Democratic Candidate for Governor Makes Herself a Witness in Major Criminal Case

An ad from the Denish for Governor campaign claims she “investigated” corruption in the New Mexico Housing Authority and states that “today people are under indictment and the housing authority has tough oversight because Diane Denish wouldn’t back down.”  A lawyer in the Housing Authority case says there is not “one shred of evidence” Denish was involved in any investigation.  And the New Mexico Attorney General’s Office says, “The Attorney General’s Office is solely responsible for the criminal investigation which led to the indictments in the housing authority case.”

Denish’s Housing Authority Whistleblower Ad Makes Her Out to be the Crime Fighter

Weeks before primary election day, the Denish for Governor campaign began airing an ad on New Mexico television stations that discusses Denish’s role in the Housing Authority corruption scandal.  That scandal involves allegations that millions of dollars were embezzled and laundered by former District III Housing Authority Executive Director and former legislator Vincent “Smiley” Gallegos and three others.  In June 2009, a grand jury impaneled by the Attorney General returned criminal indictments.  The criminal case is now in the discovery stage.

The Denish ad features Frances Williams of Las Cruces, who served on that community’s public housing authority board.  She is generally credited as the whistleblower in the case, though the klaxon call that galvanized attention was when the District III Housing Authority defaulted on $5 million in bonds it had sold to the State Investment Council.  Williams ran unsuccessfully for mayor of Las Cruces in 2004 and has been a delegate to the Democratic National Convention.

The transcript of the ad is as follows:

Williams:  “$5 million was just wasted.  $5 million gets squandered.”

Announcer:  “When whistleblower Frances Williams uncovered corruption at the housing authority she needed someone to take on Santa Fe insiders.  She turned to Diane Denish.”

Williams:  “Diane listened to me.  She was outraged.  She took action.  She investigated.”

Announcer:  “Today four people are under indictment and the housing authority has tough oversight because Diane Denish wouldn’t back down.”

Williams:  “She has the courage of her convictions. She will get it done.”

Here’s the ad itself:

Denish’s Documents Contradict Claim
New Mexico Watchdog on January 8, 2010, submitted to Denish’s office a request to inspect all public records concerning or containing information about any communication by Denish or members of her staff to the Attorney General, and also the Governor, about corruption or allegations of corruption. As we reported in March, Denish’s office responded to our request that it was making all responsive documents available for our inspection. But the Lt. Governor had nothing in her files showing any communication to the Attorney General or Governor about public corruption or concerns about public corruption.

So if Denish “investigated” and, as the ad states, four people are under indictment because Denish wouldn’t back down, where are the results of her investigation? Certainly, since she cannot prosecute crimes or initiate civil lawsuits, she would have to communicate the results of her productive investigation with the Attorney General. But her files contained no such documentation.

The Attorney General Doesn’t Back Up Denish, Contradicts the Ad’s Central Claim

So we asked the Attorney General’s Office if it had received any reports of an investigation into corruption at the Housing Authority from the Lt. Governor’s Office.  Phil Sisneros, the AG’s spokesman, issued this statement:

Our office was certainly aware that the Lt. Governor was instrumental in getting state statutes changed to allow for more and better oversight of the housing authority and that she had conversations with Francis Williams. If there was a civil investigation by the Lt. Governor’s Office, we are not aware of its scope or outcome.

The Attorney General’s Office is solely responsible for the criminal investigation which led to the indictments in the housing authority case. Information from Francis Williams was independently obtained by our office using AGO investigators and prosecutors. Her information was only part of a much broader investigation conducted by our personnel. To be clear, the four indictments in this case were obtained by our office as a result of our investigation.

Not a “Shred of Evidence” Denish Involved in Any Housing Authority Investigation

Criminal and civil cases have been brought by the Attorney General’s Office against Gallegos and others involved in the Housing Authority.  The rules of criminal and civil procedure, in lay terms, require that the AG must disclose to opposing counsel the names of all witnesses with knowledge of the allegations in the complaints and produce for inspection all evidence that proves or disproves the facts alleged.  If Denish had in fact conducted any investigation of allegations of corruption, her name would have to be disclosed as a witness and the material generated in the course of the investigation would have to be disclosed to defense counsel.

“In the thousands of pages of discovery we’ve seen,” says Paul Kennedy, defense counsel for Gallegos, “there is not one shred of evidence that Denish had anything to do with any investigation in this matter.  The ad appears to be a complete fantasy.”  The absence of any evidence in the discovery materials indicating Denish had been involved in any investigation concerning the Housing Authority was confirmed by Billy Blackburn, counsel for  Robert Strumor, another defendant in the case.

But Denish’s ad has now made her a witness in a major criminal case, an unintended consequence of politicizing a pending criminal case. Kennedy says he will demand to interview Williams, who is portrayed as the whistleblower.  He will then demand to interview Denish herself.  That could pose problems for the prosecution, as we will discuss in part II of our report on this matter.

We asked Chris Cervini, the spokesman for the Denish campaign, to identify the individuals in Denish’s office who conducted the investigation claimed in the television ad.  We also asked the same question of Denish’s chief of staff, Joshua Rosen, We are curious as to who could have possibly conducted an investigation into a very large and complex criminal and civil case.  Denish has no investigators on her staff.

Neither Cervini nor Rosen have responded to our inquiries.