Monday, November 09, 2015

Indictments? A Seminal Moment Nears For Gov. Martinez And Her Top Political Adviser Jay McCleskey; Feds Investigation Of McCleskey Confirmed; Role Reversal For New Mexico's "Shadow Governor"; He's Now The Target; Our In-Depth Coverage, Analysis And Perspective  

McCleskey & Martinez
If Jay McCleskey is charged, would he step down and Susanna Martinez would become governor?

That's a Facebook post from politico Chris Catechis that was funny but also rang with truth. It is no exaggeration to say that the man known as the "Shadow Governor" has imposed virtually one man rule over the Martinez administration. Friday night a shadow was cast over him and it's the story we now dive into on your behalf. . .

Will he or won't he? That's the question on the lips of anyone with even a mild interest in state politics as they await what could be the most potent dose of political news administered in New Mexico in many years--whether a federal investigation of Jay McCleskey, probably the most powerful gubernatorial political adviser in state history, will culminate with indictments or end with a whimper.

News of the probe has circulated on the rumor mill for months but is now confirmed, with the Feds investigating Gov. Martinez's campaign accounts, the use of funds for her 2010 inauguration as well as state contracts, according to a Friday night tweet from CNBC reporter Daniel Libit. He wrote the definitive journalistic piece on the power and path of McCleskey for the National Journal in 2013. Among the sources the article drew upon were years of coverage and scrutiny of McCleskey by NM Politics with Joe Monahan. 

The headline over that piece was: "The Man Who Discovered Susana Martinez Could Also Be Her Downfall." Is that about to become prescient?

The potential ramifications of any legal action against McCleskey is king-sized. First and foremost is the impact on Gov. Martinez who has tied herself to McCleskey's hip since undertaking statewide politics. Will she be dragged directly into any scandal involving him? Advancing the chess pieces further the question arises about the future relationship between Martinez and McCleskey, if indictments rain down. Both know so much about each other.


Getting on the record comment from the Feds and even off the record comment is notoriously difficult. Here's what we are getting from our Legal Beagles:

It appears McCleskey may have received a target letter from the Federal grand jury several months ago. It's Justice Department policy to advise you of your rights if you are a “target” or “subject” of a grand jury investigation. They do it with a “target letter.” When you get one, you immediately know it's time to lawyer up.

As Libit tweeted, the investigation appears multifaceted. It may include alleged bid rigging by the Martinez administration for the racino lease at the Downs at ABQ, a story that received blanket coverage here several years ago and was the subject of an earlier FBI investigation that concluded without indictments, but now appears to be back.

Campaign finances--This is a big net as McCleskey received millions of dollars for media buys and consulting fees over the years. Campaign insiders have previously questioned how those funds were accounted for.

And then there's all the money raised for the Governor's 2010 inauguration. She raised nearly $1 million--heavy with big oil money--and McCleskey was the one running it. The Feds appear to be taking a close look.

Then there's this from the Sunday New Mexican:

Federal investigators have subpoenaed records from the New Mexico Taxation and Revenue Department looking into whether the agency performed retaliatory audits on former members of Gov. Susana Martinez’s political team or state officials who ran afoul of her administration, according to a person familiar with the investigation.
It is unclear whether the probe is in any way linked to a simultaneous federal inquiry into Martinez’s top political adviser, Jay McCleskey.

That's a biggie for Gov. Martinez. Like the Downs deal, that's government business you're talking about, something that can't be dismissed as not being in the loop about.

Finally, there are indications that the Feds probe is broader than the list above, delving into other government operations and putting even more pressure on the Fourth Floor.

Martinez and McCleskey were not talking over the weekend as they were getting sucker punched with confirmation of the FBI investigation and the leak on the possible illegal tax audits. You could almost call it a taste of their own medicine.

The only peep we heard directly from the Martinez camp was a tweet from her communications director arguing that if there were politically motivated tax audits, how come he was recently audited? Really? Tell that to the Republicans who disagreed with the administration and report that they were audited and harassed. Like we've long said, the Guv's Machine is pretty darn good at offense but downright awful on defense.


We've got our Legal Beagles rounded up and we put them on the trail this weekend to sniff out how the Feds are handling the big story:

Joe: The reason for the activity now is that the Feds may be running against a statute of limitations problem which is five years. Some of the potential charges involve the Governors first inauguration which will be 5 years ago this January. Also, the Downs at ABQ racino lease award occurred the first year of her first term which is also approaching 5 years. 

The Feds will not want to do a "piecemeal" approach on the charges  and will lump all charges and all defendants in one charging document, either a grand jury indictment or a criminal complaint filed by the US Attorney office. The Feds approach will be to see who will want to cut a deal first and to testify in exchange for no jail time, which is the exact approach they used in the ABQ Metro Court Corruption case.

So what about Gov. Martinez? Could she benefit from the approaching statue of limitations? Probably not. Back to the Beagle house:

The use of a "John Doe" is a very common practice used by prosecutors to preserve charges and to prevent charges from being lost because of the Statute of Limitations. Once a defendant's identity is confirmed without any doubt, the charging document is amended to identify that person. In the McCleskey case, the Feds may indict "john does" to preserve the charges and add names latter. A named and charged Defendant could then provide a positive identification and evidence against a co-conspirator and the name added latter. 

Our good friend in this case--once indicted--could sing like a canary and identify as a conspirator the person who gave him orders and instructions to do tax audits or solicit donations to secure the racino lease. Another term used is unindicted co-conspirators.


