When Susana Martinez was elected governor in 2010, the framers of her inaugural committee promised the public a new level of transparency in fundraising for the events celebrating the incoming administration. And unlike the murky dealings of past inaugural committees that had used money intended for ceremonial balls to defray campaign debts, Martinez’s committee promised to use the money only to “honor a new governor and other prominent elected and appointed officials and citizens.”
“The entire process will be transparent as the identities and the details of the donations will be disclosed to the public,” Patrick J. Rogers, the committee’s lawyer, wrote to former U.S. Sen. Pete Domenici, who was to be the honorary chairman of the committee.
But the promise of transparency stopped at the list of donations. How the nearly $1 million the committee raised was spent has remained largely a mystery and was, until recently, among the subjects of a long-running FBI investigation into the governor’s top political adviser, Jay McCleskey. McCleskey’s lawyer said last week that the FBI has dropped its inquiry and that no grand jury indictment is forthcoming.
Now, for the first time, records obtained by The New Mexican provide details into the committee’s spending, including more than $130,000 that went to companies connected to McCleskey. The documents also provide strong evidence that, despite the committee’s promises to the contrary, some of the inaugural money was used for fundraising for Martinez’s 2014 re-election campaign. The committee had promised to donate all unspent money to charity.
The documents don’t provide a complete picture of the spending. But they offer insight into why the use of the committee funds later raised concerns among some people involved in the committee, including its executive director, Andrea Goff, who provided the documents to The New Mexican. Emails between committee members also show Rogers’ and McCleskey’s desire to keep secret how the money was spent.
At one point soon after the election, Rogers wrote to Goff:
“Well, since we cannot use the inaugural money for ‘political purposes’ and put it into the campaign fund, perhaps we can find a way to highlight our transparency and open gov’t approach. I would, nonetheless, not suggest you report expenses. Just donations.”
Goff, who cooperated with the FBI investigation and provided agents with the same documents, said she agreed to give them to The New Mexican because the inquiry now appears to be completed. She said she was sharing them “not with the intention of smearing anyone, but partly because I have a responsibility to donors and I want the truth out.”
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.
Jay McCleskey and his attorney, Paul Kennedy, did not return phone calls from The New Mexican on Friday and did not respond to detailed questions sent by email. Rogers also did not respond to emailed questions Friday and hung up on a reporter before answering any questions by phone.
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 and campaigns connected to Gov. Martinez and J. Miles Hanisee, a state appeals court judge who, like many Republicans in the state, hired McCleskey as a campaign consultant, an investigation published Nov. 15 by the The New Mexican found.
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 Hanisee and PACs controlled by McCleskey, the investigation showed.
McCleskey has never responded to questions from The New Mexican about why he chose to steer some of the payments he received from the committees and campaigns through the front companies. The companies were never formally incorporated or registered with the Secretary of State’s Office. The only public trace of them appeared in campaign filings, which listed post office boxes in Albuquerque as addresses.
While state law didn’t require McCleskey to register the companies with the Secretary of State’s Office, the use of them allowed some of his clients to report campaign expenditures without revealing their connection to McCleskey.
M3 doesn’t show up in inaugural spending. As for C.D., McCleskey sent an email to Goff on Jan. 27, 2011, with the subject line, “inaugural checks.” He then listed the number of the check to C.D. Production and Public Relations for “Video Production, Editing, and PR preparations.”
He also listed a separate check number for a $21,460.48 payment for “consulting” to his own firm, McCleskey Media Strategies, a company he incorporated with the Secretary of State’s Office 11 days after the Jan. 1, 2011, inauguration.
Goff said about $600,000 of the $966,400 the committee raised went to legitimate inaugural expenses. But she had questions about much of the rest of the spending.
A company called Targeted Victory Communications, for example, received $17,778 to create an inaugural website. The check to the political Web strategies firm, signed by Nicole McCleskey, is dated Jan. 20, 2011, 19 days after Martinez’s inauguration.
But Targeted Victory did not create a website or app for the inauguration, Goff said. Instead, another company, Grassroots Targeting, created a landing page that was used by the committee and was paid $550.
Reached by phone Friday, Abe Adams, a senior director with Targeted Victory, said he could not comment on its work for the committee but said he would consult with the company’s officials on the matter.
The inaugural committee also paid Tempe, Ariz.,-based Lincoln Strategy Group $78,714 in five separate checks cut from the committee’s bank account. The checks appear to have Nicole McCleskey’s signature on them. Goff said she never received invoices for the expenses, but a Dec. 10, 2010, email from Nicole McCleskey to Goff contained terse descriptions of some of the checks, including “Check 1026 — Staff - $36,500,” and “1028 — Collateral - $7,200.”
“I still don’t understand what those checks paid for,” Goff said in an interview.
Nicole McCleskey did not return an email seeking comment Friday.
