State agency doles out $1M for questionable contracts

A three-month KRQE News 13 Investigation

Larry Barker
Larry Barker

SANTA FE, N.M. (KRQE) – January 21, 2015. A state government attorney sends an urgent email to the Governor’s legal staff.

“There is a very important matter regarding a contract … that I need to discuss with you. If I sign that document, it will create an appearance of impropriety to Governor Susana Martinez’ administration (e)specially if Larry Barker gets ahold of the information.”

Guess what? I’ve got the information. What’s in the documents? Well, as scandals go this one’s a doozie. It involves a million dollars in state and federal funding, sweetheart deals, and abuse of power.

r_lima_email_1-21-15-page-1
Division of Vocational Rehabilitation’s own Counsel’s email warning of “an appearance of impropriety”.

The focus is on an obscure state agency hidden away in Santa Fe. The Division of Vocational Rehabilitation, or DVR, provides counseling and financial assistance to the state’s disabled population.

Behind the scenes, however, DVR is a troubled agency. The ‘trouble’ relates to a million dollars in contracts that were not handled by the book. It’s a messy situation that insiders call ‘bizarre,’ ‘outrageous,’ even ‘illegal.’ But ask top bureaucrats about it and you’ll get a blank stare.

“I’m very comfortable with what’s happened,” says Paul Aguilar, the Public Education Department’s Deputy Secretary.

“I am not aware of any improprieties,” says DVR Director Joe Cordova.

In fact, a KRQE News 13 investigation finds DVR managers have been repeatedly warned about wrongdoing at the agency. Red flags were raised by DVR Legal Counsel Rosa Lima, DVR Assistant Legal Counsel Mel Savarese, DVR’s then Chief Financial Officer Veronica DeLeon-Dowd and DVR’s then Interim Director Annette Ortega.

It started when DVR wanted to hire, on contract, a Veteran’s Outreach Coordinator. DVR wanted someone who could locate disabled veterans and get them to come to one of the DVR offices and apply for services. DVR issued a “Request For Proposal” to invite prospective bidders to apply for the Veteran’s Outreach job.

To qualify for the Veteran’s Outreach Coordinator, applicants did not need any experience, education or training. In fact, the only qualification for the contract was that applicants be a veteran.

An unemployed Santa Fe man named Clarence Gallegos was the only bidder. Even though Clarence’s wife, Eileen Marrujo-Gallegos, was a manager at the Public Education Department (which oversees DVR), Gallegos was awarded a lucrative four-month contract to do Veteran’s Outreach.

DVR paid Gallegos $38,947 for the four-month job which was billed at $90 an hour to locate veterans with disabilities and assist them in applying for services to the Division of Vocational Rehabilitation. Gallegos billed the state for meeting with veterans, handing out business cards and doing administrative work. Much of his time was spent posting flyers in post offices, bars, liquor stores, a motorcycle shop, and fraternal organizations.

Gallegos failed to comply with the terms of the four-month contract by not holding a minimum of two town hall meetings. However, in July 2015, someone at DVR decided to pump another $108,000 into his pocket with a new contract. Because the new contract (for the 2016 fiscal year) was not put out for competitive bid it was in apparent violation of the state’s procurement law.

This time Clarence Gallegos billed the state $56.35 an hour which is more than twice what DVR’s own rehabilitation counselors are paid. In fact, a man with no college degree, experience, or training earned more than DVR’s Director Joe Cordova, more than Attorney General Hector Balderas and even more than Governor Martinez.

Last year, DVR put the Outreach Coordinator job up for bid for the 2017 fiscal year. This time there were two bidders, Clarence Gallegos and a fired state cop named Jason Griego. DVR awarded each man $433,444 contracts to be paid out over four years.

According to DVR Director Joe Cordova, “That’s not a lot of money compared to what we do in general in Vocational Rehabilitation Services.”

DVR Attorney Rosa Lima refused to sign off on the contracts because, she said, they did not comply with the law.

“I was not comfortable with all those violations to sign a contract that could cause problems … in the future,” Lima said.

After Lima refused to authorize the contracts, she was sent home on paid Administrative Leave. That was in August last year. She remains on paid leave today. DVR’s Director Joe Cordova would not comment on Lima’s leave citing personnel rules. Lima says the action was retaliation for not signing the contracts.

With Lima gone, Joe Cordova found another lawyer willing to sign off on the contracts.

However, shortly before cashing in on his latest sweet deal, in October, Clarence Gallegos ended up in jail. Albuquerque Police officers were called to a local bar after Gallegos became belligerent and caused a disturbance. When he refused to leave the premises he was arrested for criminal trespass. The case later dismissed.

Clarence Gallegos and Jason Griego will each collect through fiscal year 2020 about $108,000 a year to do veteran’s outreach.

Following whistleblower complaints about apparent mishandling of the contracts, DVR Assistant General Counsel Melchior Savarese was asked to make a legal review. In a 17-page memorandum, Savarese found numerous legal problems.

Savarese wrote, “The issues discovered are irregularities and red flags that are problematic and raise more questions than they do suitable answers… It is the NMDVR legal opinion that these contracts are presently legally insufficient under the Procurement code and (state law).”

Savarese’s said it was DVR’s legal recommendation, “…not to proceed with the contracts.”

That legal advice was ignored. DVR Director Joe Cordova said Savarese’s legal conclusion was “wrong.”

Deputy Secretary Paul Aguilar also says Savarese got it wrong.

“I don’t believe (the legal memo was) particularly well-written and I don’t believe that the basis of it was all that that well documented,” Aguilar said.

The Deputy Secretary told KRQE News 13 another lawyer’s review found no problems with the contracts.

“It’s like wow, what are they doing over there,” said former DVR Deputy Director Andy Winnegar.

“Why did they do that?” Winnegar asked. “Basically what they are doing is putting up posters and going out and identifying individuals that can go over to a DVR office. That’s what you would pay about $15 an hour for not $90 an hour.”

“It’s incredible that these contracts would have been let in the first place,” said Senator Jerry Ortiz y Pino, who chairs the Senate Public Affairs Committee.

“Two individuals without any particular credentials or anything to recommend them, to get these plums for four years? This is a much better paying job than many state employees would ever hope to achieve,” Senator Ortiz y Pino said after reviewing KRQE News 13’s documentation.

Former State Senator Dede Feldman commented, “This is a hell of a way to run a railroad.” Feldman today is an outspoken advocate for governmental accountability.

“The department was repeatedly told not to enter into this contract by its legal counsel and they did not heed that warning,” Feldman said. “I would hate to see the clients of this agency be penalized for the kind of inefficiency and questionable contracting procedures that the DVR seems to be using here,” the former State Senator told KRQE News 13.

To date, the Division of Vocational Rehabilitation has awarded contracts totaling $1,000,000 for veteran’s outreach. Those federal and state dollars come from the same funding that provides services to DVR’s disabled clients.


To find out more about the Division of Vocational Rehabilitation and their services click here »

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