October 30, 2015

Complaint against Tax. Dept. lawyer adds details to scandal

Newly released documents appear to show a top state Taxation and Revenue Department staffer was involved in alleged abuse of power that is subject to an ongoing probe.

© New Mexico Political Report, 2015. Contact editor@nmpoliticalreport.com for info on republishing.

Untitled design (3)In July, State Auditor General Counsel Sarita Nair filed an ethics complaint against Tax Department lead attorney Brad Odell with the Disciplinary Board of the Supreme Court of New Mexico, NM Political Report has learned.

The Disciplinary Board opted not to take action against Odell, citing that it lacked sufficient evidence. Still, the board’s lawyer raised concerns about Odell’s alleged involvement in a scandal currently under investigation by New Mexico Attorney General Hector Balderas.

On Sept. 25, Assistant Disciplinary Counsel Jane Gagne wrote to Nair that Odell failed to “reject the idea of allowing the Secretary to submit an affidavit which would effectively provide cover” for a client for whom Tax Department Secretary Demesia Padilla previously did accounting work.

“Although we are closing the matter at this time, we are reserving the right to reopen this matter in the event the Attorney General’s Office issues findings that implicate Mr. Odell in any impropriety,” Gagne writes.

During the summer, State Auditor Tim Keller announced that his office completed a preliminary investigation concluding that Padilla attempted to give preferential treatment to a former client and retaliated against employees who brought forward concerns about her actions. The allegations stemmed from an anonymous complaint reported to Keller’s office in February.

Keller’s office contracted with Albuquerque-based McHard Accounting Consulting to conduct the preliminary investigation. The firm came to its conclusions based on “hours of audio recordings and corroborated interviews with multiple people,” according to State Auditor spokeswoman Justine Freeman at the time.

These audio recordings involve Odell, according to correspondence regarding Nair’s complaint against him.

“Mr. Odell appears to have participated in Secretary Padilla’s attempts to gain special treatment for her former client, as documented on the audio recording,” Nair wrote in her complaint, citing the McHard report.

The report also states that Odell “advised NMTRD staff to give differential treatment in the form of waived penalties for [Taxpayer], potentially to protect Secretary Padilla from liability as their former CPA.”

“It also appears that Mr. Odell may have also violated his ethical obligation as an attorney when he discussed his willingness to utilize his various roles as Chief Legal Counsel to legally maneuver the case for special consideration, including the potential abatement of taxes, penalties and/or interest,” Nair wrote, again citing directly from the preliminary report.

Other parts of the report allege Padilla instructed her staffers not to impose taxes and penalties on her former client, but to instead forward the audit directly to Odell’s office.

Keller referred the report to Balderas’ office, which began an investigation that is still pending.

NM Political Report obtained the complaint against Odell and correspondence between Nair and the Disciplinary Board through a public records request with the State Auditor’s Office, but learned of it from another source.

Nair’s complaint, according to Freeman, “was one of the referrals recommended in the independent investigation of the Tax and Revenue Department.”

Freeman adds that the correspondence “is another example of the pattern of alleged attempts to pressure employees to give preferential treatment to a former client of the Secretary.”

The Disciplinary Board conducted its own probe into Odell, which eventually “found insufficient evidence to support allegations that Mr. Odell violated the Rules of Professional Conduct,” Gagne wrote.

According to Gagne’s letter, Odell made a “clear rejection of the Secretary’s alleged attempt to forgo the normal assessment process” of Padilla’s former client—which is why Nair’s complaint didn’t “rise to the level of impropriety justifying formal charges.”

“We do, however, have concerns that we are addressing with Mr. Odell separately,” Gagne wrote.

Gagne is referring to Odell allegedly allowing Padilla to write an affidavit in support of her former client as a part of the company’s response to its audit from the tax department.

As NM Political Report previously reported, Padilla wanted to write an affidavit showing that she once possessed Nontaxable Transaction Certificates (NTTCs) belonging to her former client that were later destroyed. When businesses are audited, they use NTTCs as proof of tax deductions they took out on items they sold.

Padilla’s former client, Bernalillo-based Harold’s Grading and Trucking, was revealed by NM Political Report through a botched redaction in a document released by the tax department to a number of media outlets this summer.

It’s unclear whether Padilla did write an affidavit or any type of support for Harold’s Trucking during its audit. Earlier this month, NM Political Report filed a public records request with the tax department asking for documents written by Padilla about Harold’s Grading and Trucking during the time of the audit.

Tax Department Public Records Custodian Mary Baily wrote back that her agency located one document responsive to the request, but it couldn’t be publicly released because it “contains confidential taxpayer information.”

Also unanswered is why Padilla would have still possessed Harold’s Trucking’s tax documents, and why they would have been destroyed. Harold Dominguez, the owner of Harold’s Trucking, previously said he was not aware of any attempts by Padilla to interfere with an audit on his company’s behalf.

There is no indication that Dominguez was aware of any of the actions related to his audit.

The Tax Department eventually assessed Dominguez’s company Oct. 30, 2014. In January, Harold’s Trucking formally protested the assessment but later lost the appeal because it wasn’t filed on time.

NM Political Report left a voicemail and email with Odell, who did not return comment before press time. Tax Department spokesman Ben Coutier also didn’t answer questions related to the complaint against Odell before press time.

Read the documents below:

Brad Odell Complaint by New Mexico Political Report