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KUNM News Update

WED: Former New Mexico spaceport CFO alleges fraud and retaliation, + More

Spaceport America
Matt York/AP
/
AP
FILE - In this Oct. 17, 2011, file photo, guests stand outside the new Spaceport America hangar in Upham, N.M. The former chief financial officer for the New Mexico Spaceport Authority has filed a whistleblower lawsuit, alleging that he was forced to resign after raising concerns about financial malfeasance. (AP Photo/Matt York, File)

Former New Mexico spaceport CFO alleges fraud, retaliation - By Susan Montoya Bryan Associated Press

The former chief financial officer for the New Mexico Spaceport Authority filed a whistleblower lawsuit alleging that he was forced to resign after raising concerns about financial malfeasance that he said cost taxpayers millions of dollars.

Among numerous allegations, Zach DeGregorio said in the lawsuit Dec. 28 that top officials committed securities fraud by refinancing spaceport gross receipts tax bonds under false pretenses.

He also said secret meetings held between state officials and Spaceport America's most notable tenant — Virgin Galactic — may have resulted in violations of the state's anti-donation law, which restricts government donations to personal and private-sector enterprises as a precaution against graft and corruption.

The civil complaint filed in state district court lists numerous officials, including Gov. Michelle Lujan Grisham, Economic Development Secretary Alicia Keyes, officials with the New Mexico Finance Authority and members of the Spaceport Authority board.

Nora Meyers Sackett, the governor's spokeswoman, said her office will not comment on pending litigation. Other officials did not immediately respond Wednesday to messages seeking comment about the allegations.

DeGregorio, a certified public accountant who had worked for the spaceport authority for more than four years, posted a video statement about his lawsuit on social media. He said he wanted to set the record straight.

"I believe one person can make a difference in this world and I believe it's important to stand up for what is right," he said.

The lawsuit also details alleged procurement violations and retaliation that DeGregorio faced after first reporting his concerns to officials in 2020. DeGregorio asked for a jury trial for the lawsuit, which seeks back pay, lost future earning and other financial damages, including punitive damages.

DeGregorio's initial complaints triggered a 2020 investigation into allegations of financial mismanagement, ethical violations and abuse of power by former spaceport director Dan Hicks, who was fired in 2021. Hicks has never commented publicly about the claims.

New Mexico Attorney General Hector Balderas' office said Wednesday that prosecutors have reviewed the financial oversight concerns raised during Hicks' tenure and directed the Spaceport Authority to strengthen its governance and oversight structures to ensure the appropriate use of taxpayer dollars.

"However, no conclusion has been reached on any related criminal matter at this time and we are still evaluating the new allegations contained in the complaint and will respond accordingly," the office said in an emailed statement to The Associated Press.

DeGregorio also listed Balderas and State Auditor Brian Colón as officials who were part of what he described as a coverup involving problems at the spaceport. Colón noted that only the state of New Mexico was named as a party in the civil complaint.

DeGregorio said the 2020 investigative report prepared for the state auditor's office was flawed.

That report alleged De Gregorio assisted Hicks in circumventing procurement policies and evading internal controls. However, DeGregorio in his complaint stated that Hicks had repeatedly tried to get him to skirt the rules and that other spaceport employees were too scared to speak up.

DeGregorio alleged that the procurement violations continued after he resigned.

DeGregorio in the lawsuit accused Keyes — who also was appointed by Lujan Grisham as chair of the spaceport authority board — of ordering him to alter a report that projected the spaceport's economic impact at almost $1 billion between 2016 and 2025. He said he refused and reported the matter to the governor's office.

Sierra and Doña Ana counties both enacted local taxes to help repay bonds that funded construction of Spaceport America, a desert outpost just north of Las Cruces that is designed to support a range of aerospace businesses — from commercial tourism ventures like those planned by Virgin Galactic to vertical rocket launches.

DeGregorio accused state officials of using the Spaceport Authority to refinance the gross receipts tax bonds with the New Mexico Finance Authority under false pretenses.

He said rather than refinancing in the public market, the bonds were refinanced at higher interest rates and under poor loan terms that included a requirement for a large reserve fund.

DeGregorio alleges that Keyes was attempting to perform a sole source refinance directly with the New Mexico Finance Authority rather than putting the refinancing out to bid. If the bonds would have been refinanced in the public markets, he claimed that the Finance Authority would be required to give back millions of dollars in reserve funds and would not receive any future spaceport tax revenues.

According to the lawsuit, the Finance Authority collected the tax revenue from the two counties and repackaged it into low interest loans to provide to other projects in other locations around New Mexico.

Bernalillo County reports suspected ransomware attack - Associated Press

Bernalillo County says it has discovered a suspected ransomware attack directed at its computer systems, prompting the government of New Mexico's most populous county to take affected systems offline and to close most county buildings to the public on Wednesday.

Public safety agencies such as the sheriff's office and the fire and rescue department were operating normally by using unspecified ""backup contingencies" but the Metropolitan Detention Center canceled inmate visits Wednesday, according to a county statement.

