Details about the investigation into Spaceport America CEO Dan Hicks continued to emerge Thursday, as its board chairwoman revealed the probe may be criminal in nature.
A wide range of allegations against Hicks are being looked into, including possible violations of the state procurement code, potential financial mismanagement such as improper spending, alleged disbursement of gross receipts tax revenue for unauthorized purposes and possible conflict of interest, Economic Development Department Secretary Alicia Keyes said.
“After the investigators initially came on and did some interviews, they informed us this is a potential criminal violation,” the secretary, who is also chairwoman of the spaceport’s board, told lawmakers at a Legislative Finance Committee meeting held virtually and in person in Red River.
Hicks, who has headed the spaceport since 2016, was placed on administrative leave in June when former Chief Financial Officer Zach De Gregorio submitted a complaint accusing Hicks of pressuring him to ignore procedures that provide accountability for the spending of public money.
Shortly after that, state officials hired McHard Accounting Consulting, an Albuquerque-based forensic accounting firm, to look into De Gregorio’s complaint.
When the firm told officials the allegations could be criminal, the state contacted State Auditor Brian Colón, who launched an investigation of his own, the secretary said. Keyes said she had not yet spoken about the probe with state Attorney General Hector Balderas.
After Keyes said the allegations could be criminal, a testy exchange ensued between the Cabinet secretary and Sen. John Arthur Smith, chairman of the legislative panel.
Smith reprimanded Keyes for how the state has conducted the matter, saying she shouldn’t have suggested Hicks committed criminal violations before having “gathered the facts” on the case from the state auditor and before speaking with Balderas.
“It might be smart to wait before you imply that there could be a criminal issue until after you’ve spoken with the attorney general,” said Smith, a Deming Democrat. “Those accusations that are not proven at this point in time could come back to haunt the state.”
Smith also told Keyes the way the case has been handled could damage New Mexico’s prospects for business and economic development.
“It communicates to the world that there’s a lot of political uncertainty in the state of New Mexico that I don’t think is positive for expedited development at the spaceport,” he said.
Keyes said she understood “this isn’t necessarily the best look for the spaceport,” yet added, “we are obligated to look into whistleblower complaints.”
Spaceport America, based near Truth or Consequences, has long been one of New Mexico’s bright hopes for increased economic development. Entrepreneur Richard Branson and former Gov. Bill Richardson announced their plans a decade and a half ago to build the world’s first commercial spacecraft launch and landing facility, and the state has invested some $220 million into the spaceport’s construction.
While Branson’s company, Virgin Galactic, has been conducting test flights at the spaceport and the complex has engaged with other tenants, including Boeing and EXOS Aerospace, the big-ticket item — Virgin’s plans to send tourists into space — has yet to launch.
Keyes said Thursday that Virgin Galactic complained to state officials earlier this year about “the everyday operations at the spaceport.”
Smith shot back that he understood those concerns given the vacancy rate at the spaceport and the length of the investigation into Hicks, which he called “endless.”
“That does not bode well for the efficiency of the state of New Mexico by any means,” he said.
The Economic Development Department has agreed to pay the McHard accounting firm between $15,000 and $49,000 to review three years of the Spaceport Authority’s procurement procedures, as well as legislation and written agreements governing gross receipts tax and the use of funds generated by the tax.
Keyes said the investigation should be completed in the “next few weeks.”
Separate from the De Gregorio complaint being reviewed by McHard, another former spaceport employee filed a whistleblower complaint against the agency July 20 in state District Court, claiming that as a space systems engineer with more than 35 years of experience, she was paid less than male counterparts and was retaliated against when she raised that issue and others.
Karen Barker is seeking an unspecified amount of damages for alleged violations of the Fair Pay for Women and New Mexico Human Rights acts.
According to the complaint, Barker claims Hicks created a toxic work environment. Despite her experience, she was excluded from fully participating in management decisions and was “used to provide contacts for male members of the team and support them with enough knowledge so they could appear to understand the Spaceport business.”