Before she became governor, Susana Martinez met with two owners of the Downs at Albuquerque Racetrack and Casino in a private room of Perry's Steakhouse and Grille in Austin, Texas — a ritzy restaurant where an 8 oz.-strip runs for $44.
And before the state awarded two Louisiana developers the lucrative contract extension that allowed their racino to lease state land for another 25 years, William C Windham and John S Turner Jr. directed tens of thousands of dollars to Martinez' campaign coffers.
State senators got an earful about the deal in a special hearing this week that prompted new calls for a state investigation of whether the governor's office unlawfully jeopardized a process to award a lease for part of the state fairgrounds.
In sworn affidavits provided to the state auditor, two members of a bid-evaluation committee say they were independent. Yet, some members of the State Fair Commission say gubernatorial officials intimidated them.
The FBI has collected evidence about the relationship between Martinez' campaign and the two wealthy developers but has not leveled any charges. The state Attorney General's investigation has produced no results and a State Auditor report made no criminal findings. Martinez has maintained that the contributions were not tied to awarding the lease.
But an SFR investigation reveals that money helped buy the Louisiana men access to Martinez that wasn't afforded to some of the working-class New Mexicans who protested a state-sanctioned gambling institution in their rough Duke City neighborhood.
In January, the Albuquerque Journal quoted Martinez saying that the lease, which was under negotiation with the state under Gov. Bill Richardson, "wasn't on the radar until after the 2010 election."
Windham issued a statement to SFR acknowledging that he mentioned the racino to the gubernatorial candidate during that steakhouse introduction— which he says lasted no longer than 15 minutes. Darren White, a Downs lobbyist and administration ally, emailed the statement to SFR on Feb. 9.
"We explained how our businesses had been contributing to New Mexico's economy for 25 years. We told her we had developed hotels in Albuquerque and Santa Fe, were co-owners of the Santa Fe Downs, Albuquerque Downs, SunRay Park and also owned a cattle ranch in Chama," reads Windham's statement.
The financial relationship between Martinez and her generous campaign benefactors offers a case study in how ethics and transparency laws often fail to account for the manner and speed at which big checks fly to from donors to the candidates for public office—and what can happen after they take office.
Documents obtained by SFR show the Sept. 27, 2010 meeting between the candidate and the racino owners had an agenda.
Two days before the meeting, Martinez fundraiser Marie Vulaj emailed campaign manager Ryan Cangiolosi outlining the "expectations" of the encounter between Martinez and Windham.
"Mr. Windham will be contributing $20,000," reads the email, which hasn't been published until now, beneath the header "[m]eeting expectations"—under which Vulaj also wrote: "Discuss his firm's development interests in New Mexico."
Vulaj also provided a brief description of Windham's career—from licensed general contractor to chairman of a company that owned and operated hospitals in three southern states to developer who "has business interests" in New Mexico.
Jay McCleskey, Martinez' top political advisor, calls the message "routine and unremarkable."
"Every candidate in every major campaign receives a briefing and backgrounder prepared by staff before campaign meetings," he writes to SFR.
Two days later, Vulaj emailed Cecilia Martinez, a national fundraiser, and Anissa Ford, the candidate's support staffer.
"Bill Windham will be writing the check out to the RGA," Vulaj wrote, referring to the Republican Governor's Association, a national clearinghouse that supports GOP gubernatorial candidates. "I have discussed this with him but wanted to inform you of this."
"Anissa," added Vulaj, "please make sure Susana is aware of this going into the meeting."
Vulaj finished the email by noting that Windham "also upped the amount to $25,000" from the $20,000 he had previously pledged, "so please also inform Susana of that change."
Former State Fair Commissioner Charlotte Rode, both a Republican and a vocal critic of the Downs deal, alleged at a Monday Senate Rules Committee hearing that Downs backers made pass-through contributions to Martinez through the RGA.
Tax filings and campaign finance reports indicate how such a transaction may have worked. On Oct. 7, 2010, the RGA reported a $25,000 contribution from Turner-Windham, LLC. Two days earlier, on Oct. 5, the RGA kicked $50,000 to its New Mexico arm—which shares the same Washington DC address and treasurer as the national RGA. On Oct. 9, Martinez' campaign reported that it deposited a $50,000 contribution from the New Mexico arm of the RGA.
While the records show that Turner's $25,000 contribution came after the RGA donated to its New Mexico PAC, it's not uncommon for political committees to hold onto checks for a while before depositing them into a bank account. Moreover, the national RGA had a good enough cash flow that year and would have been able to do just that.
