How the Southwest Was Won

Six days before New Mexico's primary election, Phil Musser, a Washington, DC-based political consultant, sent a cordial email to a key Republican donor.

"Thanks very much for the time this morning," Musser wrote. "I know that the Governor very much enjoyed seeing you and values your friendship a lot…The Lord is clearly working through you in many ways."

The donor, B Wayne Hughes, Jr., is the founder of American Commercial Equities Management, a high-end real estate firm based in Malibu, Calif. In 2010, he donated $100,000 to Gov. Susana Martinez' gubernatorial campaign; Musser wanted to know if he'd help out again.

Musser wrote that New Mexico Republicans needed $75,000 for "an aggressive mail and radio program" slated to begin the next day.

"Our humble request is that you consider helping us bridge a good portion of that gap," Musser wrote, asking Hughes to wire money to a political action committee, Reform New Mexico Now. The committee, formed one day earlier by Martinez political adviser Jay McCleskey, would take part in an unprecedented effort—as Musser pitched—to "effectuate significant change in New Mexico's primary elections."

Two days later, Reform New Mexico Now got a $10,000 donation from Hughes.

That may sound like a lot of money, but against the millions spent in New Mexico's state and local races this year, Hughes' donation seems almost insignificant. More recently, Reform received $250,000 from Las Vegas casino magnate and major Mitt Romney donor Sheldon Adelson. On the other side, in October alone, New Mexico Democratic groups received more than half a million dollars from powerful labor unions.

All of this signifies a sea change in how New Mexico elections are fought—and won.

What once were sleepy hometown races are now subject to the influence of deep-pocketed, out-of-state donors. Voters have seen their mailboxes and TVs fill with ads that seem more focused on tearing candidates down than supporting them.

In broad terms, the swell in spending by political committees like Reform—known as "super PACs," they can accept unlimited donations since they technically operate independently of candidates—is the result of the now-infamous 2010 US Supreme Court decision in Citizens United v. Federal Election Commission.

But the specifics are more nuanced. As Musser's email illustrates, the new election model relies on a complex web of close relationships among candidates, PACs, political advisers and out-of-state donors like Hughes.

"Jay McCleskey, also copied here, is coordinating the effort directly and can speak to any specific questions you might have," Musser wrote, adding that he was "also copying the Governor so you can keep in touch."

After obtaining this email, SFR pored through campaign finance reports, filed public records requests and made countless calls. Efforts to contact the governor's office and officials affiliated with her campaign committee, her political action committee (Susana PAC) and Reform New Mexico Now were referred back to one man: Jay McCleskey, who is behind all three committees. It's a stunning example of how, in just two years, New Mexico's political landscape has transformed.

Just ask Aubrey Dunn, a Republican candidate for state Senate who found himself at odds with McCleskey's PACs. "I think it's become painfully obvious during this election cycle that super PACs are deciding the elections, and not New Mexicans," he says.

This chart illustrates the relationships among various Republican political groups. Numbers are approximate. Expenditures do not include thousands of dollars Martinez' campaign paid to McCleskey's firm and his former employer, Lincoln Media Strategies. It all started with Citizens United. In 2010, the Supreme Court ruled that, as long as political spending is done independently of a candidate or campaign, it can't be limited. The only reason to limit political spending—a form of free speech, the Court argued—would be to prevent corruption. If a candidate never asked anyone to help him win, the logic goes, he wouldn't owe anyone a favor.

New Mexico once capped donations to political committees and statewide candidates at $10,000. (Hughes made his $100,000 donation to Martinez before the limits went into effect.)

The plan to dismantle some of those limits started more than a year ago, when high-profile conservative lawyer James Bopp came to New Mexico to argue against them. The court ruled in his favor and ordered the contribution limits removed for super PACs. (The New Mexico Attorney General's office, which argued against Bopp, is scheduled to present its case to a federal appeals court on Nov. 7—the day after the election.)

The results are astounding. Nationwide, the presidential election was the costliest in history; in New Mexico, PACs and candidates together poured more than $20 million into state and local races.

Neri Holguin is an experienced Democratic political consultant who runs Albuquerque-based Holguin Campaigns and Communications. Like McCleskey, she wears various hats: She's one of the founders of the left-leaning Justice League PAC, runs campaigns and operates her consulting firm. She stands to financially benefit from the political dollars flooding into the state. Nevertheless, she calls the state of campaign finance after Citizens United "unfortunate." She adds that she's seen "a lot more negativity."

"Candidates can't even really control your own message, because the outside groups are saying what they're going to say…" she says. "In some ways, I think the kind of races that we've run in the past—they're just a lot uglier now."

Incoming Democratic state Rep. Carl Trujillo can attest to that. During a bruising Democratic primary against Santa Fe Mayor David Coss, Reform New Mexico Now sent out pro-Trujillo mailers in the final week of the campaign. Many viewed the mailers as crucial to Trujillo's eventual upset over the favored Coss, but Trujillo maintains that they actually hurt his chances and nearly cost him the election.  

