As the FBI was nearing the end of a long-running criminal investigation into Gov. Susana Martinez’s top political adviser last year, the governor gave a 10-page sworn declaration to federal prosecutors defending the adviser, as well as her own involvement with her 2011 inaugural committee, which had become a central focus of the probe.
The U.S. Attorney’s Office in New Mexico dropped the case against her adviser, Jay McCleskey, less than two months after she signed the document Jan. 5, 2016. What influence her statement had in the outcome is unknown.
But the declaration, which the U.S. Justice Department released to The New Mexican through a Freedom of Information Act request, provides insight into the FBI’s investigation and the agency’s interest in how Martinez’s inaugural funds were spent. It also opens up questions about the extent of Martinez’s involvement with the committee and its spending, which the declaration makes clear, for the first time, also was used for Martinez’s transition.
Martinez stated in the declaration that her campaign also paid for some inaugural and transition expenses, which, she wrote, was “not improper.” But according to some legal experts, that may have violated state campaign finance laws.
Martinez emphasized in the document, which she signed under penalty of perjury, that none of the nearly $1 million raised and spent for her first inauguration was used for “political purposes,” which by New Mexico law is defined as expenses meant to influence an election. That spending included more than $130,000 in payments to companies connected to McCleskey, who had also orchestrated her successful gubernatorial campaign.
She stressed that she was “intimately” involved with how the committee spent its money and that she relied on the advice of her attorney in determining that the committee did not violate the state’s Gift Act or campaign finance laws. Some legal experts who reviewed the document for The New Mexican said her statements may have played a role in convincing federal prosecutors not to go forward with the case, making it difficult to prove criminal intent even if there were wrongdoing, especially with Martinez stating that she had carefully consulted with an attorney to guide her involvement with the committee.
But Andrea Goff, who was the executive director of the “Susana Martinez Inaugural Committee,” disputes Martinez’s characterization of her interaction with the group, especially Martinez’s statements that she was closely involved with the inaugural committee’s budget decisions. And an investigation by The New Mexican published in March 2016, two months after Martinez signed the declaration, found strong evidence that at least some of the money raised by the committee was used to raise funds for her 2014 re-election campaign, a political expense that was expressly forbidden by the committee’s legal charter. Donors, too, were promised no money would be used for “political purposes,” which include campaign fundraising. That sharply limited what the donors could contribute under New Mexico’s campaign finance laws.
Martinez wrote in the declaration that she believed from the very beginning that donations to the inaugural committee also would be used to fund her transition, including the process of hiring transition staff, reviewing applications for state positions and selecting Cabinet appointments.
“In my view, it was entirely lawful and appropriate that funds raised by the committee would be used for transition and inaugural expenses,” she wrote. “The inaugural activities, after all, were to be events celebrating the transition of my new administration. At those events, we announced news, policies, executive orders, and legislative plans for my new administration.”
The committee raised $966,400 in the two months between Martinez’s November 2010 election victory and her Jan. 1, 2011, inauguration. More than half the money came in chunks of $10,000 to $25,000 donations, the committee’s voluntary cap, from oil and gas companies and other corporate donors. The committee ended up donating about $100,000 of the contributions to New Mexico S.A.F.E. House for victims of domestic violence, which Martinez stated in her declaration she had decided on “well before my inauguration.”
New Mexico does not regulate private contributions or spending for inaugural or transition committees. Neither the Governor’s Office nor the committee’s lawyer, Pat Rogers, a close political ally of the governor, nor McCleskey’s lawyer, Paul Kennedy, responded to detailed questions from The New Mexican late last week. But on Friday, Kennedy and Rogers provided answers to several of The New Mexican’s questions to the Albuquerque Journal for a story published on Saturday. The Journal does not say in the story how it obtained the Martinez document.
Among the answers provided to the Journal, Rogers said the committee’s articles of incorporation made it clear that money raised could be used for transition purposes.
In fact, the committee’s incorporation papers did no such thing, and several major donors told The New Mexican they were never informed that their money would be used for anything other than Martinez’s inaugural festivities. The only place the word “transition” appears in the formation of the committee was in a proclamation signed Nov. 12, 2010, a month before the committee was formed, that stated the committee “would seek to gather private funds to support private Inaugural events.” It goes on to say the inaugural activities would provide “an opportunity for celebration and to advance the public policy in favor of the smooth transition between administrations.”
