Results of a state audit released Tuesday found nearly $1 million in unaccounted-for-expenses and $200,000 worth of fiber-optic cable missing from a federally funded project that brought broadband connectivity to Northern New Mexico.
State Auditor Wayne Johnson, in a letter Tuesday that accompanied the audit, said the North Central New Mexico Economic Development District “is unable to provide multiple source documents” to account for the missing funds and cable. If the district has those records, Johnson wrote, it should immediately provide copies to both the project’s general manager and the Office of State Auditor.
Three contractors that worked on the project, called REDI Net, have been or will be subpoenaed to provide records, said State Auditor spokesman Enrique Knell. He did not identify the contractors.
“There’s a million missing,” Knell said. “That doesn’t necessarily mean it went into somebody’s personal pocket. It just means they can’t account for where it went.”
A comparison of inventories in January 2013 and June 2014 revealed the missing fiber-optic cable, according to the audit report. The project started with 34.65 miles of cable, of which 14.35 miles was used for the project and 8.18 miles were sold to Los Alamos County, leaving 12.12 miles unaccounted for.
The yearlong audit, by the independent Jaramillo Accounting Group of Albuquerque, showed the district used inaccurate or incomplete practices to account for the REDI Net project funds. REDI Net “still does not have a complete listing of its capital assets that were constructed with money from the federal grant,” Johnson wrote.
The North Central district is an association of local governments in Colfax, Los Alamos, Mora, Rio Arriba, San Miguel, Sandoval, Santa Fe and Taos counties. It had responsibility to administer $10.5 million from a July 2010 federal grant from the Obama-era American Recovery and Reinvestment Act to develop a high-speed broadband network in Northern New Mexico, a project that became REDI Net.
In 2015, Rio Arriba County asked the North Central district for financial information as part of an accounting before taking over fiscal responsibility for REDI Net, according to the audit summary. As part of that process, “questions arose and information came to to the attention of the REDI Net board that caused concerns about certain transactions (the district) had charged to the grant.”
Those questions triggered the state audit, which began in May 2017 and concluded Friday with a presentation to the district and REDI Net. Jaramillo Accounting Group found that the economic development district had failed to comply with a joint powers agreement, under which the district took responsibility for building the broadband network on behalf of its eventual users. Those users include Los Alamos, Rio Arriba and Santa Fe counties and the pueblos of Okhay Owingeh, Santa Clara, Pojoaque and Tesuque.
The audit found “significant violations” of that agreement by the district, including its withdrawal of $198,767 from the REDI Net account at the Los Alamos National Bank in March 2016 “without prior notice or approval.” Most of the missing $1 million — $955,792 — was traced to failures by the district, according to the auditors, to provide “supporting documentation for all disbursements.”
The North Central district’s “inability or unwillingness” to provide the Jaramillo Group auditors with complete records and “the severe disorganization of and missing records” meant “serious delays” in the audit and limited results, according to the report.
Tim Armer, executive director of the North Central New Mexico Economic Development District, did not return a call Tuesday seeking comment.
This is not the only state audit of the North Central New Mexico Economic Development District. Johnson announced in January that the district would be scrutinized for its administration of funds, including billing practices, vendor reimbursement and federal grants related to the district’s contract with the state Aging and Long-Term Services Department. The North Central district administers the Non-Metro Area Agency on Aging for the state.
Contact Joseph Ditzler at 505-986-3034 or firstname.lastname@example.org.