The Democratic Governors Association also contributed to Martinez' opponent.
Transparency advocates such as Common Cause New Mexico have raised concerns at the frequency with which contributions wash through political action committees. According to a report released by the nonprofit, up to 80 percent of contributions to New Mexico political action committees between 2005 and 2012 came from companies or other PACs, "effectively concealing the true entities making contributions."
Windham has a different explanation for his contribution.
The $25,000 donation to the RGA, according to his written statement, was his renewal to the political organization's Executive Roundtable in which business executives pay annual dues in exchange for meetings with Republican governors.
"I simply explained that since I was making a large contribution to the RGA-ERT," reads his statement, "I was not going to be making a contribution to the Martinez campaign at that time."
The statement doesn't explain why Vulaj would have wanted Martinez to know that Windham "upped the amount to $25,000" just hours before their meeting in Austin. Vulaj has not returned several messages seeking comment on her emails.
The scenario in Windham's statement presents another question: Why would a donor want to inform a candidate before an introductory meeting that, actually, he was contributing to a separate entity instead of the candidate?
"I, nor any RGA-ERT members, have any influence over how the money is spent," reads Windham's statement. "Obviously, we support Republican candidates, hence the name Republican Governors Association."
A NEW HORSE
Yet Windham doesn't always support Republican candidates. In the 2010 gubernatorial race, he and Turner had been hedging their bets between both candidates. By the time of the Austin meeting, they had already switched horses.
In 2010, the Downs was attempting to negotiate a new lease with Democratic Gov. Richardson, who couldn't seek another immediate term. The Downs principals were busy directing money to the campaign of Richardson's lieutenant governor, Diane Denish, who would take on Martinez in the general election. In total, she logged $24,000 in gubernatorial campaign cash donated by Downs players and affiliated entities.
But lease negotiations with Richardson's administration were encountering roadblocks from State Fair commissioners and lawmakers, who objected to the deal that would have allowed the company—which had missed payments to the state—to lease the land for another 40 years without having to compete with other companies for the lease. Further complicating matters, Richardson was under a federal grand jury investigation into charges that he was handing out state contracts in exchange for campaign contributions. Paul Blanchard, a third owner at the Downs, was a huge Richardson donor who had also worked in his administration.
After beating four primary candidates in June 2010 Martinez became the recipient of campaign cash from the Downs owners. And donations from Windham and his business partners to Denish's campaign suddenly dried up.
In 2009, Denish was also the recipient of a $12,000 contribution from SunRay Gaming, Windham and Turner's Farmington casino. In the fall of 2010, around the same time that Windham was arranging the meeting with Martinez, Denish saw her last $2,000 contribution from Windham, Turner or any of the Downs backers.
By contrast, shortly after Martinez' victory in the June primary, Windham and Turner contributed $15,000 from SunRay to Martinez—the candidate that polls consistently showed ahead. On October 26, 2010, just before the election, Windham contributed $15,000 directly to Martinez on the same day that Sun Ray sank $25,000 into her campaign. A Downs' attorney donated $10,000 to Martinez the next day. In total, records indicate Downs affiliates gave her $65,000.
Those generous cash injections helped send Martinez into the governorship on a campaign message that she would help root out the corruption many voters saw in the Richardson administration. In her inaugural State of the State address in January 2011, just months after an exhausting campaign where she regularly touted transparency, Martinez told lawmakers, "that members of my administration would serve no interest other than that of the public."
PLEAS FROM THE ‘WAR ZONE’
The differences between the two administrations' processes and proposals is a constant talking point for McCleskey, Martinez' politi- cal advisor. He has emphasized the fact that the lease was vetted through a bidding process between two competing companies. His stance: just because Windham and Turner were campaign donors doesn't mean Martinez gave them preferential treatment. By his accounts, the fact that Gov. Martinez put the lease out to a competitive bid underscores that she wasn't giving preference to the two donors, who would have benefitted more by simply being handed the contract as was proposed under Richardson.
"Governor Martinez went well above and beyond the requirements of the law to ensure that the process was open, fair, and that the state got the best deal possible," he writes.
After Martinez was elected, campaign finance laws went into place that limited the amount of cash candidates could contribute directly to candidates. But the campaign cash from Windham and Turner to Martinez kept flowing to her new political action committee—Susana PAC.
Windham and Turner also began contributing to Martinez through their Brazos Land and Cattle company. That entity, records show, contributed $5,000 to Martinez in late December 2010, just days after Richardson's State Fair Commission announced that it would leave the decision on a new lease for the racino to the incoming administration of Gov. Martinez. Around the same time, SunRay contributed $5,000 to the governor.
