Ex-head of state tax agency charged
Padilla, who resigned from Cabinet post in 2016, accused of embezzling $25K
State prosecutors charged former New Mexico Taxation and Revenue Secretary Demesia Padilla with embezzlement and seven other counts Thursday, accusing the exCabinet member of stealing money from a client of her side business and then interfering with an audit of the very same client.
The charges are just the latest turn in Padilla’s fall from a prominent role in Gov. Susana Martinez’s administration. Padilla was one of the longest-serving members of the twoterm Republican’s Cabinet when she resigned in late 2016 amid an investigation by the Attorney General’s Office
into her business dealings.
Now, as she faces up to 25 years in prison, Padilla’s case is bound to cast the shadow of corruption once again over New Mexico politics after a round of scandals.
Padilla, who lives in Albuquerque, is accused of transferring about $25,000 from the bank account of a Bernalillo-based grading and trucking company that was a client of her accounting business.
The charges allege she transferred all of that money between 2011 and 2013 — after taking over as secretary of the Taxation and Revenue Department in 2011.
Investigators say the company, Harold’s Grading and Trucking, did not authorize the 40 discrete electronic transfers.
Some witnesses told investigators that Padilla, 58, claimed money transferred from the company was owed to her.
In any event, the timing raised questions about whether Padilla was continuing to manage the taxes and finances of a business while also serving as the state’s top tax official.
Padilla has maintained that she stopped working for the company around the time she took office.
But investigators say her husband, Jessie Medina Jr., signed off on the company’s tax returns for several years after she became a Cabinet secretary.
And investigators say that when her department’s staff began auditing the company around 2014, Padilla interfered.
Some staff told investigators Padilla questioned them specifically about that audit.
Others said it was unusual for a Cabinet secretary to go to an audit supervisor and ask for the file on a particular case.
Employees at the Taxation and Revenue Department raised alarms about the Cabinet secretary, depicting her in a thenanonymous 2015 letter as pressuring civil servants to overlook audit findings and suppress investigations of her friends and clients.
One witness told investigators that he was unsure at one point whether Padilla was acting as his boss or as the accountant representing the company he was helping to audit, according to the charges.
Investigators say they also found that Padilla used her access to the department’s computer system to examine state records on several other clients of her accounting business.
The charges say Padilla advocated for waiving the penalties on her former client, suggesting she may have been trying to protect her business and ensure she was not on the hook for thousands of dollars if the company wanted her to cover the costs as its accountant.
An accountant hired by the Attorney General’s Office to review files from the investigation into Padilla says in the charges against her that Padilla not only violated the state’s conflict-of-interest laws but also the professional standards for accountants.
“There was no legitimate reason for Ms. Padilla to inject herself in the Harold’s Trucking audit,” the accountant, James Hamill, wrote.
Padilla’s lawyer, Paul Kennedy, said Thursday afternoon that he had not seen the charges and declined to comment.
Attorney General Hector Balderas cast the matter as one of public trust.
“Serving in a position of financial trust as a regulator over $7.4 billion dollars of revenue for the state of New Mexico carries with it great responsibilities that should never be breached or abused for personal interests,” the Democrat said in a statement.
In addition to one count of embezzlement, Padilla also is charged with engaging in an official act for personal financial gain, embezzlement over $20,000, computer access with intent to defraud or embezzle and five counts of violating ethical principles of public service.
The Attorney General’s Office filed the charges in a 40-page criminal complaint Thursday afternoon in a state District Court in Santa Fe.
Questions about Padilla’s role in the audit have been swirling for years.
In 2015, then-State Auditor Tim Keller concluded his own investigation, finding that Padilla had tried to give preferential treatment to the trucking company.
At the time, the Governor’s Office dismissed Keller as “the Grand Marshal of a publicity parade.”
Balderas’ office appears to have opened its own probe after Keller announced his findings.
“There is no place for abuse of power from our highest-ranking officials. That’s why we refused to sweep it under the rug in the face of intense pressure due to the fact that she was a powerful appointee of Gov. Martinez,” said Keller, who is now the mayor of Albuquerque.
The Governor’s Office issued a statement Thursday evening that quoted her as saying, “As a former prosecutor, I take all allegations of misconduct seriously and don’t believe anyone is above the law – that is why I ordered the tax department to cooperate fully with the Attorney General’s Office. This case will now be settled in the courts and it’s important to let that process play out in the appropriate venue.”
All of this comes as just the latest scandal involving a top New Mexico politician after a round of successive resignations and prosecutions.
Balderas filed charges against then-Secretary of State Dianna Duran in 2015 accusing her of embezzling money from her own campaign. She resigned and spent 30 days in jail.
Last year, a jury in Santa Fe convicted former state Sen. Phil Griego on multiple charges stemming from a real estate deal approved by the legislator and benefiting the lawmaker.