ...," the judge said. "I just wished it never happened. ... This is no way to clear up my name."
Gomez said Gallegos sought her advice on legal matters involving a son and daughter, but she said she didn't intervene in either case.
The judge said she couldn't recall the details of events that led her to dismiss the traffic ticket issued to Gallegos.
Gomez said she didn't give Gallegos special treatment in dismissing the ticket, and she added, "I would not have taken care of any DWIs."
Metro Court records show Gallegos was cited Jan. 14 for failing to wear a seat belt and for not having proof of insurance or other financial responsibility.
Gallegos was later cited for contempt for failing to appear for a court hearing on the citations. A bench warrant was issued for his arrest.
Records show Gomez dismissed all the charges Feb. 20 and canceled the bench warrant. The reason for her action is listed in records as "Wrong Def/Identity."
In a letter dated Nov. 3, Rael advised Gomez that she could continue to live in the house at a monthly rent of $850.
He also demanded $3,400, or four months of back rent, and said more back rent would be demanded once the housing agency figures out exactly how long Gomez has been in the home.
Gomez said she planned to pay the $3,400 in back rent and December's rent over the next two weeks.
The judge said she lives in the home with a son and daughter-in-law.
Gomez was appointed to the Metro Court bench in February 1991. She has been described as the first American Indian to be named to a state judgeship.
She has served as chief judge of Metro Court and in 1993 was a finalist for a federal judgeship.
'Just trying to be courteous'
The home Ortiz lives in was purchased in January 2004 by Housing Enterprises for $109,000, according to records of the Region III Housing Authority.
Housing Enterprises then paid about $41,000 to a construction company for improvements to the property on Simmons Road just off N.M. 41 north of Stanley, the records show.
The manufactured home has three bedrooms and two baths and sits on a permanent foundation.
In her letter in October to Rael, Ortiz said she and her boyfriend located the property in June 2003 and began exploring options to purchase it.
Ortiz said Gallegos, while in the speaker's office, overheard the couple discussing the home in a telephone conversation.
Gallegos said he was executive director of the Region III Housing Authority, could purchase the home and make improvements, then resell the home to the couple, according to the letter.
Ortiz said Gallegos dismissed her concern that she didn't qualify for assistance from the Region III Housing Authority based on income.
She said that the improvements weren't completed until spring 2005 and that, in August of that year, she began working with the housing agency on a purchase price.
An authority employee initially set the price at nearly $174,000, according to Ortiz. The price included improvement costs and a 14 percent administrative fee for the agency for its role in purchasing, renovating and reselling the home.
Ortiz said she disputed the costs of the improvements and in September 2005 signed an offer to buy the home for nearly $137,000, including improvement costs and a 3 percent administrative fee.
The purchase was to take place after the couple sold a home in Rio Rancho.
With the permission of Gallegos and while the Rio Rancho home was on the market, the couple put horses on the property in November 2005, then moved to the home in March of this year, Ortiz said.
She said Gallegos declined the couple's offer to pay rent until their Rio Rancho home was sold and the purchase of the Stanley home was finalized.
"Our present concern is that while Region III was under the direction of Mr. Gallegos we have been wrongly mislead (sic), defrauded and victimized," Ortiz wrote.
Ortiz's official job title is leadership analyst, but she serves in part as a gatekeeper for those who want to meet with Lujan in his office or talk with him on the telephone.
Lujan, a Santa Fe Democrat, described her as office manager and said Ortiz isn't involved in policy work.
Ortiz said she believes Gallegos "was just trying to be courteous" in helping the couple buy the home and didn't do so in hopes of future special treatment.
"The speaker's always had an open-door policy with almost everybody ...," she said. "I have not provided him (Gallegos) with any special privileges at all."
Lujan said Wednesday that he had only recently learned that Ortiz lived in an authority-owned home and that he had never discussed the matter with Gallegos.
Lujan said he and Gallegos, a former state representative from Clovis, have been friends since serving in the House together.
The speaker dismissed the notion that Ortiz may have been given special treatment by the housing authority because of her position on his staff.
"I don't know what political influence someone could get from her," he said.
$5M loss offset?
In a letter dated Nov. 3, Rael advised Ortiz and her boyfriend that they could continue to live in the house at a monthly rent of $450. He also demanded $4,050, or nine months, of back rent.
Rael said the couple hadn't yet paid any rent and had asked to talk about the rent amount.
He said the housing authority is trying to determine if Gomez and Ortiz would now qualify to purchase the homes based on their incomes.
Meanwhile, the state Attorney General's Office is trying to undo the authority's sales of homes to two agency employees and a board member, arguing in part that they didn't meet the low-income qualifications.
Rael said the housing agency apparently purchased the Gomez and Ortiz homes with proceeds from the bonds sold to the State Investment Council.
That means the money from sales of the homes could be used to offset the council's and taxpayers' loss of $5 million in bond money.