McCleskey's power is so far reaching with the administration that he has earned the nicknames the "Shadow Governor" and "The Fifth Floor." His allies populate most key government posts. In the past six years he has profited mightily by heading all of Martinez's political operations, including her gubernatorial campaign, her PAC and a super PAC. Recently he has been drawing consulting fees of over $21,000 a month from Martinez's PAC, even though she can't seek re-election. He also has been handsomely rewarded with contracts from the Republican Governors Association. In addition, the polling firm that employs McCleskey's wife, Nicole, has received ample business from Gov. Martinez. (Here's more on the McCleskey money)


Adam Feldman
The mention of McCleskey's name instantly evokes fear and loathing among the legions of enemies he has made since popping onto the scene in the late 90's. He has created and supervised one of the most effective political machines the state has ever seen. And in relentlessly pursuing victory he has unabashedly employed the politics of personal destruction with an Nixonian vengeance.

The unfounded smear, financial intimidation and threats and bullying, accompanied by a startling arrogance and an in-your-face hubris have been his go-to tools for taking power.  It was no surprise to see social media burst with glee over his apparent legal woes Friday night, with few supportive comments.

McCleskey has not commented on the investigation but Darren White, his longtime ally, a former Bernalillo County Sheriff and a controversial figure in his own right, posted a tweet on the story.

Without irony, White called those spreading the news about McCleskey "haters."

Importantly, White did not deny the existence of an investigation but instead conjured up a bizarre conspiracy theory that had news of the investigation being used to divert attention from developments in an email scandal that has enveloped former NM Dem Party Chairman Sam Bregman.

Darren White ‏@darrenPwhite Nov 6
Day after Bregman & Co. get outed. . . for being involved in the email scandal, haters go right back to playing the same hand.

That tweet was retweeted by political operative Adam Feldman. He is also a McCleskey acolyte. Feldman, who has frequently leveled attacks against Martinez's critics via Twitter, suddenly went dark on social media in mid-September. Feldman's direct mail firm Red Tag Strategies gets most of its business from McCleskey Media Strategies thus the investigation of Martinez's campaign finances would likely touch on his work.


Any charges against McCleskey could hurt or even derail Martinez's national ambitions. She is poised to become the next chair of the Republican Governors Association at a meeting to take place in less than two weeks.

The White tweet may have given us a clue on a a possible McCleskey/Martinez defense--that the charges against him are politically motivated and meant to damage Martinez who has been mentioned as a possible 2016 GOP VP pick.

Previously, the administration has called media critics of the nation's first female Hispanic Governor "racist." We might see that line of attack as well in response to any indictments. There is a problem with that that, however. Martinez has repeatedly said she is not interested in the VP slot and is not a candidate for anything.

A fall by McCleskey could also dampen GOP efforts to take over the state Senate next year and perhaps give the Dems a better shot at taking back the state House. His most singular accomplishment may not be Martinez's election victories but engineering the 2014 GOP takeover of the House for the first time in 60 years.

Don't forget ABQ Mayor RJ Berry. McCleskey was key in electing him in 2009, before Martinez won the governorship in 2010. Berry has populated city government with McCleskey allies (i.e. Chief Administrative Officer Rob Perry, APD Chief Eden) and while perhaps not a "Shadow Mayor" his reach in city affairs is far and deep. Trouble for McCleskey would surely mean trouble for RJ should he undertake a Guv run in '18.


The state was rocked when we broke Libit's news on social media Friday night. Still, New Mexico reporters, perhaps wary of anonymous sources, did not pick up on the story. Instead it exploded on social media with retweets and Facebook postings.

Around midnight the Santa Fe New Mexican--which had apparently been working the story for a while--posted a report confirming the investigation news Libit broke. To confirm the federal probe the paper used "a prominent New Mexico Republican" who had been interviewed by the FBI.

The ABQ Journal has not yet reported the news of the federal probe. KRQE and KOB TV news carried it over the weekend.  However, KOB did not put the big story on its web site so we can't link to it. (On Monday it was posted). The Journal traditionally shies away from using anonymous sources, but it is also well-known for being very protective of Martinez. To say the least.

Investigative reporters for the three TV stations have shied away from any in-depth or adversarial journalism in reporting on McCleskey or the Martinez administration since its advent in 2011.

The McCleskey story is particularly troubling for the Journal. It's the third big story they have been scooped on this year. The other two were the APS scandal that led to the resignation of the superintendent and the campaign finance scandal that ended with the resignation of Secretary of State Dianna Duran. They seem to be becoming a niche player rather than a mass medium--appealing to a conservative readership ala Fox News and not really concerned about their reputation outside of that audience.

New Mexico journalism has been hijacked and ransacked--sometimes willingly--by the Martinez Machine. If  there were ever a time for navel gazing by the ink stained wretches and their electronic brethren this is it.

There has been only skimpy news coverage of the real political narrative taking place in the state the past six years--the one with Jay McCleskey at the center of power. Outside of this blog the Santa Fe Reporter, sometimes the New Mexican and national reports from the National Journal and Mother Jones, the mainstream media has rarely touched on McCleskey, ignoring his immense influence and unprecedented hold on state politics. In addition, no prominent state Democrats have taken on the role of critic of the administration, further keeping McCleskey's power and influence under the radar and giving him free rein.

Given that backdrop a corruption scandal of this magnitude would be received like shock treatment by most voters who perceive Gov. Martinez as an older sister or aunt who reads to school kids and seems on the surface to have a pleasant demeanor. Or they see her as a tough-as-nails former prosecutor and the last person they would suspect of harboring widespread corruption or engaging in it herself.

As the political community and activist voters are fully aware, there is much more to the real Susana Martinez. If her longtime Svengali is upended, the public may finally realize it as well.

This is the home of New Mexico politics.

E-mail your news and comments. (jmonahan@ix.netcom.com)

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(c)NM POLITICS WITH JOE MONAHAN 2014. Not for reproduction without permission of the author&gt
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