Legislators seek criminal probes of housing scandal


The majority of Doña Ana County’s legislators have signed a letter asking the state attorney general and U.S. attorney to investigate the operations of the state’s housing authority system, and to specifically probe the Region VII authority based in Las Cruces.

The Las Cruces authority ceased operations last year in the midst of the scandal that toppled the state’s housing authority system. The attorney general’s office is already investigating the situation in part because the Region III authority based in Albuquerque defaulted last year on $5 million in bonds it owed the state.

“We know each of you are aware of the serious allegations of possible wrongdoing, including potential criminal wrongdoing, at the regional housing authorities in the state. We urge you to investigate these allegations fully,” the letter states. “We specifically urge you to investigate the activities of the Region VII Housing Authority, based in Las Cruces and consisting of Doña Ana, Sierra and Socorro counties.”

All seven of Doña Ana County’s House members were joined by Rep. Janice Arnold Jones, R-Albuquerque, in signing the letter. Three of Doña Ana County’s Senators – Mary Kay Papen, D-Las Cruces; Leonard “Lee” Rawson, R-Las Cruces; and Dianna Duran, R-Tularosa, were joined by Sen. John Arthur Smith, D-Deming, in signing it.

Sens. Mary Jane Garcia, D-Doña Ana, and Cynthia Nava, D-Las Cruces, did not sign the letter, which you can read by clicking here.

The letter is certain to draw more attention to the potentially far-reaching scandal even as a bill that would reshape the state’s affordable housing system appears to have hit the brick wall of a bureaucracy that may not want it approved.

Senate Bill 519, sponsored by Papen, would, over a period of several months, shut down the housing authorities and replace them with an affordable housing system overseen by the New Mexico Mortgage Finance Authority. This is Gov. Bill Richardson’s proposal to deal with the system’s problems.

The bill has been assigned by Sen. Majority Leader Michael Sanchez, D-Belen, to three committees – Public Affairs, Corporations and Transportation, and Finance. Bills that leaders want to pass are generally assigned to two committees. Those they want to kill or at least slow down commonly have to be endorsed by three committees before reaching the Senate floor, many lawmakers say.

Papen declined to comment on that, but said she signed the letter to the attorney general and U.S. attorney because of the importance of the situation.

“This is something that has not been run the way we should be doing business in New Mexico,” Papen said of the housing authorities. “We want them to look at it. If there is something drastically wrong, we want them to take action because this is not the way we want to do business in New Mexico.”

The attorney general’s office has had an ongoing civil and criminal investigation for several months that has focused on Region III. Phil Sisneros, spokesman for Attorney General Gary King, said the office would be “happy to expand it to include what they’re requesting” – a more thorough vetting of Region VII.

Norman Cairns, spokesman for the U.S. Attorney’s Office, said the office is a prosecutorial agency, and said the request would be forwarded to the appropriate federal investigative agency, most likely the FBI.

The housing authority scandal is a hot potato in the Legislature because of the relationship between former Region III Director Vincent “Smiley” Gallegos and Speaker of the House Ben Lujan. Gallegos is a former legislator and current lobbyist who, in past sessions, has spent a lot of time in the speaker’s office.

Among the scandals that have plagued the housing authority was the disclosure late last year that a top aide to Lujan had been living rent-free in a home owned by the Region III authority. After the situation was revealed by the Albuquerque Journal, the aide paid back rent. She continues to live in the home.

Lujan has repeatedly said he didn’t know about the situation until a reporter told him about it.

Reviews by the governor’s office and State Investment Council last year found widespread misuse of the housing authority bond money that may have included criminal activity. Almost $900,000 in bond money went to Gallegos as salary, benefits, and a loan, though the bonds required that the money be spent to construct and rehabilitate low-income homes.

The Region VII authority was restarted several years ago with help from Region III and, in many ways, was being controlled by Gallegos. He funded its operation with the bond money, which was also contrary to the requirements of the bonds. In addition, one of the most intriguing misuses of money identified by the State Investment Council was a $300,000 loan the authority made to a private company owned by Gallegos under the guise of purchasing more than 30 lots in Las Cruces, even though the properties had already been purchased by the authority.

Gallegos repaid the loan, with interest, on July 31 of last year, the day before he resigned.

One thought on “Legislators seek criminal probes of housing scandal

  1. This is just more talk no one will go to jail for all the money that was missing. How can people that took advantage of poor people get away with this housing situation.