"They were unwanted and unsolicited, and we actually saw our numbers go in the other direction [after they went out]," Trujillo tells SFR.

Faith McKenna, Trujillo's campaign manager, says Trujillo has since been working to repair the damage the mailers did to his image in a heavily liberal area.

"It's mystifying how anybody could think Republican independent expenditures in one of the state's largest Democratic districts helped a Democratic candidate," McKenna tells SFR.

In his email, Musser details Reform's primary election strategy.

"The bulk of the activity starts tomorrow, will come as a surprise, and be fairly intensive in nature," he writes—with the goal not only of helping "fortify the position of several allies," but also to "try and take out two or three overtly hostile members in the [S]enate."

Hughes was in a good position to help. The son of B Wayne Hughes, Sr.—the founder of Public Storage and a major donor to American Crossroads, a group led by former George W Bush adviser Karl Rove—Hughes Jr. is a former board member at the conservative nonprofit advocacy group American Action Network.

Hefty donations from both sides are funding the types of local races that used to attract little attention.

"Particularly in the state and local races, like the state legislative races…we're seeing individuals and organizations writing single checks of $50,000, $100,000, $250,000 to PACs," Albuquerque political analyst Brian Sanderoff says. He adds that this doesn't necessarily make for more negative campaigns, but simply a greater "saturation of the negativity."

"We're seeing legislative races where people are being hit 10, 12 times by one particular PAC," he says.
Strictly speaking, none of this is illegal, but observers on both sides have raised concerns about how various PACs operate.

Reform New Mexico Now, for instance, is technically an "independent expenditure" committee—a super PAC—meaning it's not allowed to coordinate with candidates. But in addition to helming Reform, Susana PAC and the governor's campaign committee, McCleskey also runs a consulting firm, McCleskey Media Strategies, that works directly with candidates (see above chart).

"How do you have one person—Jay McCleskey—not coordinate with himself?" state Rep. Brian Egolf, D-Santa Fe, asks. Egolf runs New Mexico Defense Fund, a liberal "hard money" PAC that—like Susana PAC—must abide by the state's campaign contribution limits.

Common Cause New Mexico Executive Director Viki Harrison also objects to McCleskey's multiple roles.

"When you['ve] got this guy running a campaign for a governor and all these PACs involved in different races, that's a conflict of interest," Harrison tells SFR.

The New Mexico Secretary of State's office is responsible for enforcing campaign laws, which it does by responding to complaints and auditing 10 percent of all campaign finance reports filed.

But the Center for Public Integrity recently gave New Mexico's campaign finance laws a D-minus, writing that a 10 percent sample "is too small to shine a significant light on irregularities."

"In addition," CPI's report concludes, "public confidence is limited by having oversight vested in a partisan, elected official"—Republican Secretary of State Dianna Duran.

Egolf says Duran has been slow to investigate complaints.

"McCleskey's lawyer says, 'We need more time.' The Secretary of State says, 'OK,'" Egolf says. "No investigation happens. [Soon] the election's over."

One particular case centers on Reform's origins.  

In June, at least four Democratic candidates filed ethics complaints against Reform for failing to disclose its formation to the Secretary of State on time.  State law mandates that PACs must register within 10 days of receiving or spending money; Reform registered as a political action committee on May 29. But in its initial disclosure from, the PAC claimed to have received at least $205,000 in contributions—all on April 24.

Reform later amended the filing, reporting that it actually received two contributions on May 21—both from oil companies, and totaling $180,000—and then three more on May 24. Four months later, in October, Reform's attorney, Paul Kienzle, stated in a letter to Duran's office that the oil companies' checks were deposited on May 18, but that—"because of the large size of the deposit"—the bank placed a hold on them until May 21. (McCleskey has said the April dates were typos.)

Still, when SFR submitted a request under the Inspection of Public Records Act to inspect copies of all five checks, Duran's chief of staff, Ken Ortiz, sent only the three May 21 checks—not the ones from the oil companies. In an email, Ortiz explained that the Secretary of State's Office "is not the records custodian of campaign contributions checks" but that the office "received copies of three checks made out to Reform New Mexico Now during the course of reviewing a complaint against Reform New Mexico Now."

It's unclear whether Duran's office didn't request the checks, or whether Reform just didn't provide them. Ortiz did not respond to follow-up questions by press time.

In his email, Musser made a prediction. "If we do this right, it will also set the stage for greater success in the fall elections, where we should be able to win the majority in the House, and get a much better hand in the [S]enate, with an outside shot to win it."

As of press time, results were not yet complete for New Mexico's state and local races. But Musser's pitch made it clear what Reform wanted. (Updated Nov. 7: It appears Republican efforts to take the House and Senate were unsuccessful, but Reform's involvement did play a key role in certain close races. Click here to read more.)

"With that combination, Susana will be in a position to get some of the bold reforms around education, taxes, the illegal immigrant ID bill and some other important things through the legislature," he wrote, "and truly become a national model for public policy."

Alexa Schirtzinger contributed reporting.

Email the authors at justin@sfreporter.com or joey@sfreporter.com.

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