Never does it say the money would be spent on transition, and the committee’s “Articles of Association” filed with Bernalillo County one month later state only that money would be used for inaugural purposes. The word “transition” is not mentioned in the three-page document. Article II of the document stated the organization’s “Intent and Purpose” as being “to organize, plan, implement and host the 2011 inaugural activities.”
Richard Painter, former President George W. Bush’s chief ethics lawyer from 2005 to 2007, said serious legal problems, such as wire fraud and mail fraud, could arise if contributors to inauguration committees are not told how the money they donated will be used.
“You need to be honest with the people giving the money,” he said.
Painter said that while many states might allow private money to finance gubernatorial transitions, he believes the practice is a “terrible idea because that’s where all the big decisions are made” on who is going to staff an incoming administration. He used the example of a teachers union funding hotel rooms, meals and office space for where administrations are vetting Cabinet officials.
“That shouldn’t be brought to you by Exxon,” he said.
Douglas Carver, executive director of New Mexico Ethics Watch, reviewed Martinez’s declaration at the request of The New Mexican.
Carver, an attorney, said it may be legal for incoming gubernatorial administrations to finance transitions with private funds. But he added that lawmakers should look into clarifying the law surrounding what he calls “the window of mischief” in the two-month period between a governor’s election and swearing into office.
There should be clear language that prevents the intermingling of inauguration and transition funds because the two activities serve different purposes, Carver said.
The function of an inauguration is to celebrate an incoming elected official, he said, while a transition is tied to government functions.
The notion of funds raised from private individuals and corporations underwriting government activities, such as hiring an administration’s Cabinet, is troubling, Carver said, particularly if such activity is not disclosed to the public.
“Would you want Occidental [Petroleum] paying the salary of the state land commissioner?” he asked.
Carver also questioned another statement by Martinez in the declaration, in which she said: “Although it was not improper for the campaign to do so, I now know that my campaign ultimately paid at least $100,000 in expenses that were for the transition and inauguration and could have properly been paid or reimbursed by the committee.” (The italics are hers.)
Carver said the state’s campaign finance laws prohibit such expenses. She “seems to admit a clear violation,” Carver said.
“I don’t see how she could use legally those campaign funds to pay Jay [McCleskey] and the others,” Carver said.
Kennedy, who represented McCleskey in the investigation, told the Journal on Friday that “is a completely legal use of campaign money.”
Section 1-19-29.1 of the state Campaign Practices Act lists seven allowable purposes for which campaign donations can be used, including campaign expenses, donations to a tax-exempt organization, political party or other candidate, and refunds to contributors. Inaugural and transition expenses are not included on the statutory list. The committee’s incorporation articles made clear that donations to it were not tax-deductible.
A review of Martinez’s final campaign expenditure report from the 2010 campaign and her first biannual report in 2011 do not contain any expenses listed as being for the purpose of the inauguration or transition, but they do include several payments to people who Martinez said in the declaration had worked on both the campaign and the committee.
Martinez’s spokesmen did not reply to questions about the campaign expenditures.
The state Attorney General’s Office referred questions about the law Friday to the Secretary of State’s Office, which enforces campaign finance laws. A spokesman for that office said he would look into it Friday.
The New Mexican also asked Common Cause New Mexico, a government watchdog organization, to review the declaration, as well as the incorporation papers, but the group declined to comment.
Heather Wilson, a former U.S. Republican congresswoman for New Mexico who was chairwoman of the governor’s transition committee, said in an email to a donor that the transition committee was separate from the inauguration committee.
“I don’t know who is handling this for the inaugural committee,” said Wilson, who is now President Donald Trump’s pick for secretary of the Air Force, in the Dec. 30, 2010, email to Alfonso Solis of Roswell. The email continued: “(That’s separate from the transition.)”
Asked about that email and Wilson’s understanding of the two committees last week, a spokeswoman for Wilson told The New Mexican she stood by the email. “The inauguration committee was separate from the transition. There was no budget for the transition that Dr. Wilson was aware of or had influence over,” the spokeswoman said. “She was a volunteer as were all of the people whom she asked to help.”
