On Monday, November 18, New Mexico State Auditor Brian Colon announced the results of a special audit he had ordered. The audit found $2.7 million in secret settlements involving appointees of former Republican Gov. Susana Martinez. The settlements lacked proper documentation, transparency, and investigations according to the audit. Colon proclaimed the settlements an “abuse of power” by former Republican Governor Susana Martinez. According to Colon, the secret settlements were done to save the former Governor from embarrassment, protect her personal reputation, and to protect her political appointees and her political agenda.
The special audit came after revelations about secret settlements of lawsuits against state official appointees by former Republican Governor Susana Martinez. Some of the settlements were sealed until after the former Governors departure from office at the end of 2018. Auditor Colón ordered the special audit after retired New Mexico State Police Chief Pete Kassetas went public asserting that $2 million worth of settlements of claims filed against him and the Department of Public Safety were reached in the final weeks of the Martinez administration. Kassetas protested the settlements saying the claims had not been investigated thoroughly. The settlements included “gag orders” that no party to the settlements could disclose the terms of the settlements.
The special audit found settlements of civil rights claims from fiscal year 2015 to the end of the Martinez Administration and the present averaged 607 days and higher. According to the audit, 18 claims were settled before Martinez left office much faster with most under 200 days. The audit also found that in a number of the settlements examined, the confidentiality periods and damages assessed for violating those agreements exceeded what is mandated by state law. The contracted state auditors reviewed the paper trail for each settlement and tried to speak with the outside attorneys hired to defend the state, along with former Risk Management Division officials and plaintiffs’ attorneys.
COLON’S CONDEMNATION OF SETTLEMENTS
The special audit uncovered nearly $3 million in legal settlements from Governor Susana Martinez’s administration that were fast-tracked, approved with little or no investigation nor documentation, and contained illegal confidentiality agreements.
During his press conference, New Mexico State Auditor Brain Colon strongly condemned the secret settlements by saying:
“This is about an abuse of power. It’s about a lack of transparency, and particularly as it relates to political appointees by our former governor. … We should never settle matters and use taxpayer dollars to protect political interest, political legacies and personal agendas. These are not anomalies that don’t matter … These are anomalies that actually represent secret payouts to protect the [fomer Gov. Martinez] administration’s reputation. … [W]hat’s truly concerning and what really is disgusting is that $2.7 million of those $5 million in settlements were done in secret without process and without a proper investigation. … There was virtually no proof in the files and in the records as to why these high dollar amounts were approved [by the Martinez administration.]”
You can review the entire Colon press conference here:
The outside auditing firm contracted by the New Mexico State Auditor’s office examined 18 civil rights lawsuits that were settled out of court by the Martinez Risk Management Division since 2014. According to the audit, two-thirds of $5 million worth of settlements that were “high dollar” settlements failed to follow internal controls.
Two of the settlements involved claims by State Police bodyguards assigned to protect Martinez and her husband, Chuck Franco. News media reports include that a very embarrassing audio recording of First Husband Chuck Franco was made containing accusations against the former Governor, but the recording has never been made public. A woman who filed a sexual harassment complaint against then-Chief of New Mexico State Police Pete Kassetas said that a recorded conversation between Gov. Susana Martinez’s husband and a state police bodyguard explains why Martinez kept Kassetas as chief despite several complaints about his behavior toward women. The recording of Martinez’s husband, Chuck Franco, was made by former police Sgt. Julia Armendariz, who once headed Martinez’s security detail. Armendariz, who was part of another case against Kassetas that was settled in late December, has said Martinez insisted she call Franco and record him.
The largest “secret settlement” involved a lawsuit filed against the Department of Public Safety and former New Mexico State Police Chief Pete Kassetas that was settled last December for $900,000. The Martinez administration also agreed to pay an additional $100,000 to resolve claims that the state violated the public records law. Allegations of inappropriate conduct by Kassetas including “mooning” employees and sexual discrimination on promotions were made against the former NMSP Chief.
One case was settled for $200,000 within two months with no proof of investigation done by the Risk Management Division. The case was settled after a two-paragraph letter threatening to file a lawsuit was sent to the state.
The audit also reported that a 2015 settlement agreement led to a $200,000 payment to a former State Police bodyguard for Martinez which included a provision that required a repayment of a debt to a “fellow public official.” The settlement was totally inappropriate and contrary to Risk Management policy.
The audit recommends tight controls that include requiring a documented second review of any and all settlements before they are resolved.
After the Colon press conference, New Mexico Risk Management Division (RMD) issued a statement saying:
“The Risk Management Division no longer enters into settlements with confidentiality periods that extend beyond those established by state law. … It also no longer threatens claimants with excessive monetary penalties to keep them quiet. … [State settlements] are examined thoroughly, objectively and consistently.”
It was embarrassing that New Mexico State Police Chief Kassetas for his part said about the special audit:
“The Office of the State Auditor validated the information I brought forward in a factual manner that cannot be disputed. This has always been about public corruption and exposing the fraud perpetrated against the New Mexico taxpayers.”
The comments about “exposing” things coming from the former New Mexico State Police Chief who was accused of exposing his rear end to employees is revealing.
