State Auditor Hector Balderas says his office has found "numerous contract violations, procurement violations and improper accounting practices" in dealings between the Corrections Department and three state contractors.
He says the department paid at least $3.7 million in unsupported costs to Omni Development Corporation, Advantage Asphalt Seal and Coating, and HEI, Inc.
"For these payments, auditors found that the invoices were not descriptive enough to determine what goods and services NMCD received, or that the contract did not allow NMCD to pay for the goods and services," a news release said.
These payments include:
• $1,294,458 in unsupported costs to Omni, including $860,619 in payments for materials costs even though materials costs were not included in the price agreement, and payments of $190,000 for “contingencies” without any support that detailed what constituted the contingencies;
• Approximately $2 million in payments to HEI where the invoices were not descriptive enough to identify the goods or services provided to NMCD, including $1,331,406 in payments to HEI under one price agreement for equipment purchases that appeared to be unallowed by the price agreement’s terms;
• Advantage Asphalt overbilled NMCD $48,000 for one project. Advantage Asphalt notified NMCD’s former Facilities Manager of the overbilling, but there is no record that NMCD was repaid for the overbilling;
• NMCD made payments totaling $193,970 to HEI for certain goods and services, but auditors found no evidence that NMCD inspected the goods and services prior to making payment;
• HEI charged NMCD $10,036.85 for services and indicated on the invoice that the services occurred on August 12, 2008, but auditors found that HEI’s own records show that HEI performed the work on September 14, 2008 and January 25, 2009 and only incurred labor costs of $532.28 for the services. HEI did not provide auditors any records that supported the remaining charges invoiced to NMCD;
• The New Mexico General Services Department violated record retention requirements by destroying a premise price agreement and HEI’s response to the RFP for the agreement; and
• HEI subcontracted work under one price agreement without NMCD’s approval, which was required by the price agreement.
Some of these names should be familiar. Omni is at the center of a recent criminal bribery case against former Corrections Facilities Manager Laurie Chapman -- although Omni owner Anthony Moya -- who recently got out of prison after serving time for embezzling from an Indian Pueblo -- has not been charged in the case.
Meanwhile, Advantage Asphalt has been at the center of an investigation into allegations of theft and fraud in the Santa Fe County county Public Works Department. The Santa Fe County Sheriff’s office handed over the case to the District Attorney's Office late last year. No charges have been filed.
Gov. Susana Martinez was quick to respond to the audit.
“This audit report describes dishonest and illegal activities that took place in recent years, where taxpayer dollars were spent improperly for personal gain,” she said in a news release “We have taken a number of steps to prevent the same sort of actions from occurring in the future, but this audit report will help to inform our further efforts to root-out government corruption in New Mexico.”
Last month Martinez issued an executive order to forbid the state from doing business with companies that have violated the public trust.
Here's a copy of the audit report:
OSA Special Audit Report of NMCD FINAL