The Attorney General’s office filed a search warrant for the house of Demesia Padilla. Padilla then resigned from her position as Taxation and Revenue Department Secretary. Here are some of the key parts of the search warrant that NM Political Report obtained yesterday. Padilla was doing work for Harold’s Grading & Trucking through Feb. 2013.
Part of the search warrant that resulted in the resignation of Taxation and Revenue Department Secretary Demesia Padilla mentioned her alleged abuse of power in a case referred by the State Auditor. Here are the stories NM Political Report wrote about this from last year. Auditor finds possible abuse of power in Tax and Rev: Allegations revealed by the state Auditor found that (at the time) unnamed top officials in TRD could have given improper preferential treatment to a taxpayer in New Mexico. State Auditor Tim Keller referred the investigation to Attorney General Hector Balderas. A spokesman for TRD said the letter from Keller was political and, “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.” TRD secretary named in investigation: A letter to Gov. Susana Martinez from State Auditor Tim Keller revealed the allegations of abuse of power surrounded Taxation and Revenue Department Secretary Demesia Padilla.
State Taxation and Revenue Department Secretary Demesia Padilla resigned from her position today, according to media reports. Padilla’s resignation came after New Mexico Attorney General Hector Balderas filed a search warrant on her house related to an investigation into allegedly aiding an ex-client by using her position as TRD head. Padilla worked as a certified public accountant before Gov. Susana Martinez appointed her to the helm of TRD in 2011. Related: The key parts of the Demesia Padilla search warrant
The search warrant sought Padilla’s personal and business income tax returns from 2011-2013, among other information, stemming from an anonymous referral sent to the Attorney General’s Office in July 2015 “alleging illegal and financially questionable acts” as well as a referral from State Auditor Tim Keller. The warrant also sought tax records from Jessie Medina Jr. According to the New Mexico Secretary of State’s Office, Jessie Medina was listed as an officer of Padilla’s private accounting firm.
Was it appropriate for the Secretary of the New Mexico Taxation and Revenue Department to get involved with the audit of a former client for whom she once did accounting work? Last week, NM Political Report wrote about how Demesia Padilla, the TRD secretary, wrote a letter asking her own department for lower tax penalties for Harold’s Trucking, a Bernalillo-based business. Before becoming a cabinet secretary in 2011, Padilla handled the business’s financials as a certified public accountant. Padilla’s agency was handling an audit of Harold’s Trucking and Padilla herself stepped in to help out the business. Padilla’s old CPA business had lost tax documents belonging to Harold’s Trucking, she wrote in the letter, and therefore the business shouldn’t be penalized for her mistake.
On Oct. 15, 2014, Kevin Sourisseau sent a message to his boss with the subject line “Harold’s Trucking Audit.”
As second and first in command of the state Taxation and Revenue Department’s audits, Sourisseau and his then-director Lizzy Vedamanikam were in charge of making sure individuals and businesses paid their share of taxes in New Mexico. Their boss, TRD Secretary Demesia Padilla, wanted to help Harold’s Grading & Trucking save money after the Bernalillo-based company faced an audit from their department. Before Gov. Susana Martinez named her head of the state agency in 2011, Padilla had done accounting work for the trucking company. In his email to Vedamanikam, Sourisseau wrote that the situation was a “difficult and uncomfortable issue.” Still, it didn’t seem like he had a reason for concern.
Shortly after state Taxation and Revenue Department Secretary Demesia Padilla was publicly implicated in an investigation of wrongdoing, the governor’s chief of staff received a letter. Those who sent the letter, which Susana Martinez Chief of Staff Keith Gardner received on July 14, claimed to be employees “who have witnessed the decline of this department because of the unprofessional, unethical, and overall inept leadership of Demesia Padilla.”
“Since the governor is on the record that her staff are expected to hold to the highest ethical and professional standards, we hope that you’ll look into what we share in this letter, and that you’ll do something about it before more TRD staff, out of frustration, seek out the [Attorney General], the state auditor and the press as a means to address these serious concerns,” the letter reads. NM Political Report obtained the letter through a public records request with the governor’s office. In July, State Auditor Tim Keller announced a preliminary investigation contracted by his office concluded that Padilla may have interfered with the tax audit of a former client for whom she did accounting work before becoming the TRD cabinet secretary. The client, later revealed to be Bernalillo-based Harold’s Grading & Trucking, has denied knowing about or asking for any special treatment.
Another day, another revelation about federal investigators looking into the goings-on of the Susana Martinez administration. After NM Political Report reported that the FBI was looking into the Martinez administration itself, The Santa Fe New Mexican added more details to the story, reporting that the FBI was looking into the embattled State Taxation and Revenue Department, citing “a person familiar with the investigation.” The newspaper says that federal investigators subpoenaed documents from the department while looking into whether or not audits were performed in retaliation of former members of Martinez’s administration. The newspaper says that three former members of the administration and a former fundraiser for Martinez, who all fell out of favor, confirmed they had been audited. One was Brent Eastwood, a former division director of international trade for the New Mexico Economic Development Department.
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.
When New Mexico Political Report discovered and reported on a botched redaction from the state Taxation and Revenue Department this summer, the state responded with a threat. “You purposely manipulated the document in order to reveal taxpayer return information and thwart the purpose of the redaction,” tax department spokesman Ben Cloutier wrote to us in July. “You have published taxpayer return information despite the clear intent that it remain confidential. It is unlawful for any person other than the taxpayer to intentionally reveal to any other person the taxpayer’s return information.”
Yet internal emails show at least one current tax department attorney faulted his employer, and not New Mexico Political Report, for the mishap. “I have been telling the Department for years that we are not redacting documents properly,” tax department attorney Lewis Terr wrote in an email the same day we published the story.
When the State Taxation and Revenue Department was in the process of auditing Bernalillo-based Harold’s Grading & Trucking, Secretary Demesia Padilla wanted to write an affidavit supporting tax deductions the company made in the past. This is according to an email recently released to New Mexico Political Report by the department as part of a public records request. Padilla is under investigation by the New Mexico Attorney General’s office for allegedly using her position to attempt to provide special treatment to a taxpayer for whom she previously did accounting work. State Auditor Tim Keller, whose office conducted a preliminary investigation into the matter, wouldn’t publicly identity the name of the taxpayer in question. However, a botched redaction from the tax department this summer revealed that it was Harold’s Trucking.