When the State Risk Management Division settles a case, it denies any and all wrongdoing, and demands that the settlement makes it clear the State is agreeing to end the case as a compromise or to avoid further litigation costs. This is standard practice in most civil lawsuit settlements and common even in the private sector. The parties usually agree to avoid disparaging each other or speaking about the terms and conditions of the settlement.
Under state law, state Risk Management Division (RMD) settlement terms and conditions cannot be disclosed to the public for 180 days, or a full six months. All too often, because of language and the terms in the settlements, it is unclear which claims have been settled or when they can be released to the public.
Under the current law, the timeline for mandatory disclosure is not clear. Current State law provides that the confidentiality period can start on 4 dates:
1. The date the settlement is signed
2. The date the claim is closed administratively by the state, or
3. The date all litigation is completed or even
4. The date all statutes of limitations have run on a claim.
EFFORTS TO DISCLOSE SETTLEMENTS TO PUBLIC
During the 2019 legislative session, a bill jointly sponsored Bernalillo County Republican State Senator Sander Rue and Santa Fe Democrat State Representative Linda Trujillo calling for the state to publish settlements in discrimination claims, the agency they were lodged against and the total amount of state money paid to settle the case, including damages and attorney fees. The legislation would have required settlements paid be published on the state’s sunshine portal after a certain amount of time elapsed. General Services Department Cabinet Secretary Ken Ortiz supported the legislation. The proposal passed the New Mexico Senate, but it did not make it through the New Mexico House of Representatives.
After the end of the 2019 legislative session, Cabinet Secretary for the General Services Department Ken Ortiz announced he was working with staffers to start automatically publishing the state settlement agreements. The goal was to post all settlements online as soon as the legally required confidentiality period of 180 days (6 months) expires. Secretary Ortiz supports clarifying the law that sets the initial 180 days of confidentiality with the goal to precisely define when the 180-day period starts. Ortiz wants to make making it clear the 180 days starts on the day the settlement is reached.
CONFLICTS BETWEEN DFA AND RMD
Confidential sources within the Department of Finance and Administration (DFA) reported to the Department of Finance Transitions Committee appointed by then Governor Elect Michelle Lujan Grisham that during the entire 8 years of former Republican Governor Martinez Administration, Republican defense lawyers who had the Governor’s ear, and who she considered her allies and supporters, were awarded lucrative defense contracts. The same confidential sources disclosed that there were times the previous Governor’s office would intervene and force the hiring of Republican political operatives who were attorneys and who had lost elections to judgeships be given jobs at the State Risk Management Division.
The most disturbing information provided by DFA confidential sources is that the State Risk Management Division would often block or fail to get approval of settlements from DFA. According to the confidential sources, DFA was repeatedly and essentially left in the dark about settlements agreed to be paid by RMD. The DFA was not allowed to participate in settlement discussions nor allowed to have any say in the amount of the settlements. Further, according to one source, DFA was not allowed to participate with selection of attorney defense contracts with the RMD carrying out the orders from the former Republican Governor’s office as to who was to be chosen.
COMMENTARY AND ANALYSIS
Kudos are in order to New Mexico State Auditor Brian Colon for taking appropriate steps to uncover “abuse of power” by the former Republican Governor in the manner in which millions were spent in taxpayer money to settle cases to save her embarrassment, protect her political appointees and her personal reputation. Kudos are also in order for Governor Michelle Lujan Grisham and Cabinet Secretary Ken Ortiz for working with information technology staffers to start automatically publishing the state settlement agreements with the goal to post all settlements.
New Mexico State Auditor Colón said the special audit report results have been forwarded to the state Attorney General’s Office, the 1st Judicial District Attorney’s office in Santa Fe, and the new state Ethics Commission. All three investigative agencies would be damn foolish to ignore the special audit report and not to take further action in order to prohibit such “abuse of power” an negotiating secret settlement in the future.
Notwithstanding, much more needs to be done by others, including the Governor and the New Mexico legislature. Governor Michelle Lujan Grisham should issue executive orders mandating that the Department of Finance and Administration (DFA) be given far more authority over the State Risk Management Division (RMD). In particular DFA needs to be given at a minimum some say on the final approval of all settlements negotiated by RMD as well be allowed to give input on attorneys selected to do defense work for the state. The RMD should never be used as a “dumping ground” for political operatives or cronies looking for jobs. Too much taxpayer money is at stake.
It is extremely disappointing that the 2019 New Mexico legislature failed to enact the legislation requiring the state to publish the nature of discrimination claims, the agency against whom they were lodged and the total amount of state money used to settle the allegation, including damages and attorney fees. Notwithstanding, even that legislation did not go far enough. The current state law that provides 4 separate dates when the 180 day or 6-month confidentiality period starts to run should be repealed or drastically amended by the legislature.
Six months for the public to have to wait to find out the terms and conditions of a settlement is outrageous. In the interest of full disclosure and transparency, all settlements should be posted within at least 30 days if not sooner from the date the settlement is agreed to by the parties. There should be absolutely no confidentiality clauses when it comes to settlements. It is taxpayer money and the legislature need to act in the interest of complete transparency and stop the practice of “secret settlements.”