Federal investigators have subpoenaed records from the New Mexico Taxation and Revenue Department looking into whether the agency performed retaliatory audits on former members of Gov. Susana Martinez’s political team or state officials who ran afoul of her administration, according to a person familiar with the investigation.
It is unclear whether the probe is in any way linked to a simultaneous federal inquiry into Martinez’s top political adviser, Jay McCleskey.
Three former Martinez administration officials and a former fundraiser for the governor confirmed in separate interviews with The New Mexican over the last several months that they were audited by the state following public and acrimonious splits with the administration.
Martinez administration officials remained mum for a second day about the investigation into McCleskey and did not return repeated phone messages Saturday seeking comment on the Taxation and Revenue investigation.
A spokeswoman for the U.S. Attorney’s Office said she could not confirm or deny that subpoenas had been issued or that an investigation was underway. A person familiar with the investigation, however, confirmed Saturday that a subpoena seeking information about at least some of the audits had been issued. The person asked not to be identified for fear of hindering the investigation.
One of the people audited, Brent Eastwood, a former division director of international trade for the New Mexico Economic Development Department, said Saturday that he signed a waiver about a month ago for federal law enforcement agents to obtain information from the department about his gross receipts taxes, which are taxes on business sales.
Eastwood told The New Mexican in an earlier interview that the Taxation and Revenue Department audited his 2008 and 2009 taxes last year. The audits came after he had filed a whistleblower lawsuit that names top officials at the department and claims he was fired after reporting allegations of wrongdoing within the department. He said the department conducted another audit last July.
Eastwood, who no longer lives in New Mexico, said he’s never had any tax problems before.
“We paid all of our New Mexico taxes,” he said.
Nathanial Thompkins, the attorney representing Eastwood in the whistleblower lawsuit, said he received an audit for his law firm’s tax returns around the same time Eastwood received an audit. Thompkins declined to discuss the matter further but said he has never had tax problems before and pays his taxes.
Another former administration official, Tom Tinnin, said he got audited after he resigned from the New Mexico Board of Finance after a disagreement with the governor about The Downs Racetrack and Casino lease in Albuquerque. He said the tax department claimed he owed the state $193,000 in unpaid taxes for 2007 through 2010. But he said he disputed the audits and never had to pay anything.
“It just seems odd that they would do this,” he said. “And they didn’t do it for subsequent years, you know, ‘11, ‘12, ‘13, whatever. And I owed them not one penny. It just seems this kind of came out of the blue and I’ve been filing these kinds of items for years, decades I would say. And I was never questioned until now.”
Andrea Goff, a former Martinez fundraiser who in 2013 was quoted in news articles saying she had been questioned by the FBI about The Downs deal and other undisclosed activities, also told the The New Mexican this summer that she, too, had been audited for gross receipts taxes.
Since “my resignation as finance director from the governor’s political organizations in the spring of 2012,” she said, the state Taxation and Revenue Department has “repeatedly audited” her tax returns.
“The audits have covered 4 years of returns from 2009-2012,” she said. “As a dutiful taxpayer for almost 3 decades, this nonstop barrage by the state government has been a time-consuming, costly burden on me and my small business, and an enormous stress on my family.”
She didn’t believe she had unpaid taxes and recently went through an abatement process with the department. She said she had never experienced tax problems before. She ended up paying a small penalty, $100, for one year of her returns.
Asked about the investigation Saturday, she declined to comment.
The audits came as the department said it has sharply increased its number of gross receipts tax audits. It issued 17,930 audits in the fiscal year that ended in June, compared to 666 in the 2011 fiscal year, the Albuquerque Journal reported in June. The numbers don’t represent the number of people audited, the newspaper reported, because the numbers can reflect audits on one person for multiple fiscal years.
And the amount of money owed to the state identified in the audits also has increased — from about $9.5 million in the 2011 budget year to roughly $35.1 million in the just-completed fiscal year.
Last month, The New Mexican asked the state tax department under an Inspection of Public Records Act request for subpoenas made on behalf of federal law enforcement agencies since mid-September. In a response Oct. 27, the department denied the request, citing a federal rule that states that matters pending before a federal grand jury, including subpoenas issued by a grand jury, are prohibited from disclosure.
“The department understands that any subpoenas that have been issued by a federal agency or federal grand jury to the department are a part of ongoing investigations being conducted by the issuing agency or federal grand jury,” Brad Odell, the department’s general counsel, said in the response. “Upon notice to the department that the investigation has been completed, the department will reanalyze its response to your request.”
Ben Cloutier, a spokesman for the Taxation and Revenue Department, did not return a message left on his cellphone on Saturday seeking comment. And efforts to reach Demesia Padilla, secretary of the state Taxation and Revenue Department, were not successful.
Spokesmen for Martinez, as well as her chief of staff, Keith Gardner, on Saturday also did not respond to requests for response to a report published in The New Mexican on Saturday that the FBI has been questioning some state Republicans about funds from the governor’s campaign, as well as money from her 2011 inauguration committee, going to her chief political adviser, McCleskey.
McCleskey also has not responded to phone calls or emails asking for his response. Nobody answered the door Saturday when a reporter went to his Albuquerque home.
The New Mexican reported Saturday that a prominent New Mexico Republican speaking on the condition of anonymity confirmed being interviewed in recent months by FBI agents about McCleskey and different “fundraising vehicles,” such as political action committees, used by Martinez’s political operation. It wasn’t clear what potential violations federal agents are investigating.
The state Democratic Party on Saturday commented on the investigation in a news release. The release noted that news of the investigation of Martinez’s political operation comes on the heels of the resignation of Secretary of State Dianna Duran, who last month pleaded guilty to corruption charges. “Duran and Martinez share at least one thing in common: Jay McCleskey served as both officials’ campaign consultant in 2010 and 2014.”
While McCleskey was paid by Duran’s campaign in those years, he was not implicated in her criminal case, which was about Duran transferring money from her campaign into her personal accounts and falsifying campaign reports.
“We know Gov. Martinez keeps Jay McCleskey as her top adviser because he gets his hands dirty for her,” wrote Joe Kabourek, executive director of the party. “Instead of focusing on her out of state donors and the special interests, Gov. Martinez needs to put our New Mexican families first. We need an economy that will work for everyone, not just the wealthy few.”
New Mexican’s Milan Simonich contributed to this report.