“As the volunteer chair of Governor Martinez’s transition in 2010, Dr. Wilson helped to identify key employees to join the administration and highlighted policy issues that would need to be addressed in her first few months,” the spokeswoman added.
Cecilia Martinez, who raised funds for the inaugural committee and cooperated with the FBI investigation, told The New Mexican in January that at one point two weeks after the election, she asked McCleskey why a transition account wasn’t being set up to collect money from private donors. She said it was clear to her from their conversation that they were only raising money for the inaugural festivities. Cecilia Martinez is no relation to the governor.
What the donors knew
Emails reviewed by The New Mexican show potential corporate donors were concerned about whether contributions to the committee would violate the state’s Gift Act or campaign laws. The committee provided these donors with a legal opinion written by the committee’s attorney, Rogers, assuring them that donations to an inaugural committee would be used for inaugural activities.
Donors to the committee who responded to The New Mexican’s questions this year say they gave money with the understanding it would go toward inauguration activities.
Spokesman Michael Trevino said BNSF Railway Co. contributed $10,000 with no understanding of how the inaugural committee would use the funds “other than we were supporting the traditional swearing-in of a state governor and the inaugural events associated with the ceremony.”
Asked if that included activities associated with the governor’s transition into office, Trevino replied that he does not have “specific details on how the contribution was used.”
“This is a major civic event and one which we regularly participate in several states,” Trevino added.
Jerry Walker, president and CEO of the Independent Community Bankers Association of New Mexico, said its $6,500 contribution to the committee earned the Aztec-based association a table and three seats at the inaugural gala for Walker and other association leaders.
“Our understanding was the funds would be utilized to help defray costs of the inaugural event held in Santa Fe,” Walker said in an email. “To my knowledge the funds were used for that purpose.”
Jeff Morris, a spokesman for Penn National Gaming, said in an email that the company’s 2010 lobbyist is no longer with the company, “but it is our understanding that this was a request to support the governor’s inauguration.”
Margaret Branch said in an email that the Branch Law Firm in Albuquerque gave $25,000 to the inauguration committee with the understanding that the money would pay for inauguration festivities.
Asked if any of the committee’s officials ever disclosed to her the money also would go toward Martinez’s transition team, Branch replied, “No.”
“I thought all funds were for the swearing-in and associated events,” Branch said.
Gov. Martinez’s involvement
Goff, the executive director of the committee, who also cooperated with the FBI investigation, told The New Mexican in an interview that she was never informed that the committee’s money would be used for transition expenses.
She also questioned Gov. Martinez’s assertion that she was closely involved in how the committee spent its money.
Martinez wrote that her “involvement in the inaugural and transition effort was extensive. Among other things, I reviewed and approved budgets; made appointments and approved staff hires; and decided on the types, format and themes of the various events we held.” At another point, she said she “approved the committee’s budget and expenditures, none of which was improper.”
But Goff said she did not seek the governor’s approval for hiring staff or entering into contracts with the committee’s roughly two dozen vendors.
In nine email chains provided to The New Mexican by Goff, Martinez asks or answers questions about logistical issues surrounding the inauguration festivities. Topics include reservations for Martinez’s family members, catering, invitation designs and state police details.
The emails do not include any discussion of the budget, save a committee staffer’s passing mention of just over $26,000 in hotel costs, as well as Goff asking Martinez and others about suggestions for a music headliner for the inaugural gala, saying there was between $30,000 and $40,000 available for the hourlong performance.
Besides those emails, Goff said, she had a few conversations with Martinez before the inaugural festivities, including a discussion about its theme, and a final walk-through of events. Of all the people Goff dealt with for the inaugural, she said, Martinez is the person she spoke with the least.
“We are getting ready to close the Inaugural Account,” Goff wrote in a Jan. 12, 2011, email to 13 individuals involved with the committee. The list did not include Martinez. “[As] far as I know I have now paid all invoices that are related to the budget, if you have a vendor at your site or know of a bill that has not been paid please send it to me immediately. I have paid all invoices, refunds etc that have been sent to me. Please let me know if anyone has anything outstanding.”
Goff acknowledged it’s possible that McCleskey may have kept Martinez aware of the committee’s fundraising hauls, because she provided him with such information on occasion. McCleskey did not return emails or phone calls seeking comment for this story.
