Changing New Mexico’s Culture of Corruption

By Jim Scarantino on June 12, 2010
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Corruption.  It’s everywhere you look.  From the Governor’s office to a couple of guys in charge of buying batteries for Albuquerque’s city car fleet.  The State Treasurer–two of them in a row were on the take.  The President Pro Tempore of the State Senate stole millions.  So many members of the Public Regulation Commission have legal problems it has become a rogue’s gallery.  Public sector thieves have stolen the equivalent of entire school districts.  The longest-serving Secretary of State is under indictment.  There’s hardly a branch of state government or a municipality clean of the contagion.

During the past eight years we’ve suffered the worst public corruption in the history of New Mexico.  No other time in our history has seen more money stolen, larger bribes paid, bigger pay-offs extorted or more public officials booked and fingerprinted.

What will it take to change the culture of corruption?   Or is this a permanent condition in the Land of Enchantment?

After sitting through lectures in Chicago by a former IRS criminal investigator and a retired high-level FBI agent, I have a few ideas on the cure.  Hey, they know corruption in the Windy City.  Coming here to study corruption is like going to the British Museum to study Shakespearre.  Here’s what I took away from two days of lectures by guys who made a career out of fighting crooks in state houses and city halls–thieves who stole more with a pencil than most robbers get waving a gun.

One, it will take checks and balances that work. The U.S. Department of Justice and the Federal Bureau of Investigation must continue to stay active.  The Feds are the best check on New Mexico’s corrupt and confident political class. The scale and complexity of these crimes is beyond the resources of the New Mexico Attorney General and local District Attorneys.  Gary King has been the most active AG New Mexico has had in nearly two decades or more.  He deserves a great deal of credit.  He has brought more public corruption and fraud cases than several of his predecessors combined. But the Michael Montoya, Robert Vigil and Manny Aragon cases were in an entirely different league, and required a non-elected prosecutor, above and beyond the blow-back of New Mexico’s politics.  Those sort of cases need a resourceful, strong prosecutor who can employ the enormous resources of the federal government.  Let’s hope our new U.S. Attorney Kenneth J. Gonzales, is as committed to fighting New Mexico’s plague of corruption as were the men who headed the office when it brought down Montoya, Vigil and Aragon.

Two, the New Mexico Attorney General must make fighting corruption a priority and receive the resources he requires.

Three, the New Mexico State Auditor must get more money to conduct more forensic audits.  Too many crimes have escaped the pro forma audits that don’t even bother to seek the truth about how agencies spend public funds.  The District III Housing Authority mess was missed entirely by auditors from Meyners & Co.  The Jemez School District embezzlement was overlooked by incurious auditors from Accounting and Consulting Group LLP.  We wasted our money on these outfits.  Only a forensic audit revealed the depth of Aragon’s corruption.  More forensic audits, please.  Also, we need more surprise audits.  According to the Association of Certified Fraud Examimers, one of the two most effective tools for reducing losses from public corruption is surprise audits.  I will discuss the other most effective preventive measure at the end of this post.

Four, we need more state employees to come forward. Another observation of the Association of Certified Fraud Examiners is that most fraud and corruption is discovered by tips from people in the corrupt agency itself.  Just over half of all public corruption cases nationwide were broken by such tips.  Internal controls detected 27% of the cases, internal audits caught 21.7%, 11.9% were found by accident, 4.1% were found by external audit, and only 2.5% were reports to law enforcement.

This means state and local governments must encourage and reward tips.  Public sector employees must have confidence that they will be protected.  Leadership must inspire loyalty to the public interest above loyalty to party or patron.  Leadership must create a culture of accountability that replaces the culture of corruption.

It’s not a step towards a cure.  It’s just facing reality.  We need to forget about an ethics code and ethics commission making any difference. About forty states have ethics commissions.  They don’t make any difference.  They just give the politicians cover.  The key is electing people who are absolutely above reproach themselves and are committed absolutely to rooting out corrupt practices in all corners of government.  That leads to the final step.

We can’t make any progress on fighting the culture of corruption unless we elect the right Governor and Lt. Governor.  We need people who will clean house with no consideration of past political friendships, alliances and debts.  We must have a clear message from the highest office in the state that a new day has dawned.  A culture of resolute reform must replace the culture of corruption.

