Diane Denish (Photo by Heath Haussamen)
Insurance company Denish’s family controls works for agency whose board she chairs; situation was disclosed
While Lt. Gov. Diane Denish has chaired the New Mexico Mortgage Finance Authority’s board of directors, an insurance company controlled by Denish’s family has made money by helping the agency obtain various types of liability insurance.
Denish’s gubernatorial campaign says she has never had a personal financial interest in the company – at least for all practical purposes. And the agency has disclosed the relationship between Denish and the company in audits and at board meetings.
When the deal between Daniels Insurance and MFA began is unclear, but it continues to this day. How much money Daniels Insurance has made working for MFA also isn’t clear.
The company acts as a broker, identifying other companies that can provide types of insurance MFA is seeking. Daniels Insurance gets paid a commission through the company MFA hires, so there are no direct financial transactions between MFA and Daniels Insurance. MFA has few records relating to how much money Daniels made from its work for the agency.
Agency staffers – not the board Denish chairs – consider recommendations from Daniels Insurance and decide which companies to hire, according to Marjorie Martin, MFA’s attorney.
Martin said Daniels Insurance has acted as a broker for MFA on a number of types of liability insurance including auto, mortgage protection, workers compensation and lawyers’ professional liability.
Martin said MFA has been unable to locate records that indicate when the deal began. MFA record retention policies require that the agency maintain records for seven years. The MFA’s deal with Daniels Insurance is still in place, Martin said.
Chris Cervini, spokesman for Denish’s gubernatorial campaign, said Denish has acted appropriately as it relates to the deal between MFA and Daniels Insurance.
“As a matter of general practice, Diane always sought to be open about any conflicts or potential conflicts and to recuse herself where a potential conflict may exist,” Cervini said. “She never attempted to influence the MFA with regard to any company.”
He pointed out that MFA is a quasi-governmental organization that doesn’t use taxpayer dollars for operations.
Denish owns no stock in company
Daniels Insurance was founded by Denish’s father, Jack Daniels. When her father died in September 2003, according to an Albuquerque Journal article, his will called for Denish and his nephew, Michael Tinley, to handle distribution of his estate. The estate became bogged down in litigation between family members over changes that had been made to a 1994 trust agreement.
Denish’s father willed her 7,200 shares of stock in Daniels Insurance, according to the Journal. But Cervini said that, for all practical purposes, that financial interest in the company never became a reality.
It was determined during the course of settling the estate that only employees can own stock in the company under its articles of incorporation. Denish isn’t an employee, so she had to give up the stock that was willed to her, Cervini said.
“After the settlement of the estate in 2007, the stock in the company was transferred to her for a minute (literally) – the time it took for her to sign it over to the company,” Cervini said. “… Her father designated stock for her in his will, but she did not take ownership of it because of that rule.”
Denish’s cousin Michael Tinley and his son David Tinley are both employees of Daniels Insurance. Michael Tinley is listed in PRC records as the company’s director, and he runs the company’s office in Hobbs. David Tinley works in the company’s Albuquerque office.
Situation was disclosed
Denish joined the MFA board and became its chair in 2004. The MFA audit for that fiscal year discloses the financial relationship with Daniels Insurance.
“The Authority purchases various insurance policies from an insurance company that is controlled by the family of the Authority’s chairman of the board,” the audit states.
The agency made similar disclosures in its 2005, 2006, 2007 and 2008 audits, but not in its 2009 audit.
Disclosure of the relationship between Denish and the company was also made at board meetings.
For example, according to the minutes of the July 16, 2008 board meeting, a staffer “informed the Board that this disclosure from the Chair discloses her family owns a controlling interest in the Daniels Insurance Company which the MFA has been doing business with for a number of years.” (You can read Page 1, Page 2 and Page 3 of the minutes.)
How much has Daniels Insurance made working for MFA?
Since Daniels Insurance isn’t paid directly by MFA, how much the company has been paid for its work isn’t clear from public records. But there are a couple of clues in disclosure documents.
The minutes of the July 16, 2008 meeting state that the total commission Daniels Insurance made in 2008 was $7,526. And the disclosure in the 2006 audit states that the total amount “of these particular insurance expenses for 2006 and 2005 are $10,000.”
Martin said MFA has no contract or bidding documents “related to procurement of services from Daniels Insurance Company.” The services provided by Daniels fall into the “small purchases” exemption to the agency’s procurement policies. That means the services have been valued at less than the $25,000 per calendar year. (In 2009, the agency increased the dollar amount allowed under the small purchases exemption to $50,000, but before that it was $25,000.)
Michael and David Tinley both said the company couldn’t discuss its deal with MFA, for privacy reasons, unless the MFA directed the company to do so.