County spokesman Tom Thorpe told The Associated Press that the suspected attack meant that county officials couldn't access the affected systems.

Thorpe said he wasn't aware of any demand being received by the county and that officials are checking the county's computers systems for various departments to learn more about the suspected attack.

Bernalillo County includes Albuquerque, New Mexico's most populous city. The county has a population of 676,000, including 106,000 people who live in unincorporated areas.

Navajo leader OKs $557M in virus relief funds for members - Associated Press

Navajo President Jonathan Nez has signed legislation to provide $557 million in hardship assistance to tribal members amid the coronavirus pandemic.

Nez approved the bill late Tuesday to send $2,000 checks to adult tribal members and $600 for each child using federal virus relief funding. The Navajo Nation doesn't issue per capita payments to tribal members, which made the widespread financial assistance rare and highly anticipated.

Nez urged tribal members to use the money responsibly, including to help the elderly, students and veterans or pay outstanding bills.

"Remember, we're not out of this pandemic yet," Nez said Wednesday morning. "So don't go and spend all this money. Put some aside, the pandemic is still here. Plan."

The Navajo Nation Council voted to tap some of the $2.1 billion the tribe received from the American Rescue Plan Act that President Joe Biden signed last year. The money will be sent automatically to tribal members who applied a year ago for relief funds under a previous round of hardship assistance.

An estimated 250,000 adults each will receive $2,000 payments, and the parents or guardians of 95,000 tribal members under the age of 18 will receive $600 for each child.

Nez previously approved $300 checks for tribal residents age 60 and older who showed they needed extra assistance under separate legislation. The tribe was up against a deadline to spend the $16 million it had from the federal Coronavirus Aid, Relief and Economic Security Act approved by former President Donald Trump, or have it revert to the federal government.

The Navajo Nation also used CARES Act funding to send the first round of hardship assistance payments.

Navajos clamored to enroll or fix their records to apply for the funding, boosting the tribe's rolls from about 306,000 members to nearly 400,000. That figure briefly put the Navajo Nation in the No. 1 spot for enrollment among all 574 federally recognized tribes before being topped again by the Cherokee Nation in Oklahoma.

The tribe paid out about $360 million to 312,000 applicants, according to the tribal controller's office said. Adults received up to $1,350 and children up to $450. Other tribes around the country also used federal relief funding to issue hardship payments to tribal members.

Navajo leaders say they now will turn to funding infrastructure projects, including electricity, broadband, water lines and roads.

New Mexico reports over 2,500 new COVID cases – By Nash Jones, KUNM News

New Mexico health officials Wednesday reported 2,514 new COVID-19 cases and 36 additional deaths related to the virus.

The positivity rate over the last week is over 20% and there are just under 500 people hospitalized with the virus across the state tonight.

The vast majority of the new cases were in Bernalillo County, with 923. The next highest county case count was in Sandoval County, which saw 182.

The zip codes of 87121 and 87120, on Albuquerque’s Westside, saw the most new cases of any in the state.

We’ll bring you more on the spread of COVID-19 and the state of the pandemic in New Mexico later on in the show.

Governor declares state of emergency in Socorro County due to monsoon damageBy Nash Jones, KUNM News

Governor Michelle Lujan Grisham has declared a state of emergency in Socorro County following damaging summer monsoon weather.

The governor signed the executive order Tuesday, Jan. 4, in response to a damage assessed from a storm on July 23. In a written statement Wednesday, Jan. 5, her office said the declaration will help make resources available to local governments to repair city and county infrastructure.

The resources include $250,000 made available to the Department of Homeland Security and Emergency Management to support locally-organized efforts. The funds cannot be allocated to individuals as direct financial relief.

The emergency declaration also makes state assistance and the New Mexico National Guard available as needed.

Socorro County Emergency Manager Gail Rogers said in the statement that a series of July storms badly damaged the La Joy Acequia, impacting farmers who rely on the water. She said the order will allow the acequia to be repaired and flowing again by the Spring.

This is the second emergency order issued for Socorro County related to 2021 summer monsoon weather. The first was signed in November to address damage from an earlier storm.

Overdue education plan frustrates New Mexico native leaders — Cedar Attanasio, Associated Press / Report for America

New Mexico's plan to address the needs of underserved Indigenous students hasn't been shared with tribal leaders or the public despite promises made by state officials that they would do so last year.

Tribal leaders were expecting to be invited to comment on a draft last October, ahead of a public release of the plan by Dec. 1 that did not happen.

"When it comes to promises, and it is a serious thing, it should have been followed up already," said Mark Mitchell, recently named chairman of the All Pueblo Council of Governors, which represents 20 Native American tribes in New Mexico and Texas.

The New Mexico Public Education Department, known as PED, had hired former Santa Fe Public Schools Superintendent Veronica García to write the plan.

García said she submitted a draft in early October and understood at the time that state education officials would refine and format it. But she never heard back from them.

"I don't know what happened after that. That would be, I think, a good question for PED or the governor's office," she said.

The education department declined to comment Tuesday on why it failed to meet its self-imposed goal to release a draft for public comment by Dec. 31.