Such a culture has been lacking during the past eight years.  Neither Bill Richardson nor Diane Denish have inspired state employees to stand against corruption.  The signals from the Fourth Floor uniformly have been that politics has primacy over service to the public.  Friends were remembered and richly rewarded  Neither Richardson nor Denish have led by example, the most effective form of leadership and inspiration.  We should not be surprised, therefore, that corruption in state government has gotten so bad.

Can we realistically hope that Denish will become a completely new person, rising above her history as a party chairwoman, standing now without compromise or equivocation against all forms of corruption?  Can we expect her to take on her  entrenched friends and allies who are part of the problem?  What we’re hearing from state employees about Denish is not encouraging.

New Mexico Watchdog has received numerous comments and direct communications from frustrated, dispirited public employees who believe they have nowhere to turn in state government to report fraud and abuse.  Yes, they can report all they want.  But the experiences they have shared with us reflect only disappointment, followed by resignation.  We have heard from several members of a group of employees from the Probation and Parole Division who went directly to Denish with a litany of complaints.  According to several of them, instead of remedying the problems, Denish burned them by reporting them to their superiors.  We have seen correspondence to and from Denish’s office to confirm their claims. Nothing changed in a very troubled state agency, and now employees write comments on this site speaking of nothing but hope for a change in leadership as a necessary precursor to any sort of meaningful reform.

There is also this to consider:  both Denish and her running mate, Brian Colon, as Chairs of the Democratic Party of New Mexico, worked hard to elect and re-elect the very same crooks who have cost taxpayers millions of dollars in losses, and inflicted untold damage on public trust in government.  We would certainly have more confidence in Mr. Colon if there was an inch of daylight between him and Richardson’s cronies who have profited during the present administration.  Colon was treasurer of Richardson’s secretive slush fund, known as the Moving America Forward Foundation, a tax-deductible “charity” that has not disclosed how it raised and spent $1.7 million dollars.  Fellow director with Colon of that shady operation was Anthony Correra, father of third-party placement fee king Marc Correra.  Both father and son have fled the country to escape service of process of civil lawsuits brought to recover losses for taxpayers from Marc Correra-connected state investments gone sour to the tune of tens of millions of dollars.

Colon, of course, knows who gave and how the money was spent.  He was the treasurer. But he has elected to stand on the side of keeping Richardson’s secret secret forever.

And Denish, as we have reported here in a number of articles tracking her use of federal stimulus funds, has demonstrated her willingness to engage in some of the same malfeasance and abuse of public funds that has plagued state government under the two terms of the Richardson/Denish administration.

Does that mean that GOP gubernatorial candidate Susana Martinez and John Sanchez, the Republican nominee for Lt. Governor, are the answer?  That remains to be seen.  The election season is really only beginning.  We must await specific proposals from Martinez.  We have to size her up.

The Association of Certified Fraud Examners is one of the world’s most respected organizations when it comes to studying public corruption.  It has observed that, in addition to surprise audits, the other most effective measure to reduce losses from fraud and corruption is job rotation and mandatory vacations.  Many frauds go on for years and years.  Crooks are afraid to let someone else sit at their desks and see what they’ve been doing.  Many cases are broken when a new set of eyes looks at the books and goes through the desk drawers. The simple injection of new blood reduces losses from fraud and deters corruption.  That’s what these experts have observed over years of studying corruption across America and other countries.  Their advice deserves our very careful consideration.

Related: Association of Certified Fraud Examiners 2010 Report to the Nations on Occupational Fraud and Abuse

State Loses Another $27 Million on Correra Deal

Denish Admits Improper Use of Federal Stimulus Funds

Denish Used Federal Stimulus Funds for Kerry Presidential Campaign

Denish Used Federal Stimulus Funds for Personal Driver, Christmas Cards

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23 Comments For This Post So Far

  1. Bernadette Flores
    7:43 pm on June 12th, 2010

    Yes, yes, yes, yes! You’re right on all counts — most importantly on mandatory vacations and job rotations. I would also suggest (and I’m sure that you wd agree) limiting auditing firms to three years — that fresh set of eyes! Additionally, sometimes the auditors become too cozy with the clients (cross selling management advisory services). It’s also important to have a strong internal audit department. And let’s not forget segregation of duties — especially with regard to control of cash. Can’t have one person, paying the bills, making deposits, bank reconcilements, etc. And this silly business of advance notice of the audit date needs to change.

