A Hobbs resident has asked the State Auditor’s Office to investigate what he calls “less-than-arms-length” city contracts with an attorney and a consultant from Pennsylvania, where Hobbs’ city manager used to work.
Nicholas Maxwell alleges in his complaint that the contracts were fraudulent. An examination, he wrote to State Auditor Tim Keller, “is enough to raise eyebrows” about whether Hobbs City Manager J.J. Murphy “knowingly and intentionally” put his own interests before the public’s.
Maxwell quoted the state auditor’s website, which states, “potential conflicts of interest” could include situations in which “the individual influencing the contract award or administrating the contract… has such a close association with one or more of the company’s principals as to create reasonable doubt as to his/her ability to place fiduciary duty above personal bias.”
Murphy, a former city administrator in Wilkes-Barre, Penn., said he’s confident that he and the City of Hobbs “have been compliant with all local, state and federal procurement policies.” And he pointed out that another complaint Maxwell filed, alleging that the Pennsylvania attorney was improperly practicing law in New Mexico, was dismissed by the N.M. Supreme Court Disciplinary Board.
At issue in Maxwell’s complaint to the state auditor are two contracts:
- Murphy, the complaint states, authorized a Hobbs city contract for legal services with Pennsylvania attorney Alan F. Wohlstetter Jr. in November 2014 related to the creation of a police video surveillance system. The contract was capped at $50,000. Murphy and Wohlstetter already knew each other: The attorney had a contract with Wilkes-Barre when Murphy was city manager there, and the two later worked as contractors on a project in Wilkes-Barre after Murphy left the city administrator job.
- The City of Hobbs issued a request for proposals (RFP) for a consultant to help improve its waste and recycling program in March 2014 with a deadline that was less than 10 days away. The city then hired The Medico Consulting Group from Pennsylvania — the only qualified bidder, according to Maxwell’s complaint — and paid the company $28,500 to be told that the city should stick with its existing vendor and “request a new and updated proposal to extend its services.”
The State Auditor’s Office confirmed that it has an “open” case involving the two contracts. It wouldn’t release Maxwell’s complaint or related records because the case is pending. Maxwell, however, provided his complaint to NMPolitics.net. Attached to the complaint are dozens of city documents Maxwell obtained through records requests. News articles are also attached.
Wohlstetter was making $535 per hour when he worked on Wilkes-Barre’s proposal to lease a parking garage and other parking assets to a private company, The Citizen’s Voice in Pennsylvania reported in 2012. The firm that employed Wohlstetter at the time, Fox Rothschild, also hired Murphy at a rate of $300 per hour to work on the parking proposal after he left the Wilkes-Barre city administrator job, the newspaper reported.
Both men were named in a 2014 subpoena related to a federal investigation of the parking proposal that appears to have ended without charges being filed.
Then Murphy moved to Hobbs to become the city manager. And eventually, the city contracted with Wohlstetter.
“I believe, based upon previous reporting, that Murphy and Wohlstetter were ‘partners’
long before Murphy became the city manager of Hobbs,” Maxwell told NMPolitics.net. “Why did Wohlstetter get an exclusive city-manager-approved contract with Hobbs?”
As for Medico, Maxwell took issue with the short RFP process. He said he believes Medico “could only get through the Hobbs RFP maze and become the Commission-approved sole-qualified contractor with Murphy’s help.”
Reached by phone, Wohlstetter declined to discuss the complaint with NMPolitics.net. Angelo Medico of The Medico Consulting Group hasn’t responded to two emails and a phone call seeking comment.
Murphy under scrutiny
Murphy, who became the Hobbs city manager in 2012, has come under regular scrutiny in recent months. A group of residents lobbied for a year and recently convinced city commissioners to begin webcasting their meetings. Two of those residents — Byron Marshall and Jeanie Coates — have authored guest columns published by NMPolitics.net that criticize Murphy for receiving an increasingly generous contract and for a policy of paying out unused paid time off that earned Murphy a check of more than $11,000 in January 2015.
Coates suggested in a column earlier this year that the city commission should terminate its contract with Murphy.