While Windham and Turner kept sinking cash into the governor's campaign coffers, residents living in the vicinity of the racino urged the governor's appointed State Fair Commission to reject any new deal that would favor the Downs.
SFR obtained 29 emails from files maintained by Attorney General Gary King. A current gubernatorial candidate, his office's examination of the awarding of the racino lease under Martinez hasn't produced any charges. He's also received $10,000 from the Downs and its owners during the 2010 election cycle. State Auditor Hector Balderas has also taken a crack at the case.
Balderas says there are "significant deficiencies" that led to the Downs deal, including that a private firm he hired believes the governor's office "was possibly involved in the selection of the evaluation committee"—which was supposed to independently vet the offers to construct a new casino and lease the land. The emails in King's office indicate a community's caution about how 25 more years of increased gambling could harm a neighborhood that's still known to many as the "war zone" for its high crime and poverty rates.
Tom Turner, who lives just west of the fairgrounds, lamented that his family had "struggled to make the neighborhood great despite some serious negative consequences of the racino at the fairgrounds." And Jennifer Jones, who lives on Louisiana Boulevard near to the Downs, warned commissioners the casino could exacerbate conditions.
"It would be the poor of this community going to the [c]asino within walking distance, to spend the whole $400.00 a month into the slots that will not bring the fortune," she wrote.
Backers of the Downs deal, including the governor's office, have recently argued that the lease extension was necessary to save the financial viability of the entity that oversees the land, which was sinking in debt. But detractors, including former commission chairman Tom Tinnin, have pointed to how the fair had in the past solved its debt problems without racino revenue.
Weeks before the state first indicated the partners would get their racino deal, Windham showed up at Martinez' side again.
Windham and Martinez both attended the Expo New Mexico Junior Livestock Board Auction on Sept. 16, 2011, where Windham and the Downs were $10,000-and-up "platinum supporters" for the charity after purchasing a steer, heifer and lamb. That was two weeks before the evaluation committee selected the Downs as the best bidder for the racino contract, with one member giving it a perfect "management" score on the scoring sheets despite the obvious disrepair of the grounds. Windham says he had no discussions about the Downs with Martinez during the public auction.
"We should run Windham's through
a different PAC"
A few days later, Martinez was slated to speak at a Sept. 22, 2011 RGA Executive Roundtable event, also attended by Windham. While the group was spending thousands on lodging and entertainment in the City Different, Windham claims that he had no "discussions with the Governor regarding the Downs" and "had no private meetings with her." In fact, Windham doesn't recall "any conversations other than normal greetings."
Eventually, the governorappointed State Fair Commission approved the lease on a 4-3 vote. And in December 2011, the Board of Finance (which the governor also chairs and appoints) unanimously stamped its approval on the deal. Laguna Development Co.—the only other bidder who responded to the state's request for proposal—lodged an official protest with the state after it awarded the Downs the racino lease.
DEATH OF DISCLOSURE
In March 2012, McCleskey sent a text message to Andrea Goff, a former finance director for Martinez.
"We should run [W]indham's through a different PAC," McCleskey wrote Goff, adding, "the lease is under protest, so we shouldn't hit it."
Goff stopped working as Martinez' finance director at the end of May 2012, around the time McCleskey formed the independent expenditure committee Reform New Mexico Now. More commonly known as "super PACs," they're allowed to raise and spend unlimited amounts of cash in elections so long as they don't coordinate expenditures with the candidates they're supporting for office. This one was particularly successful, claiming the status as the top spender in the 2012 election cycle after having poured $2.4 million into various races. Super PACs must report contributions publicly.
But disclosure isn't required for different groups.
Super PACs are the more transparent cousins to dark-money 501(c)4 nonprofit groups. Both kinds of groups can raise and spend unlimited amounts in elections so long as their spending isn't coordinated with candidates. But unlike super PACs, 501(c)4s can't expressly advocate for a candidate. Yet that doesn't prevent them from running ads for or against a candidate's policies, and they have emerged as some of the biggest spenders in elections nationally. Another bonus for donors is that the groups are not required to report the sources of their contributions.
In spring of 2013, a 501(c)4 group named New Mexico Competes, Inc. registered in Washington DC. The nonprofit has already paid for advertisements in support of Martinez policies.
Listed as the organization's secretary and treasurer is Pat Rogers.
He's a close Martinez ally and attorney who helped negotiate the racino lease—which will give an estimated $1 billion in revenue to the Downs.