Pearce business interests raise questions in race for governor
SANTA FE — Republican Steve Pearce has made his success as a businessman in New Mexico’s oil fields a pillar of his campaign pitch to voters.
But Democrats have seized on Pearce’s financial interests as a line of attack in the closing stretch of the campaign for governor, accusing him of having conflicts and failing to disclose his businesses accurately. Pearce says the accusations are baseless.
The clash surfaced again in this week’s televised debate, and it’s a topic in campaign ads.
Pearce sold the assets of his oil field services company, Lea Fishing Tools, upon joining Congress about 15 years ago. That’s the business he usually highlights on the campaign trail when he speaks about emerging out of childhood poverty and succeeding in a competitive sector.
But he and his wife, Cynthia, still own two Hobbs based companies that either have — or used to have — ties to the oil industry, according to Journal interviews and a review of public records.
Each company generated somewhere between $100,000 and $1 million in income for the couple in 2017, Pearce reported in a financial disclosure to Congress.
Pearce’s critics point out that if elected governor, he would be in charge of the state agency that regulates the oil and gas industry in New Mexico.
Pearce campaign spokesman Kevin Sheridan said that the Pearces aren’t involved in running either company and that neither of the businesses would present a conflict if Pearce were elected governor.
One of the companies, Trinity Industries Inc., is listed in state corporation records as dealing in oil field equipment and other aspects of the oil and gas industry. But Sheridan says that isn’t accurate, and he says the company has no oil field equipment.
The other company, LFT LLC, is a small portion of the couple’s investments, he said.
LFT has equipment that’s rented to an oil field services company, Sheridan said, but it’s managed by a third party.
The Pearces “do not market, manage, or operate any type of equipment,” Sheridan said. “They do not have employees or customers. All gains or losses are the result of passive investments.”
Pearce has a broad portfolio of investments that are professionally managed, his campaign says, so he and Cynthia do well when the economy does well and face losses when it doesn’t, similar to many other Americans.
In 2017, Pearce and his wife made $395,281 of income from capital gains, which can be profits from either investments or property sales, according to tax returns released by the candidate this month. But they reported a loss of $332,595 from a tax category that includes rental real estate, royalties and trusts.
TV debate
Pearce’s business interests have come under fire by his opponents as the race for governor has turned decidedly negative in the final weeks. Pearce is competing with his congressional colleague, Democrat Michelle Lujan Grisham, to succeed Republican Gov. Susana Martinez.
In the candidates’ final TV debate, Lujan Grisham accused Pearce of hiding his oil field business interests by describing them as a company that rents party equipment. She also alleged that he had used his position as a member of the House Natural Resources Committee to enrich himself by supporting less regulation of the oil and gas industry.
“What exactly are you hiding from New Mexico voters?” she asked.
Pearce shot back that she was “misstating the facts all the way through.” He said he did have a party equipment rental business at one point.
“There’s nothing that we’re hiding,” he said. “Actually, these things were asked to the (House) Ethics Committee in Washington, and they said, ‘No, it is OK. He has filed exactly correctly.’ ”
Republicans, meanwhile, have also accused Lujan Grisham of conflicts, assailing her for her ties to a company that helps run New Mexico’s high-risk insurance pool.
Lujan Grisham divested herself from the company, Delta Consulting, last year.
Inquiry sought
Current and former Democratic elected officials have joined Lujan Grisham in accusing Pearce of hiding his interests in the oil and gas industry. They say that he released far less personal tax information to the public than Lujan Grisham did and that the congressional disclosures don’t mention oil field equipment.
Pearce, for example, released only his 2017 state and federal tax return cover sheets — not the attached tax schedules — along with the required congressional financial form from 2017 that he had filed earlier this year.
Lujan Grisham, by contrast, released five years of her state and federal income tax returns earlier this year during her campaign to win the Democratic nomination.
Releasing tax returns is voluntary, and there’s no precedent for doing so in a New Mexico governor race. But Pearce pledged to release his tax returns if his opponent did.
Former Albuquerque Mayor Martin Chávez, a Democrat, said Pearce has “not been honest with New Mexicans.”
“Conflicts of interest are natural,” he said, “but they have to be disclosed. Steve Pearce failed to disclose to New Mexicans what his actual financial interests are in his votes.”
Three district attorneys in New Mexico — Mark D’Antonio, Richard Flores and Lemuel Martinez, all Democrats — sent a letter to the U.S. House ethics committee this week requesting an investigation into Pearce’s financial dealings.
Sheridan, the spokesman for Pearce, said the political attacks are a desperate attempt to distract from Lujan Grisham’s own problems but that “lying isn’t going to save her.”
Pearce has repeatedly made full financial disclosures to Congress and had his records reviewed by the House ethics committee, Sheridan said.
Allegations
Democrats have singled out a variety of businesses or transactions for criticism. Here’s a closer look:
In 2003, Pearce sold the ■ assets of Lea Fishing Tools to Key Energy. A group backed by the Democratic Governors Association released an ad this week that says Pearce sold the assets for twice the stated value of the company, citing a 2008 article by Roll Call, a newspaper that covers Capitol Hill.
But Roll Call also reported that year that it “found no evidence that Pearce has taken any legislative action to specifically benefit Key Energy Services,” according to FactCheck.org, a website run by the Annenberg Public Policy Center at the University of Pennsylvania.
A Pearce spokesman at the time also told Roll Call that it is “standard accounting practice to value a company based on the depreciation of its assets,” but that the sale price is “based on future potential earnings.”
Pearce’s most recent disclosure ■ report to Congress says he and Cynthia jointly own LFT LLC, which is valued at between roughly $1 million and $5 million, with income ranging from $100,000 to $1 million.
The income is from capital gains, interest and rent, according to the disclosure.
Sheridan said the company has equipment that’s rented to an oil field services company. The equipment was left over from the Pearces’ earlier company, he said, and it’s now managed by a third party.
Pearce’s financial disclosure statement, filed with the state, describes LFT’s business purpose as “real estate/equip rental.”
Pearce’s disclosure ■ report to Congress says he and Cynthia jointly own Trinity Industries Inc., which is valued at $5 million to $25 million, with income of between $100,000 and $1 million. The income is from capital gains, dividends, interest and rent, the disclosure says.
The company’s corporation documents maintained by the New Mexico Secretary of State’s Office list dealing in oil field equipment and buying and selling oil and gas leases as among the purposes of the business.
Pearce’s campaign says that isn’t correct and may be outdated, given that the company was formed in 1965.
Pearce’s financial disclosures statement, filed with the state, describes Trinity as “investments/equip rental.”
Sheridan described the company as “professionally managed investments.”
Pearce owns stock in ■
Exxon Mobil Corp., valued at between $15,000 and $50,000, with dividend income of $1,000 to $2,500.
Sheridan said Exxon is “one of the most widely held stocks in the world, owned by pension funds, mutual funds, and tens of millions of retail investors.”
A previous financial disclosure by Pearce said he inherited the Exxon stock from his mother.