Auditor: Tijeras payouts may have broken the law

A special audit of the Village of Tijeras uncovered 14 findings, including possible criminal violations, and has been referred by the State Auditor to the office of the Attorney General.

The Attorney General’s office said Tuesday that it will investigate those findings. “I can confirm the Office of the Attorney General has received a public referral and this matter is under review,” wrote AG spokesman David Carl in an email to The Independent. “All complaints received by the Office of the Attorney General are fully reviewed and appropriate action is taken.”

At the heart of the investigation is an ongoing feud between Tijeras Mayor Gloria Chavez and the village council, spearheaded by Councilor Jake Bruton. The specifics of the investigation center on payments of $64,423.65 made to employees of the village, including Chavez and Diane Klaus, who at times has been acting village clerk, deputy clerk, and interim clerk.

Bruton also received a check, which prompted him to contact the State Auditor and others, including The Independent, because he believed the payment was improper.

Those payments were fraught with issues, according to State Auditor Wayne Johnson, whose report says, “…the OSA has not made a finding of intentional criminal wrongdoing by Village officials. However, the OSA has referred its findings to the Attorney General’s office for review and determination of whether criminal prosecutions are warranted.”

Among challenges faced by the State Auditor’s office was incomplete or missing records, and a culture of fear among village employees. “During the course of the special audit, it came to the OSA’s attention that Village staff appeared to be intimidated and feared retaliation for speaking with the auditors. Specifically, staff were concerned that employees who spoke with auditors may face retaliation by the Mayor and/or the Village Council due to past instances where it was perceived that former employees were targeted by one faction or another and ultimately lost their jobs.”

The report says that Chavez may have violated the Governmental Conduct Act in making an “executive” decision to issue checks to current employees “for an alleged payroll calculation error” in retirement deductions.

The Mayor, in an interview with OSA, indicated that she had made the decision to reimburse the monies without taking the issue before the Village Council because the Council had been ‘postponing’ agenda items and she did not believe the Council would take action on the reimbursements.”

In another potential violation of the Governmental Conduct Act, acting clerk Klaus “was identified as the individual who located the error in the PERA deductions” and herself received a check for $10,752.58, an overpayment of $10,624.55, according to the State Auditor’s report.

Another possible violation of state law centers on the separation of powers, under which “management of finances and prescribing the compensation to be paid to municipal officers and employees are express duties of the Village Council, not the Mayor,” the report says. “Additionally, the Mayor made a decision to hire hire a Village Comptroller, a position that was not taken to the Council for approval. … Additionally the Village Comptroller is paid on contract but does not appear to meet the Internal Revenue Service’s definition of a contractor.”

The report goes on to say that state law “provides that the mayor’s ability to appoint or terminate employees is subject to the approval of a majority of the members of the governing body.” Between 2012 and 2018, Klaus had acted as deputy clerk, acting clerk and interim clerk.

Both Chavez and the village council have indicated they will litigate the matter of Klaus’ employment status with the village.

The total amount overpaid was $47,350.94, which the village will now garnish the wages of its employees for repayment, the report says. Chavez was overpaid $6,745.91.

The overpayments to Chavez and Klaus amount to 36.7 percent of the total amount overpaid in the disbursement. Another 11 employees combined were overpaid another $29,980.48, the report says.

In addition, the village did not make payments of $71,957.99 to former employees of the village, and it failed to properly withhold payroll taxes from payments, which were taxable wages, according to the State Auditor’s report.

The Village does not appear to have complied with IRS requirements, the State of New Mexico’s taxation requirements, state unemployment requirements, federal unemployment requirements, Social Security and Medicare taxation requirements,” the report says. “Non-compliance with payment of employment taxes can have serious consequences for employers and the employees. Employers may be subject to criminal and civil sanctions for failing to pay employment taxes.”

According to the State Auditor, this “improper report[ing]” on W-2s, means federal taxable wages were understated by $85,000 and state taxable wages were understated by more than $200,000. “The Village could be held responsible for all employee and employer tax and related penalties by the Internal Revenue Service,” the report says.

Other issues brought to light by the special audit include possible violations of the state’s Anti-Donation Clause, which prohibits the government from financially benefitting a private individual or business; violation of the village’s own nepotism ordinance; improper use of the State Fire Marshal fund; failure to safeguard Village assets; lack of evidence for a Council-approved budget; missing documents; potential abuse of mileage and per diem payments; and use of duplicate check numbers.

Another reimbursement identified by the OSA was a payment to Klaus for $798.19 “for repairs to a damaged 2012 Mazda” but “no specific information or back-up documentation was provided,” the report says, adding, “The Village processed what appears to be improper payments to Village Officials that lack adequate documentation and may give rise to a criminal referral under NMSA 1978 12-6-6.”

Additionally, the village “was unable to provide investigators with all personnel files” employed between 2006 and 2018. “It is unknown why the Village did not retain financial documentation,” the report says. “Additionally, the Village did not maintain the Quick Books file for the periods 2006 through 2010.”

Current village employees will “pay back as much as they can now and begin wage garnishment on their first paycheck in July” in amounts sufficient to be paid by the end of the year. For those who don’t pay, “the village will pursue collections and or litigation on a case by case basis to be decided by the governing body,” the report says.

The village’s response to potential violations of the Governmental Conduct Act, according to the report, include a public apology by Chavez, plans for thorough training of the Village staff and adherence to State and Federal laws as well as Village ordinances.

A copy of the special audit report can be found here.