Jay McCleskey was a partner at Lincoln Strategy Group while he helped Martinez win office, working as a contractor both for her campaign and for the Republican Party of New Mexico during the 2010 election cycle. Nathan Sproul, founder and managing partner of Lincoln Strategy Group, did not return an email from The New Mexican sent Friday.
Goff said her role as a witness in the FBI investigation began after Nov. 30, 2013, when she received a mysterious alert from Wells Fargo bank notifying her that it had disabled her password for the inaugural committee’s long-closed account because someone had unsuccessfully tried to access it three times in succession.
A committee is formed
Even as the inaugural committee was being formed, representatives from several corporations expressed concerns that corporate contributions to the committee might run afoul of pay-to-play or campaign finance laws, emails provided by Goff show.
A Dec. 9, 2010, letter from Rogers assured the companies, expressing his legal opinion that “it is clearly lawful and appropriate for the Inaugural Committee to solicit and accept private donations for the events related to the inauguration of Governor-Elect, Susana Martinez.
“Neither the Gift Act nor the Campaign Practices Act prohibits these practices,” Rogers concluded.
Rogers characterized the committee as “an unincorporated non-for-profit organization” that “has been formed to organize, plan, implement and host the 2011 inaugural activities.” It stated the committee’s articles limited contributions to $25,000 and that the committee’s “Articles further provide that no funds will be used for ‘political purposes.’ ”
Rogers added further down in the letter that, “Although past New Mexico inaugural committees have used inaugural contributions to defray campaign expenses, and for other political purposes, the Inaugural Committee will not use any funds to defray campaign expenses.”
The letter went on: “To the extent contributions exceed the expenses of the Inaugural Committee, a donation is planned to S.A.F.E. House, a Section 501(c)(3) tax exempt non-profit organization registered with the New Mexico Public Regulation Commission and listed with the Internal Revenue Service.”
The committee paid $105,630.73 to “SafeHouse Network of NM” on April 1, 2011, according to a copy of the check.
But Rogers’ letter did not assure at least one of the companies, whose legal counsel wanted to wait for an official opinion from the state Attorney General’s Office.
That opinion came in a Dec. 13, 2010, email from the Attorney General’s Office: “Based on the Committee’s representations, it appears that contributions are being made to the Committee, an unincorporated, not-for-profit organization, and not to Governor-Elect Susana Martinez.”
But documents show that at least some of the inaugural committee money was used for political purposes, going to pay for early fundraising expenses for Gov. Martinez’s 2014 re-election campaign.
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.
By the time the check to Cecilia Martinez was written, Goff said, the money had already been earmarked as part of the contribution intended for the nonprofit.
Though Domenici was the committee’s chairman, Goff said he was mainly a figurehead and did not have involvement in the day-to-day operations or how the money was spent. Domenici confirmed that in an interview with The New Mexican.
The New Mexican asked the Governor’s Office in an email Friday whether inaugural committee money had been used to pay campaign expenses, and whether the governor approved any of the committee’s expenses, along with other questions.
In an emailed response Saturday, Mike Lonergan, a spokesman for the governor, did not answer any of the questions and instead attacked Goff, though The New Mexican had not mentioned her name in the list of questions.
“You can reprint Andrea Goff’s out-of-context garbage all you want, but she has proven to be a liar and a fraud who will desperately say anything to smear her political adversaries,” he said. Apparently alluding to the FBI investigation, he added that “the fact that she is now running to the media after her latest false attacks were completely invalidated by the documented truth underscores what we have been saying all along — this was nothing more than disgruntled hacks trying to score cheap political points at taxpayer expense.”
Lonergan did not respond to a follow-up email asking for details about what he contended Goff was lying about.
Goff responded in an email: “This isn’t about adolescent name calling it’s about bringing out the facts and documents that have triggered a 2 year long Fbi investigation.”
Goff and Martinez said an FBI special agent and an attorney with the U.S. Attorney’s Office in New Mexico informed them that the decision not to seek an indictment came down from Deputy U.S. Attorney General Sally Yates on a belief that federal prosecutors would not prevail at trial.
Yates did not return an email sent to a spokesman seeking comment last week. Elizabeth Martinez, a spokeswoman for the U.S. Attorney’s Office in New Mexico, said: “As you know, as a matter of policy, the U.S. Attorney’s Office cannot comment on investigative matters.”
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.
In another email, on Jan. 26, 2011, Goff asked McCleskey what the plan was for disclosing the committee’s contributions. McCleskey replied:
“The plan is to put the donors on the website Friday and send the release Friday afternoon to the Associated Press w/quote from Danny. We’ve done the research that shows many other Govs spent more than us, which we’ll release to the AP for background.” “Danny” referred to Danny Diaz, the spokesman for Martinez’s 2010 campaign.
As for disclosing expenses, McCleskey added:
“Going to try not to release expenses unless we get waterboarded into it.”
Justin Horwath can be reached at 505-986-3017 or email@example.com.