  2. Chuck Ring
    8:59 pm on June 12th, 2010

    Good to have you back and I see you came back with a bang, I hope you have inspired public employees and officials to come forward and do the right thing for their employers, i.e., New Mexico’s fine citizens.

  3. Jim Scarantino
    10:38 pm on June 12th, 2010

    Segregation of duties of key employees was another suggestion from the former IRS criminal investigator. Spot on, Bernadette.

  4. Fed Up
    10:01 pm on June 13th, 2010

    People who supported Denish before will not vote for her now. Many state employees from Probation Parole went to her agency asking for help on fighting the corruption within our agency. Denish and her staff lied about wanting to help the many probation officers who came forward.
    Denish doesn’t need to to elected for any office because she’s an advocator for criminals. Denish and her avoidance to report criminal activty that was reported by probation parole officers needs to be investigated by the FBI, Attorney Generals Office, The President.
    Step out of the race Denish and go live with crooked Warden Joe Williams, Probation Parole Director Charlene Knipfing.

  5. Employees
    12:09 am on June 14th, 2010

    Frances Williams claims she spoke to a male from Denish’s office. It was probably Joshua Rosen or Daniel Montano….they were the two fakes that she claims “Investigated” the corruption at Probation/Parole.

  6. Not happy
    12:21 am on June 14th, 2010

    Jim you are doing such a good job with the Denish stuff and the Probation and Parole stories. You really should call all those employees from Probation to meet with you and get down to the nitty gritty. Would you like to take some cases to Federal Court? There sure is plenty to go around.

    Charlene Knipfing’s got a huge surprise coming to her in the next few weeks…I dont think Richardson or Denish can help her on this one. When Knipfing, Richardson, Denish and Williams are sitting in their cells next to Manny with nothing to do maybe they can request a library book on Kharma to keep them busy.

    Oh and Charlene…in the big house you wont have Jablonski standing there holding your purse waiting for you to put your cigarette out in his hand….maybe it will be Bertha!

  7. Charles
    9:19 am on June 14th, 2010

    Excellent article.

    I think the corruption problems in NM are primarily political in origin. That is, NM really does not have a vibrant two party political system. The last time that the GOP held a majority in the state house and senate at the same time was 1930 – a mere eighty years ago. The SOS web site indicates that 50% of all registered voters in NM are Dems and only 32% are Republicans. The voter registration differential makes it very tough for Republicans to be elected to state wide office in NM.

    Because of the total dominance by the Dems in state politics, NM lacks the inherent checks and balances that exist when there is a strong two party political system. For example, I have always felt that a Dem District Attorney is going to be less enthusiastic about prosecuting a Dem politician for fraud than a Republican DA would be. The corruption cases against our two former state treasurers and Manny Aragon could all have been prosecuted in state court – but none were.

    Many New Mexicans have forgotten that NM was an overwhelmingly Hispanic Republican state until the New Deal beginning in the 1932. Hispanics then joined the Democrat party in droves in return for nave to grave employment with state government and the school system.

    Until Republican voter registration more closely approximates that of the Dems, I suspect that New Mexico’s woes will continue. The most fertile ground for new Republicans is with Hispanics. I’m encouraged that the nomination of Susana Martinez for the top spot on the state ticket may be a trend.

  8. Employee
    8:15 pm on June 14th, 2010

    Not Happy: Keep us posted on what’s going on with PNP. Hopefully what you said is true. Can you give us more info ?

  9. Mike Blessing
    2:42 pm on June 15th, 2010

    Point 3-A — In addition to giving more resources to the State Auditor, the Open Meetings Act needs to be beefed up to open conference committees in the Legislature, as well as explicitly allowing citizens to take their own camcorders into any session of the Legislature. If the legislators don’t like that, that’s too bad — while they’re in session, any photon bouncing off of them goes into the public domain. Same goes for any sound vibration coming from their person. If they don’t want to go on record, they shouldn’t run for election to public office.

  10. Connie
    6:31 pm on June 15th, 2010

    What are you talking about–in three weeks??? What’s that about?

