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Auditor Probe Stonewalled

Auditor Probe Stonewalled

The auditor's report said there was a possibility that 'Secretary Padilla took these actions... to protect herself from possible individual liability resulting from her actions as a certified public accountant working for that taxpayer'


State Tax and Revenue Department officials tried to stonewall his investigation into allegations of wrongdoing by tax chief Demesia Padilla, state Auditor Tim Keller said.

State Auditor Tim Keller, photo by Peter St. CyrThat “obstruction,” as Keller called it, came when tax officials refused to allow at least two agency employees talk to an independent accounting firm Keller’s office had hired to investigate the allegations, Keller said during a news conference Wednesday. Tax department officials cited the state’s Taxpayer Protection Act, and the need to keep taxpayer information confidential, as the reason for refusing to let the workers talk to the investigators.

“They were initially trying to obstruct our investigation,” Keller said, adding that his office has gotten only “radio silence” from Gov. Susana Martinez’s office on the matter.

Keller’s office fought the alleged stonewalling by firing of a letter on June 9 to Tax and Revenue officials telling them that the Auditor’s office had a constitutional duty to investigation allegations of wrongdoing and possible abuse of power, Keller added.

On June 11, Tax and Revenue Chief Legal Counsel Brad Odell wrote Keller’s office to say the auditor didn’t have the legal authority to perform the audit. “The Department has concerns that this investigation will seek disclosure of confidential taxpayer information,” Odell wrote. “Neither the Department or any of its employees have authority to discuss confidential taxpayer information with the Office of the State Auditor. Discussion of anything beyond the procedures for selecting audits, performing audits, and collecting taxes places our employees in jeopardy of disclosing confidential taxpayer information.”

The tax department eventually acquiesced and allowed the employees to be interviewed. Had the tax department’s position that it could not participate in an investigation because of taxpayer privacy concerns, it would have meant that no agency could ever investigate its officials for alleged crimes, Keller added.

Keller’s office has tuned the investigation over to the state Attorney General’s office, which has opened an investigation, Keller said. The case involves allegations that Padilla tried to get favorable treatment in the form of reduced tax values for a former client, Keller said. He added that he could not name the taxpayer nor the amount of money involved because of the pending probe.

Padilla owned a private accounting firm in Albuquerque before she was appointed secretary of the tax department by Martinez.

Tax officials and Martinez’s office have blasted Keller’s investigation as politically motivated, a charge Keller denied. On Wednesday he said the tip on the case came from an anonymous caller to the auditor’s fraud hotline. After getting the call, Keller’s office hired a private firm, McHard Accounting Consulting, LLC, to investigate the allegations. That firm concluded “that predication exists for an investigation to be opened into allegations that [Secretary Padilla] used her official position as Cabinet Secretary to inappropriately influence or pressure NMTRD employees to obtain differential treatment,” said a portion of the report that Keller made public Wednesday.

The report also said there was a possibility that “Secretary Padilla took these actions, in whole or in part, to protect herself from possible individual liability resulting from her actions as a certified public accountant working for that taxpayer.”

Keller said he held the news conference to release public documents in the case that had been requested by members of the news media and to counter allegations that the investigation was politically motivated.

“We are going to all it what it is regardless of what politicians say,” Keller said. “We hope the administration will take this seriously going forward, rather than taking cheap political shots.”

— Dennis Domrzalski is an associate editor of ABQ Free Press. Reach him at dennis@freeabq.com

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Dennis Domrzalski is managing editor of ABQ Free Press. Reach him at dennis@freeabq.com.

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