The state got a scandal worthy of at least a TV miniseries.
***image5***The details, the substance of it all, were shocking: Not one, but two, state treasurers; the current and the former. Indicted. Alleged kickbacks, extortion, money laundering, conspiracy. To the tune of hundreds of thousands of dollars. Kickback money donated to candidates. Yes, the details stunned. But the essence of it, well, was that really a surprise? Couldn't this have been predicted? Wasn't it predicted? Seven years ago SFR noted, "The state treasurer's office and the financial boards have codes of conduct, but they…are feeble…For somebody with questionable ethics the job can be tempting."
Warnings came from other corners, too. "Why did the federal government have to come in and tell us what was going on in the Treasurer's Office when we already had our own evidence," asks State Sen. John Grubesic, D-Santa Fe, reiterating a point made to SFR earlier [SFR Talk, Oct. 5:
]. "There was an audit done, that was circulated, and memos written in response to the audit. So people knew there were problems in that office before this all happened."
Even before this latest scandal former state treasurer Michael Montoya was no stranger to allegations of financial impropriety. In 1994, the year he won the state treasurer's race, he was sued by three people who alleged he failed to repay $20,000 in loans. That same year he and his sister were sued by Ranchers State Bank for defaulting on a $171,321 campaign loan. The first case was settled out of court and Montoya eventually repaid the bank. But the die was already being cast.
***image4***Robert Vigil had his own previous brush with accusations of financial misconduct. In 1999 state investigators looked into allegations brought by the State Auditor's Office that Vigil, while auditor, used an accounting firm to funnel money to an assistant. Although Vigil denied the charges, The Santa Fe New Mexican reported that investigators concluded there was "every indication that strong patterns of public corruption existed."
Initially, the treasurer scandal looked like it was going to become a messy, drawn-out political quagmire. Vigil proclaimed his innocence and refused to resign. Gov. Bill Richardson and Attorney General Patricia Madrid urged Vigil to resign, but were prepared to let him temporarily step down-with pay-while the charges were pending. Meanwhile, state legislators braced themselves for possible impeachment proceedings in an extraordinary session.
Just when everything seemed to be coming to a head, the worst of the storm seemed to pass. Vigil, still maintaining his innocence, resigned in October, thereby averting impeachment hearings in the House. The governor appointed Doug Brown, a Republican, to serve out the remainder of Vigil's term, which ends next year. As part of the deal Brown agreed not to seek a full term in November '06.
Brown was still moving into his new office when Montoya struck a deal with prosecutors and pleaded guilty to one count of extortion and admitted to taking $278,500 in kickbacks.
Any lull in the scandal is only temporary, however, a calm between the storms. On deck for '06? For starters, the governor has ordered a forensic ***image1***audit-ow!-of the treasurer's office. The independent firm conducting the audit was scheduled to report its findings this week. But any fresh evidence of financial wrongdoing will carry over into the new year, and could even lead to new charges. Federal prosecutors have a pretty hefty list of co-operating witnesses, a list that now includes Montoya. Vigil still says he's innocent and plans to fight 26 counts of extortion, money laundering and conspiracy against him. If this continues to be his stance, Vigil's case could actually land on some judge's docket.
Finally, count on the state treasurer's race to be one of the most closely watched contests next November and to include discussions of how to increase oversight of the office. State Rep. Luciano "Lucky" Varela, D-Santa Fe, already is a declared candidate.
Considering that Montoya says his need for money originally stemmed from huge campaign debts, the scandal might even energize the grassroots. Max Bartlett, executive director of Re-Visioning New Mexico, an organization that ***image6***advocates for campaign finance reform, says, "The problems with the State Treasurer's Office simply highlighted the same problems that exist throughout the system." Fresh on the heels of a public financing victory in Albuquerque, Bartlett says, "Next year we'll be laying the groundwork to have similar legislation introduced in the long session in 2007. We're now moving ahead to carry the fight forward in the Legislature to do this for all state offices."