Michael Lonergan, a spokesman for the governor, did not address any of The New Mexican’s questions about the declaration and attacked Goff when asked about her comment that the governor had overstated her role in the committee.
In an email, Lonergan said Goff’s claims have “proven false and she has been discredited as having lied from the outset of the inaugural.” He also said the case was closed on the issue and called attempts to revive it political.
“This is old news and the inaugural was run the same way as virtually every other inaugural around the country,” he said.
Asked to specify what he thought Goff was lying about, Lonergan qualified his remarks. He said Goff is “either lying, or is blissfully ignorant about the facts.” He did not address Goff’s statements that questioned Martinez’s role in the inaugural committee.
Goff called Lonergan’s remarks “the same old personal attacks” and said she would be happy to have a public debate with the governor on the issue “to decide who’s lying.”
“She is not telling the truth on this,” Goff said of the governor.
Cecilia Martinez, the committee fundraiser, said in a statement to The New Mexican in January that she did not have frequent interactions with the governor-elect about the inaugural committee.
“When asked by the FBI about Gov. Martinez’s specific involvement with her Inaugural, I told investigators that I had only one very brief discussion with her about Inaugural in which she directed me to ‘raise a lot of money’ so her entire family could attend the event,” Cecilia Martinez said.
The New Mexican’s investigation last year found the committee had given a check for $36,540.22 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 the money was intended to produce an inaugural keepsake video. But the committee never planned or approved such a video, and it was never produced, Goff told The New Mexican last year.
The committee also paid $78,714 in five separate checks to Lincoln Strategy Group, an Arizona-based company where Jay McCleskey was a partner and which had performed campaign work for Martinez’s 2010 campaign. The checks were also signed by McCleskey’s wife. Goff said she never received invoices for the expenses and didn’t know what they were for, though some of them contained terse descriptions in the memo field such as “Staff” and “Collateral.”
In her declaration, Gov. Martinez never mentioned C.D. Productions. But she said Lincoln was paid to perform administrative duties for the committee, “including accounting and payroll services, because of its significant experience in this area.”
The committee paid $21,400.48 to another McCleskey company, McCleskey Media Strategies, which was incorporated with the state 11 days after the Jan. 1, 2011, inauguration. Martinez didn’t mention the company in her declaration but devoted nearly three pages of the statement to work performed by McCleskey for the committee.
Martinez wrote that she personally approved $57,000 of the committee’s money to paying McCleskey for work he did on the inauguration as well as the transition — including “identifying, vetting and appointing staffers for an entire administration” and “participating in and advising me with regard to numerous final interviews of high level and other administration staffers and appointees.”
Martinez said she directed that McCleskey “be paid approximately $57,000” after McCleskey “finally agreed to receive some compensation for his work.” She said some of that amount included reimbursement for expenses he and others incurred on the committee’s behalf. He used some of it to reimburse other individuals, she said.
“Jay earned every cent of the money he received from the Committee,” Martinez wrote to federal investigators. “In fact, the money he received was nowhere near full compensation for his work on the inauguration and transition, given the extensive time he put in, the range of services he provided and most importantly, the high value of his work as a seasoned consultant in the industry.”
One expense never mentioned in the declaration was a $3,000 check to the Republican fundraiser, Cecilia Martinez, for raising money for Gov. Susana Martinez’s 2014 re-election campaign.
Gov. Martinez’s office did not reply to questions about whether the governor was aware of the inaugural committee’s $3,000 payment to cover political fundraising expenses when she wrote the declaration. The New Mexican first reported the expense in March 2016, two months after her declaration was signed.
An invoice shows Cecilia Martinez billed the governor’s campaign $3,000 for soliciting contributions from five campaign contributors who gave early to Gov. Martinez’s 2014 re-election fund. Cecilia Martinez would later receive a $3,000 check from the inauguration committee.
In the first acknowledgement by anyone associated with the Martinez administration that the payment was improper, Kennedy told the Journal on Friday that the payment should have come from campaign funds rather than the committee. Kennedy, a former Martinez appointee to the state Supreme Court who currently serves as the governor’s counsel, told the Journal that the payment was the result of a clerical error, and that federal investigators were satisfied with the explanation.
Justin Horwath can be reached at 505-986-3017 or firstname.lastname@example.org.