Witnesses have been subpoenaed to appear in early February before a grand jury in the drawn-out investigation of scandal in the state’s housing authority system, The Associated Press is reporting.
The probe has been ongoing since before Gary King took office in early 2007, and many had begun to wonder whether it would ever lead to criminal charges. Many have been shocked at the egregious nature of the scandal, which began in mid-2006 when the Albuquerque-based Region III Housing Authority defaulted on $5 million in bonds it owed the state.
Soon thereafter, the State Investment Council released a report that found widespread misuse of the bond money, which was supposed to be spent on houses. Instead, almost $600,000 went to former Region III Director Vincent “Smiley” Gallegos as salary and benefits. Almost $700,000 was loaned to the Las Cruces-based Region VII authority, which did little to provide affordable housing and has since shut down.
Perhaps the most intriguing misuse of money revealed in the investment council report was a $300,000 loan the housing authority made to a private company owned by Gallegos under the guise of purchasing more than 30 lots in Las Cruces — lots that had already been purchased by the authority.
There has been some response to the scandal in the last couple of years. The AG obtained court orders to boot three tenants from homes owned by Region III because they didn’t qualify for affordable housing — two employees of the authority and a board member. A Bernalillo County Metro Court judge was disciplined by the Supreme Court for a conflict of interest related to the scandal. And the State Investment Council is suing Gallegos and Albuquerque bond attorney Robert Strumor in an attempt to recover taxpayer money that was lost when Region III defaulted on the bonds.
According to The Associated Press article, which Santa Fe New Mexican reporter Steve Terrell posted on his blog, Albuquerque lawyer Paul Kennedy confirmed that he’s representing Gallegos but would not comment further. The news service confirmed the convening of the grand jury with “a person familiar with the criminal investigation who asked not to be named because of the confidential nature of the proceedings.”
Rumblings about a grand jury have been ongoing for several weeks. In December, AG spokesman Phil Sisneros told me that, because grand-jury proceedings are secret, he would be prohibited from discussing them even if he knew about them.
Meanwhile, state Auditor Hector Balderas told The Associated Press today that he will release a report on the housing authorities next week. He’s been conducting an audit of the situation and cooperating with King’s investigation.
“I’m hopeful that this report will provide a clear financial view of what happened to these regions,” Balderas was quoted by the news service as saying. He added that he has “directed my auditors to cooperate and provide any documentation that might be helpful to the attorney general’s office.”
Update, 8 a.m.
Here’s Albuquerque TV station KRQE’s report on the grand jury, which includes analysis by me: