Oil vs. Real Estate

Who's Buying the Next Governor?

Both major party candidates for governor are running as corruption-fighters, promising a new era of accountability and transparency.

Neither is off to a promising start.

Let’s start with the Democratic candidate, Lt. Gov. Diane Denish, who promises to deliver “increased transparency in political campaigns and lobbying.” On July 29, she

for “young, young-ish or young-feeling professionals” at the Railyard Restaurant and Saloon.

The crowd, as it turns out, was made up of those pushing middle-age, well past it, or politically connected—nothing like those Obama events that felt like college parties.

SFR arrived, camera and notepad in hand, and within 10 minutes was kicked out by the Denish campaign’s finance director, Steve Fitzer.

Fitzer, who helped raise cash for Gov. Bill Richardson’s 2008 presidential run, makes $8,500 a month as Denish’s fundraiser-in-chief, campaign expense reports show.

That same night in Albuquerque, Republican gubernatorial candidate Susana Martinez spoke at a fundraiser headlined by

Daily Show

punching bag and Republican National Committee Chairman

Michael Steele

. Despite Martinez’ own transparency pledges, that event was also closed to the press. (For what it’s worth, Martinez and her staff had allowed SFR to take pictures and interview attendees at a smaller May fundraiser in Santa Fe.)

Back in Santa Fe, Denish asked a few dozen supporters inside the restaurant for their help in the “tough battle” ahead. “It’s not just about money,” Denish said.

Well, it’s mainly about money.

Including the primary, the New Mexico gubernatorial race has so far this year attracted more than $13 million in donations, or $6.12 per resident of the state. By contrast, the candidates to replace Gov. Arnold Schwarzenegger have collectively raised $2.46 per Californian.

New Mexico’s gubernatorial race is so expensive, relatively speaking, in part on account of the state’s relatively loose campaign finance rules, which allow for lump-sum donations so large they’d be illegal at the national level. But the race also is pricey because it’s so competitive.

The candidates are close in terms of fundraising. At Denish’s last report, filed July 1 with the New Mexico Secretary of State’s office, she had raised more than $2 million.

Martinez, meanwhile, had raised just less than $1.9 million.

Citing polls, and the tendency of Americans to punish incumbents when the economy is poor, national news outlets, including The Washington Post, say Denish risks losing to Martinez.

As measured in dollars, the Republican candidate seems to be generating more interest at the grassroots level.

On July 27, the state Democratic Party attacked Martinez’ fundraiser with Steele as a sign of her campaign’s reliance on out-of-state contributions from “Washington Republican insiders.”

The attack was disingenuous. As SFR’s review of campaign finance report shows, Denish relies more heavily than Martinez on donors outside New Mexico. Denish has raised $397,000 from 76 individuals, labor unions and political action committees in Washington, DC. By contrast, Martinez has raised $250,000 from the Republican Governors Association, and $25 from a former Internal Revenue Service lawyer with a Washington, DC, address.

In-State Vs. Out-of-State



Overall, 10 percent of Denish contributors have out-of-state addresses, accounting for 47 percent of the money raised. Among Martinez’ contributions, the figures are 5 percent and 40 percent, respectively. Counterintuitively for a Republican, Martinez is also relatively less reliant on large donors, which may indicate a high energy level among GOP voters.

Share of Small Donors

As the chart shows [

], 76 percent of Martinez’ donors gave $100 or less, accounting for 7 percent of her funds. Meanwhile, 60 percent of Denish’s donors gave $100 or less, accounting for 10 percent of her funds.

Denish had approximately 900 more small donors overall than Martinez, reflective of the Democratic Party’s broader popularity in New Mexico.

SFR also analyzed the candidates’ donations from limited liability companies, or LLCs. Because LLCs are not required to disclose their investors, they are an effective way to disguise a political contribution.

Martinez’ biggest LLC donor was ME LLC of Albuquerque, which wrote her a $25,000 check last month.

ME’s only listed contact is its registered agent, Craig Othmer, a lawyer who died in 2007. But the company shares an address with Southwest Trane Co.—a franchise of the national air conditioning company—and RMCI Inc., a construction company with approximately $2.4 million in contracts with the state of New Mexico last year. In 2008, RMCI paid a $500 penalty to the Construction Industries Division of the New Mexico Regulation and Licensing Department for failing to arrange required inspections.

RMCI President James Giannelli has donated tens of thousands of dollars to Republican candidates over the past decade. The donation to Martinez could be problematic, since she takes every opportunity to link Denish to the pay-to-play contracting scandals of Gov. Richardson’s administration.

Aside from a $15,000 donation from SunRay Gaming of New Mexico—the Farmington casino and horse racing track—Martinez’ other major LLC contributors somewhat predictably hail from her strongest corporate base: the oil and gas industry. Even after the disastrous BP oil spill in the Gulf of Mexico, Martinez is promising to ease regulations on the industry; she’s so far failed to explain how that’s any different in principle than what she calls the “corrupt” Richardson habit of awarding state contracts to campaign donors.

Denish also has a problem. Her slogan is “a new way forward.” But her campaign backers include many of the same folks behind Gov. Richardson, whose popularity has tanked following two years in which state corruption scandals dominated the headlines.

Denish’s largest stealth donors are in real estate. Mesa del Sol LLC, named for the massive business park and residential development near the Albuquerque Sunport, donated $20,000 to Denish. Mesa del Sol’s developer, Forest City Covington, gave nearly a third of a million dollars to Richardson, and received


Forest City’s design and construction director for Mesa del Sol, Michael S Castillo, was recently employed by Coast Range Investments, a California-based real estate company that’s developing a similar, 5,600-acre development near Belen called Rancho Cielo. A Coast Range LLC has given Denish $20,000; two other LLCs affiliated with Forest City have given her $5,500.

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