“For all the free-wheeled spending Murphy has either gotten away with or attempted, why not just terminate Murphy’s employment and pay him his severance now?” Coates asked. “Doing so would be just a fraction of what other spur-of-the-moment, half-baked ideas costing in the millions will pop up during what remains of his contract.”
Meanwhile, Murphy has been applying for other city manager positions, including the open job in Las Cruces. As NMPolitics.net reported in July, Murphy claimed to be a finalist for the Las Cruces job earlier this year when applying for a city manager position in Dunedin, Fla. But officials in Las Cruces had not named finalists for the job, and Mayor Ken Miyagishima said he had “never met with, spoken to or interviewed Mr. Murphy ever.”
The most recent public criticism of Murphy came in a commentary Marshall authored. It details the allegations that are central to Maxwell’s complaint to the state auditor. Maxwell published Marshall’s column on a website he runs that watchdogs Hobbs city government.
Marshall wrote about Wohlstetter joining a new law firm — Zarwin, Baum, DeVito, Kaplan, Schaer, Toddy P.C. — and expressing “his gratitude to Murphy for helping him secure business within the first few weeks of starting his new job.” He quoted a March 17, 2016 email to Murphy, in which Wohlstetter wrote, “Thank you so much for starting me off here with the opportunity to work together. It meant a tremendous amount to me, JJ.”
“Thick as thieves, these two,” Marshall’s column states.
As for The Medico Consulting Group, Marshall’s column states that it didn’t register as a business in Pennsylvania until May 20, 2014 — 13 days before Hobbs city commissioners approved the company’s contract, and weeks after the RFP deadline.
Marshall, who spearheaded Hobbs’ webcasting movement, said he hopes Maxwell’s complaint to the state auditor leads the city “closer to what can objectively be called an open and transparent city government that also empowers citizen involvement.”
“I want commissioners to grill employees on their proposals in public meetings, not through one-on-one phone conversations and not behind closed doors,” Marshall said.
He also criticized the Hobbs newspaper, the News-Sun, for being “unwilling to ask the hard questions.”
“Through Murphy’s four years, Hobbs has paid a hefty price,” Marshall said. “What could we have saved if the newspaper had also asked the hard questions in its news reporting?”
Marshall said the allegations in his column and Maxwell’s complaint “stem from tips that I’ve received from City of Hobbs employees over the last year since I began calling for webcasting of meetings.”
City manager of the year
Thus far, the criticism of Murphy hasn’t stuck. Last week, he was voted the state’s city manager of the year by the New Mexico Municipal League. According to the News-Sun, Hobbs city commissioners have begun discussions on whether to extend Murphy’s current contract, which expires in August 2017.
This isn’t Maxwell’s first complaint. Earlier this year he alleged to the N.M. Supreme Court’s Disciplinary Board that Wohlstetter was unauthorized to practice law in the state. The Board found no violation, Chief Disciplinary Counsel William D. Slease wrote in a July 28 letter to Maxwell that Murphy provided to NMPolitics.net.
Murphy also provided this statement to NMPolitics.net about Maxwell’s complaints:
“I have not seen this specific article but the City of Hobbs has recently been made aware of two complaints filed with state agencies by Mr. Maxwell. One has quickly been dismissed and we are waiting for the other to be resolved before commenting.
“I had prepared a guest commentary for publication by NMPolitics.net addressing the issues in Maxwell’s complaint but would prefer to wait to submit it until the one pending state auditor’s investigation is complete to not interfere with the investigation. The City of Hobbs and I fully believe we have been compliant with all local, state and federal procurement policies.”
Maxwell isn’t giving up. “My hope is that the state auditor will agree with my complaint — that less-than-arms-length municipal dealings did occur — and will file his own complaint with enforcement agencies at the conclusion of his investigation,” Maxwell said.
Keller’s office can make determinations on whether government rules or laws were violated but can’t enforce the law. The auditor could, if he finds violations, refer his findings to the attorney general, the local district attorney, or another law enforcement agency.
Beyond confirming the existence of an open case, Keller’s office provided no comment for this article.