Martinez’s office had deals with staffer’s husband

District court had a similar arrangement to provide after-school services for juveniles; Martinez says it made sense to use the same company

District Attorney Susana Martinez’s office paid companies owned by an employee’s husband for several years to mentor juveniles in an after-school martial arts program.

The Third Judicial District Court in Las Cruces entered into a similar arrangement with one of the companies. Martinez’s gubernatorial campaign and Kelly Kuenstler, who was the office manager in Martinez’s office while her husband’s companies were being paid for the services, said it made sense to put the juveniles from the DA’s pre-prosecution diversion program (PPD) in the already existing class for juveniles in the court’s drug court program.

Most of the payments to the companies – Steel Dragon, which was co-owned by Kuenstler’s husband Abe G. Martinez, and Dragon’s Den, which Abe Martinez owned by himself, were made before changes to the state’s Governmental Conduct Act in 2007 that may outlaw such deals. (Susana Martinez and Abe Martinez are not related.)

However, the last payment to Abe Martinez’s Dragon’s Den was for services rendered in July 2007. The new provisions in the Governmental Conduct Act took effect July 1, 2007.

According to documents provided by Susana Martinez’s campaign, the martial arts classes were scheduled in three-month blocks. It’s not clear whether the July 2007 classes were scheduled before the changes to the act took effect.

Susana Martinez’s campaign says a disclosure form related to the Abe Martinez/Kelly Kuenstler situation was voluntarily filed with the Secretary of State’s Office, but it could not produce a copy of the form. The campaign said the form is “no longer available in the DA’s office,” but it referred to an audit document that says the disclosure was filed in fiscal year 2004.

That’s the same response Martinez gave when asked about her office doing business with another employee’s company, Janetta Hicks’ Titan Office Supply. You can read about the Titan situation from the Albuquerque Journal here, here and here.

Details of the Steel Dragon and Dragon’s Den arrangements

The arrangement between Susana Martinez’s office and Steel Dragon, which was co-owned by Abe Martinez and Steven Estrada, started in December 2003 and continued through September 2004, according to invoices and payment vouchers obtained by NMPolitics.net. Later, Abe Martinez formed Dragon’s Den, through which he was paid by Susana Martinez’s office for services in 2007, invoices and payment vouchers indicate.

The total paid to the two companies – $3,557.95, according to the documents obtained by NMPolitics.net – is much smaller than the $60,000 in office supplies and law enforcement equipment Susana Martinez’s office bought from the company owned by Hicks, who at the time was one of the top prosecutors in the office.

Abe Martinez began working at the DA’s office about the same time the deal with Dragon’s Den stopped. Susana Martinez’s campaign said he became director of the DA’s pre-prosecution division on July 27, 2007. It’s a job he still holds today.

District court records provided by Martinez’s gubernatorial campaign show that at least as early as February 2004 Steel Dragon entered into a contract with the court – separate from its deal with Susana Martinez’s office – for individuals in the juvenile drug court program. The contracts with district court that were provided by Susana Martinez’s campaign extended through June 30, 2005.

The district court contracts provided by the campaign took effect three months after the DA’s office started paying Steel Dragon, but Kuenstler and the campaign said the court had a deal with Steel Dragon first. Steel Dragon’s proposal to district court is dated April 3, 2003.

“The contracts stemmed from the Juvenile Drug Court in District Court,” Kuenstler wrote in an e-mail. “The DA’s Office just basically ‘piggy backed’ off of that contract so that the Juvenile Pre-Prosecution Diversion kids had the same curriculum as the Juvenile Drug Court kids.”

Ryan Cangiolosi, Susana Martinez’s campaign manager, said there was no contract or bidding process. He said none was required, “nor was it practical as this program was designed to be consistent with an existing contract with district court for juveniles in drug court. The juveniles in the district court were in the same drug court class as the juveniles in the PPD program.”

Susana Martinez authored a letter to the state’s Department of Finance and Administration (DFA) in January 2004 justifying the deal with Steel Dragon.

“The clients we work with in our program are at risk, first time offender juveniles who we are trying to divert from the criminal justice system,” the letter states. “The after school program we are placing them in offers after school tutoring, mentorship, drug, gang & alcohol related courses and self defense through the martial arts.”

The letter doesn’t mention Abe Martinez or his relationship to Kelly Kuenstler, who is now the director of the New Mexico District Attorney’s Association.

Changes to the Governmental Conduct Act

There’s only one payment from the DA’s office to Dragon’s Den – $192.83 for services rendered in July 2007 – to which the July 1, 2007 changes to New Mexico’s Governmental Conduct Act might apply. Under those changes, the act states that an agency can’t enter into a contract for services with a family member of an employee, if the employee has a substantial interest, without public disclosure, and it can’t enter into a sole-source or small-purchase contract in that scenario under any circumstances.

But the DA’s office had no contract with Dragon’s Den; Kuenstler and Susana Martinez’s campaign say none was required.

Another provision in the Governmental Conduct Act that took effect July 1, 2007 states that a public employee can’t sell services – “directly or indirectly, through the public officer’s or employee’s family or a business in which the public officer or employee has a substantial interest” – to the agency where the employee works.

I asked Susana Martinez’s campaign a number of questions for this article via e-mail, including whether the district attorney believes the deals with Steel Dragon and Dragon’s Den would be illegal today under the changes to the act, and whether she believes such deals – in which employees of the office have a financial interest – should be legal and allowable.

Cangiolosi’s responses to my list of questions ignored those about the Governmental Conduct Act and whether such deals should be legal today.

Martinez was quoted several weeks ago by the Journal, about the deal with Titan Office Supply, as saying she would do it again as governor “so long as there was transparency in that transaction” and it saved money.

The procurement process

It’s illegal under the state’s Procurement Code for employees to participate “directly or indirectly” in a procurement process when they know that they or any member of their immediate family has a financial interest in a business seeking the contract.

Again, there was no contract in the deals with Steel Dragon and Dragon’s Den. Regardless, though Kuenstler was normally involved in the office’s procurement process, Kuenstler and Susana Martinez’s campaign said Kuenstler had no role in the decisions to enter into the agreements with Steel Dragon and Dragon’s Den.

Kuenstler said the decision was Susana Martinez’s.

“I was not allowed to participate in this decision,” she said. “Normally, I was involved in the agency’s procurement process, but not in the case of Steel Dragon or Dragon’s Den.”

Cangiolosi said the same, adding that the decision to enter into the deals with Abe Martinez’s companies had nothing to do with the fact Kuenstler is Abe Martinez’s wife. Cangiolosi also said, “Before beginning the program, approval was sought and granted by DFA.”

Susana Martinez’s Jan. 14, 2004 letter to DFA justifying the program came after Steel Dragon’s first invoice to the DA’s office on Dec. 2, 2003. Susana Martinez’s campaign provided no other documents related to her office seeking approval from DFA.