AG raids home of ex-head of Miss NM

’16 win­ner’s ac­cu­sa­tions of fraud, em­bez­zle­ment sparked probe

Albuquerque Journal - - FRONT PAGE - Up­Front is a front-page news and opin­ion col­umn. Com­ment di­rectly to Jo­line at 823-3603, jkrueger@abqjour­nal.com or fol­low her on Twit­ter @jo­linegkg. Go to www.abqjour­nal.com/ let­ters/new to sub­mit a let­ter to the ed­i­tor.

Two years ago, I found my­self in an un­likely po­si­tion as both judge and chron­i­cler of the Miss Al­bu­querque pageant, the first royal rung on the climb to the Miss Amer­ica crown by way of Miss New Mex­ico.

But Greg Smith, then the new ex­ec­u­tive direc­tor of the Miss New Mex­ico or­ga­ni­za­tion, wasn’t pleased.

He scolded me for break­ing the rules of ju­di­cial se­crecy, as if I had just re­vealed the mys­ter­ies of the uni­verse. Rules mat­tered, he said. Last year, Stephanie Chavez, crowned that day as Miss Al­bu­querque and later Miss New Mex­ico 2016, was among the con­tes­tants who con­tacted me to ac­cuse Smith of some ugly be­hav­ior and fail­ure to pay them their schol­ar­ship money.

Smith coun­tered that Chavez

had bro­ken the rules of royal con­duct and that she and the oth­ers had not fol­lowed the rules on sub­mit­ting pa­per­work for schol­ar­ship dis­burse­ment.

But Smith may have bro­ken a few rules him­self dur­ing his time with Miss New Mex­ico — he now faces al­le­ga­tions of fraud, em­bez­zle­ment and money laun­der­ing.

Agents with the state At­tor­ney Gen­eral’s Of­fice raided Smith’s cat­tle ranch in El­ida on Oct. 3, seiz­ing bins of pageant doc­u­ments, com­put­ers, a cam­era and a cell­phone as part of an in­ves­ti­ga­tion that has been on­go­ing for more than a year.

“They’ve pretty much been work­ing silently, do­ing their job,” said Chavez, who con­tacted the AG’s Of­fice last year about her al­le­ga­tions. “We knew it was go­ing to take some time.”

A 14-page af­fi­davit de­tails the al­le­ga­tions against Smith, in­clud­ing:

Leav­ing the or­ga­ni­za­tion with a neg­a­tive bank bal­ance and at least $54,419.75 in un­paid schol­ar­ships and ven­dor bills.

Run­ning a fic­ti­tious board of direc­tors with no re­gard to bylaws or fi­nan­cial record-keep­ing.

De­cep­tively en­cour­ag­ing con­tes­tants to tell donors that the or­ga­ni­za­tion was non­profit and money raised was taxd­e­ductible, even though the or­ga­ni­za­tion’s non­profit sta­tus was re­voked.

Forc­ing con­tes­tants to sell $10 raf­fle tick­ets for a new ATV. The raf­fle lasted more than two years, a win­ner was never cho­sen and a used ATV match­ing the one on raf­fle fliers was re­ported to be on Smith’s cat­tle ranch.

Charg­ing con­tes­tants $450 for photo pack­ages that cost $250 — then not pay­ing the pho­tog­ra­pher.

Charg­ing con­tes­tants $25 a night to stay in dor­mi­to­ries at East­ern New Mex­ico Uni­ver­sity for the pageant when the uni­ver­sity charged $12.50 a night.

Bank records also un­cov­ered nu­mer­ous ques­tion­able pur­chases, with­drawals, trans­fers and over­drafts in­volv­ing the Miss New Mex­ico ac­counts and Smith’s per­sonal ac­counts, ac­cord­ing to the af­fi­davit.

That in­cludes a $1,700 trans­fer from a pageant ac­count into a cashier’s check to pur­chase cat­tle se­men.

“The at­tor­ney gen­eral is an­gered by the mis­use of schol­ar­ship funds in­tended for bright young women in our com­mu­nity,” said David Carl, spokesman for At­tor­ney Gen­eral Hec­tor Balderas. “Our of­fice has worked tire­lessly with vic­tims and their fam­i­lies in this case for more than a year, and we will con­tinue to ad­vo­cate to im­ple­ment re­forms that min­i­mize fi­nan­cial ex­ploita­tion of schol­ar­ship re­cip­i­ents.”

Smith, 55, could not be reached for com­ment. He told the East­ern New Mex­ico News this week that he was “busy” and re­ferred calls to his at­tor­neys.

But two at­tor­neys who have rep­re­sented him pre­vi­ously said they knew noth­ing of the AG case.

Smith was ter­mi­nated from his po­si­tion in Fe­bru­ary. A spokes­woman for the Miss Amer­ica Or­ga­ni­za­tion de­clined to com­ment, cit­ing the on­go­ing in­ves­ti­ga­tion and adding that the or­ga­ni­za­tion is co­op­er­at­ing.

Last year, the or­ga­ni­za­tion had also re­fused to an­swer my ques­tions, in­clud­ing whether Smith had un­der­gone a back­ground check be­fore be­ing named ex­ec­u­tive direc­tor. Had there been one, I sus­pect, ques­tions would have arisen over Smith’s per­sonal fi­nan­cial back­ground, which in­cludes fil­ing for bank­ruptcy in 2002 and 2010, be­ing sued by his bank­ruptcy at­tor­ney for $76,941.18 in un­paid le­gal fees, be­ing sued for fraud over bounced checks and be­ing ar­rested in 2002 on a felony theft charge in Texas over a miss­ing check.

That charge was later dis­missed.

Af­ter Chavez went pub­lic with her al­le­ga­tions, she said Smith re­tal­i­ated against her, strip­ping her of her of­fi­cial du­ties and keep­ing her from par­tic­i­pat­ing in the 2017 Miss New Mex­ico pageant. Sac­ri­fic­ing her crown was worth it, she told me then, if it sounded the alarm about Smith.

The AG’s in­ves­ti­ga­tion seems a good sign that it did.

“Hon­estly, a lit­tle bit of peace over­came me, know­ing that the truth is com­ing out,” she said.

Some­times we are forced to choose right over reign, to speak up rather than smile silently. Chavez knows that. It’s why she and the oth­ers who came for­ward still rule.

Jo­line Gu­tier­rez Krueger

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