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Speaker's Friendship Questioned

By Colleen Heild
Copyright 2006 Albuquerque Journal; Journal Investigative Reporter
    Call it the "Smiley" Gallegos factor.
    In his bid to hold on as House speaker, Ben Lujan of Santa Fe has been dogged by questions about his friendship with Vincent Gallegos, a former legislator-turned-lobbyist now caught up in a public housing scandal.
    Lujan faces a challenge from Majority Leader Ken Martinez of Grants in a contest to be decided Monday when House Democrats nominate a candidate by secret ballot.
    Various House members have grumbled for some time that Lujan has acquiesced too often and too easily to Gov. Bill Richardson.
    But recent disclosures about Gallegos' problems at the Albuquerque-based Region III Housing Authority have fueled behind-the-scenes discussions about whether Lujan should retain the leadership post he's held since 2001.
    Lujan dismisses the issue as an underhanded political attack.
    "My opponents are trying to destroy my reputation by these innuendoes," Lujan said in a Journal interview last week. "There was never any intention for me to do anything unethical whatsoever."
    Vincent "Smiley" Gallegos isn't a good friend for a politician to have these days, and questions have surfaced as to whether Gallegos benefited politically from his friendship with Lujan.
    Lujan says he and Gallegos are friends. The two served together in the House, and Gallegos as a lobbyist regularly frequents the Speaker's office.
    Gallegos was forced out in August as executive director of the scandal-wracked Region III Housing Authority. A state Investment Office review in October found Gallegos' agency had misused housing money to fund salaries and benefits, make loans and buy vehicles.
    Gallegos received about $870,000 in salary and generous retirement benefits, including a $300,000 loan from bond proceeds.
    The housing authority, meanwhile, has defaulted on $5 million bonds it sold to the Investment Council, potentially leaving taxpayers on the hook. Gallegos has said he did nothing wrong.
    The matter was referred to the state Attorney General's office for investigation.
    Some legislators note that Lujan sponsored legislation earlier this year to spend $4.5 million for a computerized learning system for public schools. At the time, Gallegos was registered as a lobbyist for a private educational software company.
    The governor vetoed the appropriation.
    As to Gallegos' presence in the speaker's office, Lujan responded, "My office is full of people during the session" and added that he is just one of Gallegos' many friends in the legislature. Gallegos was a state lawmaker from Clovis from 1987 to 1996.
    More questions were raised recently after the Journal published a story reporting that one of Lujan's top aides, Lisa Ortiz, was living rent-free in a Region III house intended for low-income people. Ortiz earns more than $71,000 a year.
    Lujan has said that he only recently learned that Ortiz lived in an authority-owned home and that he never discussed the issue with Gallegos.
    "Unfortunately, my staffer made a bad judgment when she was evidently living there without rent," he said. "I knew absolutely nothing about any transaction."
    Lujan added he has "taken the necessary disciplinary action" involving the issue.
    He confirmed that Ortiz is still working for him but declined to elaborate on the disciplinary action. "It's a personnel matter," Lujan said.
    Ortiz has said she did nothing wrong.
    Lujan said in a recent interview that he first learned about the financial problems with Region III "when I read about them in the newspaper." He said Gallegos never brought up the issue with him.
A legislative setback
    Three months before the lid blew off the Region III scandal, Lujan introduced legislation to set up a statewide regional housing council with a $5 million appropriation.
    Lujan said he has long supported more affordable housing. He said the bill had nothing to do with his friendship with Gallegos and that, "under no circumstances, unequivocally," was it an attempt to bail out Region III before it defaulted on the $5 million in bonds.
    The bill died in committee.
    The original legislation would have created a 10-member council, giving the governor three appointments. The chairs of each of the seven regional housing authorities in the state— or their designees— would also have served.
    A House committee amended the bill to give the speaker and Senate president pro-tem one appointment each, cutting the governor to a single appointee.
    The council would have tapped the $5 million fund for projects proposed by regional housing authorities.
    During the Journal interview, Lujan initially said he introduced the bill at the request of the Richardson administration.
    Later in the interview, he said the measure was proposed by a coalition that included the New Mexico Mortgage Finance Authority and a group of housing authority officials. He said Gallegos was "probably" a member of the coalition.
    A spokesman for the governor's office said Friday, "That was not our bill." MFA officials said they had no involvement.
    Frances Williams, a former commissioner for the Region VII housing authority in Las Cruces and an outspoken critic of Gallegos, said the type of council contemplated by the bill could have allowed Gallegos to consolidate power over the state's seven regional housing agencies.
    Lujan pointed out that a number of legislators signed onto the bill, including his challenger, Martinez. The version Martinez signed did not give the speaker an appointment.
    Martinez said Friday he signed the bill only because he supported affordable housing and "that was probably the full extent of my knowledge about it at the time."
Conflict of interest
    Critics also fault Lujan for appointing Gallegos last year to an existing state housing trust fund committee that advises the MFA on how affordable housing money should be spent.
    Sen. Leonard Lee Rawson, R-Las Cruces, proposed in June that the legislature's MFA committee write a letter asking Lujan to seek Gallegos' resignation from the group.
    Rawson said he thought Gallegos had a conflict serving on the advisory committee because Region III competes for such funds.
    "It's not an issue of trying to make a political stab at the speaker or Smiley," Rawson said. "It's a matter of what is a prudent thing to do."
    Lujan said he didn't ask for the resignation because he never received the committee's letter.
    Rawson raised the issue sometime later when the two met, but, at that point, Gallegos had submitted a verbal resignation.
    Critics also say Lujan appeared to defend Gallegos when the Legislative Finance Committee in August was being briefed about misuse of affordable housing money in Region III.
    Hearing minutes show Lujan questioned whether procurement law was violated in contracting with the outside auditors who did the review.
    State Investment Officer Gary Bland responded that one $50,000 contract was an emergency procurement and the other cost less than the $30,000 minimum that requires a request for proposals.
    Lujan told the Journal that regional housing authority officials asked him to attend the meeting. He said he "questioned some of the actions that had been taking place. But I wasn't the only one."
    Lujan said Sen. Shannon Robinson, D-Albuquerque, "was a lot more vocal that I was."
    Robinson couldn't be reached for comment.
Criticism for silence
    Williams, the former Housing Authority member from Las Cruces, has chided Lujan for not making a public statement after the negative reports about Region III were made public.
    "He should have come out and denounced Smiley but he didn't," Williams said recently.
    Lujan said it wasn't his place.
    "It seems to me we all agree that there was mismanagement that was done," Lujan said, but he noted that Gallegos hasn't been charged with any crime.
    Lujan added: "I've always been the type of individual that when a person stumbles... I'm not the type that's going to step over him."
Journal Politics Reporter Jeff Jones contributed to this story.