Breaking: A.G. serves search warrant alleges “embezzlement” by Martinez cabinet secretary; Secretary resigns

Breaking: A.G. serves search warrant alleges “embezzlement” by Martinez cabinet secretary; Secretary resigns

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Breaking: A.G. serves search warrant alleges “embezzlement” by Martinez cabinet secretary; Secretary resigns

One of Governor Martinez's closest and most influential cabinet secretaries resigned suddenly this morning after the Attorney General's office filed a search warrant seeking person ...

One of Governor Martinez’s closest and most influential cabinet secretaries resigned suddenly this morning after the Attorney General’s office filed a search warrant seeking personal and business tax records from the Martinez administration.  Former employees of a Padilla client claim those records show Padilla embezzled from their company before joining the State’s Tax and Revenue Department, then used her position as Secretary to shut down an audit that may have uncovered it.

The big picture
  • Padilla, an accountant, appears to have embezzled $25,000 from a former client, transferring money from their account to her credit cards while acting as Tax & Rev Secretary
  • Padilla used her position as Cabinet Secretary to attempt to stop an audit that could have uncovered her activity
  • Agents discovered $128,000 in unreported, taxable income for Padilla from multiple sources.  She was the State’s top tax enforcement officer at the time
  • Padilla admitting to burning records

Embezzling from clients as Tax & Rev Sec., attempts to stop audit to uncover it

Secretary Demesia Padilla, an accountant by trade, has been one of Governor Martinez’sclosest political appointees.  As Secretary of Tax and Revenue, she advanced many of the governor’s priority corporate tax cuts and oversees the Motor Vehicle Department and the governor’s anti-immigrant license efforts since 2011.

Last year, the New Mexico Political Report first identified one of Padilla’s former tax clients who was alleged to have received special tax favors from Padilla as secretary.

An internal memo showed that Padilla wrote a letter to state tax auditors who worked for her requesting that they void a tax penalty for a former client of hers.

The search warrant, filed today, details allegations from former employees of the trucking company who allege that Padilla embezzled from the company by transferring funds from the company’s bank account causing employee paychecks to bounce. Padilla admitted to investigators that she later burned the records.

Further, bank records show that from 2011-2013, while serving as Secretary of Taxation, Padilla received electronic transfers from the company to her personal credit cards or accounts of more than $25,000.

Martinez’s top tax official took in $128,000 in unreported, untaxable income as Cabinet Secretary

In addition, investigators obtained Padilla’s bank and credit card statements and identified $128,000 in personal income not reported on her public Financial Disclosure Statements required for public officials.

That includes $47,000 to Padilla from a pay-day loan company. Martinez’s administration has resisted regulations to crack down on pay-day loan companies.

BREAKING: TRD Secretary Padilla resigns after AG’s search warrant | NM Political Report
Documents: Search warrant on Demesia Padilla | NM Political Report

At the time, Martinez said she had total faith in Padilla.

SANTA FE, N.M. (AP) – Gov. Susana Martinez says she has total faith in state Taxation and Revenue Secretary Demesia Padilla about allegations of wrongdoing by Padilla until evidence reveals that she shouldn’t. –– Associated Press – Friday, July 24, 2015 
Investigation began with whistleblower complaint to State Auditor Keller

Padilla remained on the job for almost 18 months as the governor’s and Padilla’s staffs attacked State Auditor Tim Keller who first launched the investigation after a whistleblower alerted the Auditor’s Office.

Taxation Department spokesman Ben Cloutier responded to the allegations with a prepared statement attacking Keller.

“That the most political State Auditor in New Mexico history would peddle false claims for the sake of grabbing a headline is hardly a surprise,” Cloutier said. “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.”

Search warrant filed against TRD

Copies of the search warrant posted online by the NM Political Report outline the allegations against Padilla.

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Padilla marks the third close political ally of Martinez to be investigated by law enforcement for corruption in elections, campaigns or her administration.  Her top political advisor and campaign manager, Jay McCleskey was investigated by the FBI for campaign finance violations and the financing of Martinez’s inauguration.

Martinez’s friend and political ally, Dianna Duran, resigned and pled guilty to felonies for embezzling campaign contributions – mostly from Republican donors – out of campaign accounts Duran was supposed to police.

Now Padilla has resigned under investigation for helping a former client avoid tax penalties other taxpayers must pay.

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