July 9, 2015

Auditor finds possible abuse of power in Tax and Rev

Joe Gratz


Top officials in the state Taxation and Revenue Department may have improperly given preferential treatment to a New Mexico taxpayer, according to State Auditor Tim Keller’s Office.

Photo Credit: Joe Gratz cc

Joe Gratz

Photo Credit: Joe Gratz cc

Update: A letter from Keller to Gov. Susana Martinez names Tax and Revenue Department Secretary Demesia Padilla as part of the investigation. Our report is here. The post continues as originally written below.

The allegations came from a fraud hotline call to Keller’s office in February, along with an audio recording of senior Taxation Department officials.

Justine Freeman, a spokeswoman for the State Auditor, said that the allegations surround cabinet level Taxation Department officials who allegedly gave a certain taxpayer preferential treatment in part to protect another cabinet level Taxation Department staffer who had previously worked for the same taxpayer.

“As a result, the state may have lost revenue and other [TRD] employees may have been retaliated against,” Freeman told New Mexico Political Report.

A preliminary investigation into the allegations by a forensic auditing firm found basis for a deeper investigation, which was referred to state Attorney General Hector Balderas.

“We can confirm the Office of the Attorney General has received a public referral and this matter is under review,” Attorney General spokesman James Hallinan said. “We will inform the public of the disposition of this referral once that determination has been made.”


State Auditor Tim Keller

Keller also sent a letter to Gov. Susana Martinez, whose office oversees the Taxation Department. Freeman said more information about the allegations— such as the name of the allegedly favored taxpayer, the Tax Department officials who may have broken the law or the audio recording—isn’t being released publicly yet because of the pending investigation.

Keller addressed the nature of the allegations in a statement.

“There is no place for preferential treatment when it comes to taxpayers,” he said. “Any abuse of power that costs our state revenue or leads to retaliation against employees who speak up is deeply troubling.”

Late Thursday afternoon, Taxation Department spokesman Ben Cloutier responded to the allegations with a prepared statement attacking Keller.

“That the most political State Auditor in New Mexico history would peddle false claims for the sake of grabbing a headline is hardly a surprise,” Cloutier said. “We believe these are nothing more than unsubstantiated claims that are being driven by disgruntled former employees, who either work for the State Auditor or were fired for sexual harassment, and now they have an ax to grind.”

This prompted Freeman to release a statement defending the investigation.

“There is nothing partisan about the audio tapes and testimony documented by the independent investigative firm,” Freeman said. “Our office has a track record of fighting misconduct of public officials regardless of political party. We hope TRD will address the substance of these issues rather than distracting with shallow rhetoric.”

Update: Quotes from Tax and Revenue Department and State Auditor’s Office added.