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.
The top attorney for the state’s Taxation and Revenue Department recently resigned from the cabinet-level agency. Brad Odell, TRD’s chief legal counsel, “informed the department that he will be leaving to pursue a good opportunity with a large law firm,” according to Lorissa Abeyta, a legal assistant with the agency. NM Political Report confirmed Odell’s resignation through a public records request with TRD after Odell and department spokesman Ben Cloutier didn’t return phone calls and emails for two days earlier this week. Odell’s actions came under scrutiny in a preliminary investigation that concluded TRD Secretary Demesia Padilla may have abused her power by helping a business during a tax audit by her agency. Padilla’s actions, according to the report, may have led to retaliation against TRD employees and lost the state money.
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.
A leaked email from the state Taxation and Revenue Department last week was perhaps more transparent than the department intended. Update: The Taxation and Revenue Department responded. Here is the response. This story continues as originally written below. State Taxation and Revenue Secretary Demesia Padilla is currently under investigation by the state Attorney General’s Office for allegedly providing or attempting special tax treatment to a former client for whom she served as a certified public accountant.