Jerome Block Jr.'s admission this week that he lied about how he used public campaign funds has the state's top Democrat concerned and Republicans calling for an investigation.

On Wednesday, Block, the Democratic candidate for the District 3 Public Regulation Commission seat, admitted in an e-mail to the Las Vegas Optic that he lied when he said San Miguel County Clerk Paul Maez's band, Wyld Country, performed at a May 3 campaign rally outside Las Vegas, N.M.

In a report filed with the secretary of state showing how he had spent campaign funds provided by the state, Block listed a $2,500 payment to the band.

As late as Tuesday, Block had claimed to The New Mexican that four or five band members — including Maez — played at a rally held on a ranch. But the band's lead singer told a reporter that Wyld Country actually played in Albuquerque that day at a wedding reception.

In a brief statement, Gov. Bill Richardson's spokesman, Gilbert Gallegos, said Wednesday: "The governor is extremely concerned with these reports."

Shira Rawlinson, a spokeswoman for the state Republican Party, said Wednesday: "The (attorney general) should launch an investigation to see if this is poor bookkeeping or criminal embezzlement."

Secretary of state spokesman James Flores said, "In this case, I think we'd have to look at whether there was there some sort of campaign finance violation. I just don't know."

Maez on Wednesday didn't return repeated calls or respond to an e-mail, but he told The Optic he had given that newspaper false information.

Block told The New Mexican on Wednesday that he will stay in the race despite admitting he lied on his campaign expense report. "One quick question for you? Why would I not continue with the campaign?" the candidate said via a BlackBerry text message on Wednesday afternoon in response to e-mailed questions. "My support is broad, and I am confident that my hard work will pay off just as it did in the primary."

In the June primary, Block won a six-way race with 23 percent of the vote for the Democratic nomination in PRC District 3, which includes Santa Fe and a swath of northeastern New Mexico. Block was the top vote-getter only in San Miguel County while finishing anywhere from second to fourth in District 3's other 11 counties.

With no Republican candidate, Green Party member Rick Lass emerged after the primary as Block's only opponent in the general election.

Block on Wednesday didn't reply to additional e-mailed questions from The New Mexican.

To The Optic he wrote: "I had every intention for Paul's band to play for me. When time snuck up on us, it was too late for him to perform. I hoped that he would make up the gig at a later date. With all the pressure from the local media, I continued with the story that the band did perform. I was unsure how to reflect a refund and quite frankly didn't want another story."

Block on Tuesday told The New Mexican that Maez would return the $2,500 to his campaign. Flores at the Secretary of State's Office said that money must be returned to the state because it was allocated for the primary and not the general election.

The $90,000-a-year seat on the PRC is one of the few elected state offices for which candidates are eligible for public funds to pay for their campaigns.

In 2003, as an experiment, the state launched public campaign financing solely for PRC candidates, although the program has come to include judges. The idea was to keep campaign contributions from influencing elected officials' decisions and keep candidates on an even playing field during elections.

But Flores said the system relies on an honor system when it comes to candidates listing their expenditures.

"I don't know that we look into it," he said. "There's a formula and there's a protocol in place, and if they qualify, we give them $67,000, and they spend it. It's for them to spend on their campaign. I don't think we've done any breakdown analysis and contacted candidates who used it or anything like that. There's really not a way for us to answer that without doing any kind of research, analysis or investigation."

Flores said individual expenditures are never audited in any fashion. "If you're asking: Do we look at their campaign finance report and call Billy Bob Sign Co. to see if they spent the thousand dollars at Billy Bob Sign Co. that they claimed, no we don't do that."

For the matter to be investigated, typically someone needs to file a complaint with the Secretary of State's Office, which considers the merits of the complaint before forwarding the case to the State Attorney General's Office, which handles investigations, Flores said.

Under state law, knowingly violating the election code is a petty misdemeanor. Under the state Voter Action Act, which includes a candidate-reporting requirement, a violator is subject to a civil penalty of up to $10,000.

The Voter Action Act says: "A person who willfully or knowingly violates the provisions of the Voter Action Act or rules of the secretary or knowingly makes a false statement in a report required by that act is guilty of a fourth degree felony and, if he is a certified candidate, shall return to the fund all money distributed to that candidate."

Flores said he plans to look at Block's e-mail to The Optic to see if that warrants moving the matter to the Attorney General's Office.

Española Mayor Joe Maestas, who was among the six Democratic PRC primary candidates, said he doesn't plan to file a complaint but said state officials should take it upon themselves to investigate without an outside complaint. "It just seems unrealistic that if there are obviously signs of misappropriation of public financing, the AG should initiate an investigation," he said. "I think if other candidates come forward, it may be perceived as sour grapes — myself included."

Lass called his opponent's dishonesty the latest evidence Block can't be trusted. Leading up to the primary, Block, the 31-year-old son of a former PRC member, gave inaccurate or incomplete responses to news media campaign questions. "I think it's just another incident to show he's not qualified. He has a record of questionable dealings," Lass said.

"Whether he paid $300 or $2,500 or whatever, it's just not proper in a democracy to be paying someone who's overseeing an election," Lass said, referring to Maez's role as the top election official in San Miguel County. "And it's the only county he won, or one of two counties maybe, making it even more questionable."

Janice Thompson, executive director of Democracy Reformed, did a 2006 study of states that provide public campaign funding. "I think that overall the rules are strict on this," she said, "and the key phrase is that spending has to be for real work at a fair market value related to a genuine campaign."

Without addressing New Mexico specifically, she added, "I would characterize the administration of these programs as good, and there have been some bumps along the road in a couple of places, but not an alarming extent. It's new."

Contact Doug Mattson at 986-3087 or dmattson@sfnewmexican.com, or Kate Nash at 986-3036 or knash@sfnewmexican.com.