In recent months the agency told lawmakers it has unfilled open positions and other staffing issues and has asked for additional staff specifically to address the lawsuit.

Lujan Grisham spokeswoman Nora Meyers Sackett said the administration will release the plan "in the near future." She declined to comment on the governor's response to the October letter from the All Pueblo Council of Governors requesting a meeting to discuss the plan.

But Sackett added: "Tribal consultation and meaningful government-to-government relations have been a guiding principle of this administration since the governor came into office, and that has not changed."

Mitchell said the tribes never got a response to their letter.

The plan is aimed at addressing a 2018 court ruling that found that Native American, low-income, disabled, and English-learning students were not receiving a sufficient education, accounting for around 70% of the state's K-12 population. Lujan Grisham, a Democrat, has tried unsuccessfully to get the ruling dismissed.

Lujan Grisham's administration has increased public education funding and is proposing pay raises for teachers and more money for the Indian Education Act in the legislative session, which begins this month.

Indigenous education advocates have welcomed a recent move by Lujan Grisham to increase Native American studies in social studies curriculum.

But three years into Lujan Grisham's first term, her administration still hasn't released a comprehensive plan to address education failures laid bare by the lawsuit.

"I hope it doesn't come out days before the session and we're expected to embrace it," said state Rep. Derrick Lente, a Sandia Pueblo Democrat, who said Steinhaus told him on Dec. 20 that the plan was still pending approval by Lujan Grisham.

The education plan would set forth budget priorities, but advocates have said it should also track which programs are effective and give more power to tribes in their discretion of how to spend state education money.

Without a comprehensive state plan for addressing tribal education inequities, Lujan Grisham's education funding increases represent "a very piecemeal approach unmeasurable in terms of any way that you can assess whether we in fact are making progress," said former Cochiti Pueblo governor Regis Pecos, who attended the meeting with Steinhaus and confirmed Lente's account.

An education department spokeswoman, Judy Robinson, declined to comment on the meeting that Steinhaus attended.

Robinson defended the formation of the draft, saying that tribal governments were invited to comment on a very early form of it in August and that revisions are part of an "ongoing process."

That early draft, obtained by the Associated Press, contained no specific or measurable action items and was largely a list of goals to make educational improvements for students, including Native Americans.

"We invited our tribal communities to comment at that time or wait until a later draft was released for their review. Many preferred to wait for the revised draft, which has yet to be issued," Robinson said.

Despite the court ruling that many New Mexico students were not getting the public education they deserved, litigation related to the case has dragged on since 2018.

State officials will be deposed about their efforts to comply with the lawsuit in the coming months, according to plaintiff lawyer Preston Sanchez. The total cost of the lawsuit to taxpayers is expected to approach $8 million this year since it was filed in 2014.

Part of the litigation has been aimed at forcing the state to make a plan. Sanchez said he would prefer that Lujan Grisham's administration do so voluntarily instead of demanding one through more court action.

Tribal leaders endorsed their own detailed plan in 2020, which advocates like Pecos see as a good starting point for negotiations.

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Attanasio is a corps member for the Associated Press/Report for America Statehouse News Initiative. Report for America is a nonprofit national service program that places journalists in local newsrooms to report on under-covered issues. Follow Attanasio on Twitter.

New Mexico Republican to make run for congressional seat — Associated Press

Republican Alexis Martinez Johnson is making another run for New Mexico's 3rd Congressional District.

The northern New Mexico district has been a Democratic stronghold since it was created in the 1980s, but Martinez Johnson said during her announcement Monday that she was optimistic about the new boundaries that resulted from the redistricting process.

Consultants to the Legislature have said the new congressional map gives Democrats an advantage in all three districts to varying degrees, based on past voting behavior.

Martinez Johnson pointed to parts of Chaves, Eddy, Lea counties that will now be part of the district and said she would reach out to boost voting in McKinley County and on the Navajo and Jicarilla Apache nations.

The seat is currently held by Democrat Teresa Leger Fernández, who is serving her first term in Congress.

An environmental engineer, Martinez Johnson said she believes the mood of the electorate is changing and that inflation will be among the issues politicians will have to face.

Martinez Johnson, who was born in Portales and raised in Roswell, ran unsuccessfully for the congressional seat in 2020. She also lost her recent bid for Santa Fe mayor.

The 3rd Congressional District has had only one Republican — Bill Redmond — hold the seat briefly. Redmond won in a special election to fill a vacancy but lost to Democrat Tom Udall when he ran for a full term the next year.

Free masks and test kits may be in the future for New Mexicans – Dan McKay, Albuquerque Journal

High quality masks, and covid-19 at home test kits all provided to the public for free–-that's according to a 60 million dollar plan pre-filed for the upcoming legislative session.

The Albuquerque Journal reports 10 million would be set aside for KN95 or equivalent masks, and 50 million would be provided for test kits—the money would be coming from federal funds allocated to New Mexico for covid relief.

With the recent spike in cases from the omicron variant, there has been a push for increased testing options and better quality personal protective equipment.

The positive test rate has jumped 8 points from last week to almost 20 percent for the last seven days.