March 13, 2016

Shell companies & donations behind FBI investigation into Gov revealed

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“Going to try not to release expenses unless we get waterboarded into it.”  – Jay McCleskey, 2011

She was once one of Susana Martinez’s most trusted advisors.  One of the few people in the soon-to-be-governor’s inner circle, she was also the one who kept up with all of the money coming in and going out.

Now Andrea Goff has shared the emails, documents and details behind the governor’s inauguration that launched an FBI investigation that we now know went all the way to the highest levels of the US Department of Justice in Washington, DC.

Today, the Santa Fe New Mexican‘s Justin Horwath details those allegations in 2,300 word front-page story.

For those who (like us) have followed the close-knit circle of advisors, shell corporations and investigations into them, it is definitely worth the lengthy read.

But in case you don’t have that much time, or need a little preview to get you started, here are the big takeaways:

McCleskey’s use of shell-companies to hide funds started right from the beginning

Most Republicans in the know will tell you that Susana Martinez was not much of a politician until Jay McCleskey picked her as his candidate for governor for the 2010 election.

Working through his firm Lincoln Strategies (in partnership with Nathan Sproul, a GOP operative investigated for destroying Democratic voter registration forms in districts where he supported Republican candidates), McCleskey helped Martinez win the Governor’s Mansion in 2010.

Next on the agenda: host an inauguration.

They had promised to be transparent about the money paying for the big event – almost $1 million was ultimately raised for the party – and to donate any left over money to non-profits.

But the “most transparent administration in history” started off by paying tens-of-thousands of dollars to a shell company created by McCleskey to produce a video that was never made.  So what happened to that money?

Screen Shot 2016-03-13 at 12.19.05 PM

Check from Governor’s Inaugural Committee to CD productions, a McCleskey shell. From SF New Mex.

The inaugural committee payments to companies connected to McCleskey included a Jan. 27, 2011, check for $36,540.22 the committee made out to a front company set up by McCleskey called C.D. Production and Public Relations. The check bore the signature of Nicole McCleskey, Jay McCleskey’s wife, who was a committee officer. Goff, who kept a ledger of the spending, said she understood that the money was intended to produce an inaugural keepsake video.

But the committee never planned or approved such a video, Goff said, and it was never produced. “I didn’t realize C.D. Productions was his at the time,” she said in an interview last week…

C.D. Productions, and companies with various iterations of that name, would later collect more than $200,000 in payments from political committees controlled by McCleskey…

Another shell company set up by McCleskey, M3 Placement, which also went by various iterations of that name, also received more than $210,000 from [GOP Appeals Court Candidate] Hanisee and PACs controlled by McCleskey, the investigation showed.

Inaugural expenses seemed to go for election activities, not the inaugural

Goff, who kept the ledgers for money coming in and out of the inaugural committee, says that the inaugural committee spent about $600,000 on the events and donated another $100,000 to charity.

So what happened to the other money?  Good question.

McCleskey and his wife Nicole, another inaugural committee member, wrote and signed several checks to political operative companies for work that the inaugural staff say was never done.  Here are a few

  • $17,778 to Targeted Victory, a Republican targeting firm in Virginia to create a website for the inauguration.  That website was never created.  Instead another company was later paid $550 to create a single landing page.
    • Though it is not a part of the New Mexican’s story, ProgressNowNM has tracked more than $473,000 in additional payments to this firm from PACs and campaigns run by McCleskey, including the Governor’s 2014 re-election and Susana PAC.
  • $78,714 to McCleskey’s Lincoln Strategies Group to pay for “staff” and “collateral.”  Goff says those checks did not have accompanying invoices.

Not all donations seemed to show up on disclosures and finance reports

Newly released emails between Goff, McCleskey and a fundraising consultant also raise questions about whether big donors to the governor and her committees were properly reported on disclosures and finance reports.

On Feb. 14, 2011, Cecilia Martinez, a political fundraiser who worked for both the inaugural committee and Gov. Martinez’s 2014 re-election campaign, emailed Jay McCleskey a $3,000 bill from her Virginia-based company, Guerin Inc., for fundraising for the re-election campaign. This was made clear in both the email and the invoice, which said bill to “Susana Martinez for Governor.”

The invoice listed $30,000 in donations from five different companies and an individual. To protect her professional relationship with the donors, Cecilia Martinez asked that The New Mexican not list their names. The New Mexican did verify that three of the donations appeared in Gov. Martinez’s first re-election campaign filing in 2011. What happened to the other three is unclear, but they did not match donations given to the inaugural committee, according to a list of inaugural donors the committee released in 2011.

When Cecilia Martinez received a check three weeks later, it was written from the inaugural account, with Nicole McCleskey’s signature. Martinez said she didn’t realize anything might be inappropriate until she later got contacted about the FBI investigation and then had her records subpoenaed by federal agents.

“I sincerely hope that they didn’t use me to unknowingly deceive donors,” she said of the committee.

This is not the first time the governor’s network of overlapping donors and donations has come under scrutiny.

In 2014, text messages between McCleskey and Goff seemed to show that McCleskey was directing donations from one major donor with a potential contract before the state to give to a 501c4 organization whose donors are not publicly disclosed. From the ABQ Journal:

According to the text messages, Andrea Goff wanted to know if they could ask [Albuquerque Downs co-owner] Windham for a contribution to Reform New Mexico Now, a political committee that would push the governor’s agenda.

On March 13, 2012, McCleskey sent a text to Andrea Goff saying, “We should run Windham’s through a different PAC. That lease is under protest which is decided by admin.”

Andrea Goff said in an interview that she understood this as saying they take money from Windham but figure out how to keep it from public scrutiny.

Lawyer discusses how to appear “transparent” without actually doing so

One of the most colorful figures from the governor’s inner circle is GOP National Committeeman Pat Rogers.  ProgressNowNM readers remember that Rogers was forced to resign from his well-paid partnership at a large Albuquerque law firm after he emailed that Governor Martinez had disrespected the memory of notorious Indian killer Gen. George Armstrong Custer by meeting with New Mexico’s tribal leaders. A ProgressNowNM campaign for his resignation led him to resign in 2012.

New emails released to the New Mexican now show that Rogers outlined a plan to prevent disclosure of expenses and to delay disclosure of donations until months after the inauguration.

From the time the committee had been formed, the governor’s camp promised it would be transparent. But emails show Rogers and McCleskey took special care to ensure only donations would be shared with the public.

On Jan. 4, 2011, Jay McCleskey emailed Goff, Rogers and Nicole McCleskey.

“Will we be prepared to release the donor list this Friday, or should we wait until the 14th?”Rogers responded that he “would recommend we wait as long as possible to announce it with the termination of the committee.

“This strategy is designed to avoid questions about disclosing expenses,” Rogers added. “Why the 14th? Can we get all bills paid and the business wound up? Jay-as discussed we need to make sure Sen d understands the expense issue.” It is unclear if, by “Sen d,” he was referring to Domenici, chairman of the committee.

“Going to try not to release expenses unless we get waterboarded into it” McCleskey responds.

The New Mexican’s story is sure to spark lots of conversation in the coming days.  Take the time to read the full piece online here.