  11. Connie
    6:33 pm on June 15th, 2010

    Does everyone know that Susanna Martinez’s choice for Secretary of Corrections is David Jablonski? How does that make our lives any better?

  12. Employee
    7:46 pm on June 15th, 2010

    We are all in big trouble of Jablonski is appointed Secretary. He is not the solution, only part of the problem. He is an enabler to the corruption. I would rather vote for Elmer Fudd then any of these candidates. We need reform in NMCD !!! The employees need to stick together and take a stand for reform. They can not keep us all quiet. Eventually they will get tired of the embarassment and humiliation they bring upon themselves. Isn’t Jablonski ashamed of how he allows Knipfing to treat him like a cabanna boy in public and in front staff ?

  13. Not happy
    10:22 pm on June 15th, 2010

    Wow hadnt heard about the Jablonski thing…..that’s horrible. Can it get any worse? Well Susanna Martinez was endorsed my the King of Corruption himself, Darren White so I wouldnt put anything passed her. Looks like Allen Weh may be the best bet.

    Dave Jablonski doesnt care that people see him running after the OLD BAG like a lost puppy waiting for her to throw him a crumb, as long as he has a job he doesnt care, he will do as he’s told because he is spineless and has no clue what else to do.

    To Employee….there are employees winning EEOC complaints left and right against this dept. They are finding criminal behavior and could be referring cases to Federal Agencies. Keep your fingers crossed.

  14. Employee
    11:34 pm on June 15th, 2010

    We all need to get together and file a class action lawsuit against the NMCD. My attorney has spoke several times about this. I don’t think it would be too hard to win with all of us claiming hostile work environment.

  15. Fed Up
    12:58 pm on June 16th, 2010

    To The Watchdog,

    Put your fax number on your blog site so people can send you some important information.

  16. Dan
    7:10 pm on June 16th, 2010

    Just scan it and email it to Jim.

  17. Jim Scarantino
    9:24 pm on June 16th, 2010

    Don’t have a dedicated fax line.

  18. Simon
    10:42 am on June 19th, 2010

    What are you going to suggest about our corrupt judges? Both state and federal judges roll over for big (in terms of politically connected) firms like Paul Fish’s Modrall, and Doug Foster’s Foster, Rieder and Jackson. In 11 lawsuits not one judge would follow the law with the facts present in the case. all judges contrived opinions transparently biased in favor of these crooks. These guys stole $130 million in uranium claims from honest tax paying shareholders — they conducted a premeditated racketeering scheme that a federal judge punished the innocent shareholders and their lawyer. Who will fix this?? Who will stop these white collar criminals?

  19. lydia
    1:07 am on June 20th, 2010

    Liars, debacles and kickbacks OH MY !! The Vincent Peele arrest which has been a long time coming is just the tip of the iceberg in New Mexico corrections corruption. Jim, please stay after probation and parole, you’re just scratching the surface of what’s going on … Thanks for the good work.

  20. Corruption Continues at PPD
    6:07 pm on June 23rd, 2010

    Jim,

    Keep doing stories on Probation Parole. You need to make Denish and her staff accountable for trying to cover up the criminal activity thats been occurying within Probation Parole. The many officers who came forward asking for Denish’s help should be applauded. Denish you should be ashamed, of yourself, with your fake campaign slogans showing that you care for the NM people, and want to get rid of corruption. YOUR A BIG LIAR and you need to either step up and help these probation officers, or step out of the govenor race immediately.

  21. Dan
    9:31 pm on June 23rd, 2010

    I agree, NMCD employees deserve to know what happened to all the employees who attended the Espanola Birthday Bash for Charlene, if anything. What happened to Tim Olsen for instructing his staff to commit fraud ? If anything… What happened to the person who left a death threat on the board ??? Again, probably nothing. What is going to happen to this department if doesn’t hold any of them accountable ? All the whistleblowers will get retaliated against unless “they” are held accountable.

  22. leadership training exercises
    8:25 pm on April 8th, 2011

    Great article, much appreciated

Trackbacks

  1. Errors of Enchantment » Changing New Mexico’s Culture of Corruption

    [...] ideas and specific suggestions for tackling New Mexico’s corruption epidemic.  You can read the essay over at New Mexico Watchdog. Posted on June 14, 2010 at 9:54 am by Jim Scarantino · Permalink [...]

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