December 20, 2016

Acting TRD head talks about Padilla resignation

The highest-ranking official at the state Taxation and Revenue Department became somewhat reflective Tuesday over last week’s sudden resignation of his former boss, Demesia Padilla.

At an annual state legislative conference hosted by the New Mexico Tax Research Institute, the department’s Deputy Secretary John Monforte said he’s known Padilla for 10 years and came to the department when she was appointed by Gov. Susana Martinez.

Padilla resigned as secretary last week after an agent for Attorney General Hector Balderas filed a search warrant affidavit on her home. Monforte is now heading the department.

The affidavit described an ongoing investigation that points to possible tax evasion and alleged embezzlement of money from a business she once did accounting work for, including while she was TRD secretary.

Monforte called the developments “obviously somewhat unexpected.”

“I think from my perspective there’s two stories to this,” he told an audience of roughly 140 people gathered at the Hotel Albuquerque. “On one hand, there is Demesia Padilla, a woman that I know that I want to give sort of deference to.”

Monforte went on to remind those in attendance that “one of sacred principles of our judicial system is you are innocent until proven guilty.”

But he continued. “On the other end of that is Secretary Padilla as a state officer,” Monforte said. “And in that light, at the very least, the appearance of impropriety at the very least has a great cost.”

Acting Taxation and Revenue Department Secretary John Monforte

Joey Peters

Acting Taxation and Revenue Department Secretary John Monforte

State employees interviewed for the Attorney General’s investigation said Padilla sought to intervene in a state tax audit of her former client, Bernalillo-based Harold’s Grading and Trucking, according to the search warrant affidavit. Those allegations first surfaced publicly in a June 2015 preliminary investigation commissioned by State Auditor Tim Keller.

The Attorney General search warrant affidavit also cited payments to Padilla from Harold’s Trucking through 2013, two years into her tenure as head of the state’s agency responsible for collected taxes. That alleged double dipping may violate the state Government Conduct Act.

In an interview conducted as part of the investigation, Padilla denied doing accounting work for Harold’s Trucking while also working as a state employee. The owners of Harold’s Trucking told investigators otherwise.

Investigators also found roughly $128,000 in “unexplained income” in Padilla’s bank account, according to the search warrant. Roughly $48,000 of that money came from QC Holdings Inc., a payday lender.

A lawyer for QC Holdings told the Santa Fe New Mexican that the payments were for renting New Mexico properties from Padilla. He did not answer the newspaper’s questions about which exact properties the company paid Padilla for rent. Attorney General Special Agent Ed Griego didn’t find evidence that Padilla owned or was associated with any of the rental locations the company used in New Mexico, according to the search warrant affidavit, and deduced that the company’s payments to Padilla did not involve rent.

Padilla’s lawyer, Paul Kennedy, stopped her from answering questions about the QC Holdings payments during an interview by the Attorney General’s Office last week.

Monforte told attendees of the conference that he had “no sort of comment” on the nature of the investigation into Padilla.

“We’re going to obviously wait and see how this story plays out for the next couple of months,” he said.

He did muse over what the controversy has been like for department employees the last few days.

“In speaking with our employees, we’ve obviously had to have plenty of time holding many sort of town hall meetings reassuring them with sort of where we’re going,” Monforte said. “And this feeling of, you know, they’ve got to explain the Attorney General raiding the Tax and Revenue Department, that’s one of the stories we have to address.”

He continued: “These individuals at the very least as public servants want to make sure they are following a person of high ethics.”