MEMORANDUM TO: FROM: DATE: RE: SUBJECT: File Mike Corwin Independent Source PAC April 4, 2012 Update

of Investigation into Awarding Billion Dollar Contract to the Downs at Albuquerque by the Martinez Administration. An examination of the actions and relationships of: Governor Susana Martinez, Susana PAC, Charles Chuck Gara, Jay McCleskey, Darren White, William Windham, John Turner, Pat Rogers, Ryan Cangiolosi, Buster Goff, Andrea Goff, Keith Gardner, Mark Shoesmith and others.

Since the release of our January 20, 2011 report about what has been dubbed the dirty Downs deal, Independent Source PAC has continued to dig even deeper. Today, we report the findings of our research. This research reveals actions and relationships that contaminated the award process, but may possibly violate state and federal law as well. In assessing corruption such as pay-to-play, it is not just the dollar amounts of contributions that must be considered. The timing of those contributions, efforts to conceal the source of the contributions, and whether all contributions were disclosed as required during the contracting process are equally important factors. In conjunction with this memorandum, ISPAC has prepared a timeline of critical actions, dates, and interactions, and a chart of connectivity visually depicting the connections between those involved. Such connections weighed heavily into the award of the contract. RE: POLITICAL CONTRIBUTIONS AND QUID PRO QUO CORRUPTION In 2006, Senator Dede Feldman authored SB 0344, signed into law by Governor Bill Richardson. The law states: No campaign contribution or other thing of value shall be given by a prospective contractor or a family member or representative of the prospective contractor to an applicable public official or the applicable public officials employees during the pendency of the procurement process or during the negotiations for a sole source or small purchase contract. (Emphasis added).

More recently, the Citizens United decision made clear that direct contributions to a politician or a PAC operated by a politician opens the door to quid pro quo (pay-to-play) corruption. Direct contributions must be closely scrutinized as they do influence decisions by public officials, including the awarding of contracts large and small. Not that long ago, ABQPAC, a political committee formed to pay for the travel of then mayor Martin Chavez, received intense media scrutiny because those with city contracts were major contributors. ABQPAC was later found to have violated the citys ban on direct gifts. Susana PAC has thus far escaped the same level of scrutiny. However, ISPAC has found that Susana PAC and many connected with it, played a pivotal role in the Downs deal, both in contributions to the PAC from stakeholders and decisions made in awarding the contract. RE: DOWNS DEAL CONTRACTS AND CONTRIBUTIONS DURING PROHIBITED TIME PERIODS The Downs deal actually involved two related but different contracts, including a oneyear sole-source extension designed to allow the Downs to continue to operate during the process of awarding a contract for a longer-term operation (25-year). The contributions by majority Downss owners William Windham and John Turner must be evaluated in light of both contracts. Dan Mourning began negotiating the one-year sole source contract following his appointment by Susana Martinez as the interim director of the State Fair in February 2011. The one-year sole-source contract with the Downs was signed by Dan Morning on 6/1/11. On 6/14/11 Martinez announced that she intended to place ratification of the oneyear contract onto the call for the special legislative session she scheduled for September. At the time Mourning announced the RFP, for the long-term contract on 7/24/11, the Albuquerque Journal reported that Downss owners were seeking to secure their third one-year extension. Thus, at a minimum, no contributions should have been given by the Downs owners or related entities to either Martinez or Susana PAC from February through July 2011. Two contributions were given within that time frame: On 5/6/11 $5,000 to Susana PAC from Brazos Land & Cattle; on 7/7/11 $5,000 from Sunray Gaming LLC to Susana PAC. (See ISPAC report dated 1/2/12 for Brazos contribution and attached for SunRay Gaming contribution). The contribution from Sunray Gaming was not included with the disclosure forms provided by the State Fair in response to an IPRA request from ISPAC. A failure to disclose a contribution would violate the law and constitute grounds to set aside the award of the contract.

The 7/7/11 contribution may also violate the intent if not the spirit of SB 0344 regarding the RFP based contract as well. As pointed out in our initial report, neither Windham nor Turner were publicly listed on the PRCs corporation website as owning Brazos Land & Cattle. Windham and Turner gained full ownership of the company through a bankruptcy court in their home state of Louisiana. (See ISPAC report dated 1/20/12). Thus, Windham and Turners connection to this contribution was not readily discernable by the public. On 6/30/11 Dan Mourning notified Martinez Deputy Chief of Staff Ryan Cangiolosi that the long-term contract RFP is set with a posting on July 5th. The posting of the RFP was then delayed by the administration and the 7/7/11 contribution from Windham and Turner received. Thus, the 7/7/11 contribution for all intents and purposes was given TWO DAYS AFTER the RFP was to be issued by the administration. By delaying the RFPs release until after the 7/7/11 contribution, the contribution was technically given prior to the pendency of the procurement process. (See attached email). But delaying the RFP to accept the contribution is still problematic. This action can signify that administration officials used their official capacity to subvert the law. Delaying the pendency to receive the contribution shows where their priorities lay. But there is still one other contribution that may violate at least the intent if not the spirit of the law. This contribution was knowingly given to influence a decision maker. On 12/28/10 in the final days of the Richardson administration, the State Fair Commission cancelled a vote set to approve a contract with the Downs to leave a decision on a new lease for the Downs of Albuquerque Racetrack and Casino to the administration of Gov.-Elect Susana Martinez. (See ISPAC Report 1/20/11). The incoming administration was now in a position to decide whether to accept the previously negotiated contract, negotiate a new contract, or give the contract to someone else. TWO DAYS LATER, on 12/30/10, Windham and Turner contributed $5,000 to Governor-elect Martinez through their company Brazos Land & Cattle. ALL THREE OF THESE CONTRIBUTIONS from Windham and Turner came at a time when Susana Martinez had the ability to directly influence the outcome of the awarding of the contract. Martinez has tried to claim that putting out the contract via an RFP meant the process was free of taint. But that seems to be nothing more than smoke and mirrors.

It should be noted that Windham and Turners chance to secure the contract might have been strengthened when Windham and Martinez attended the Junior Livestock Sale together on 9/16/11. THIS WAS AFTER THE RFPs WERE SUBMITTED BUT BEFORE GARA GAVE THE DOWNS THE PERFECT SCORE. Martinez apparently does not see the ethical issue of spending time with a bidder during the pendency of the bidding process. Then again, there were many longstanding relationships between Martinez, Susana PAC, and the Downs not disclosed to Laguna Development. RE: CONNECTIONS AND RELATIONSHIPS CAPABLE OF INAPPROPRIATELY TIPPING THE SCALES On information and belief, on 8/10/11,Tom Tinnin, a former State Fair Commission Chairman and Martinez appointee to the Board of Finance Authority, submitted a list of qualified evaluators experienced with the ins and outs of operations of the state fair, at Dan Mournings request. On information and belief, Tinnins list of evaluators was approved. On information and belief, on 8/28/11 THREE DAYS AFTER the RFP responses were due from the Downs and its competitor Laguna Development Corp, the MARTINEZ ADMINISTRATION SUBSTITUTED IN DIFFERENT EVALUATORS OF THEIR OWN CHOOSING. Tinnins list of those with significant State Fair operations experience was disregarded. Instead, Charles Chuck Gara was brought in. On 2/9/11 Martinez appointed Gara to a $91,998 a year job with her administration. Gara was also close to Jay McCleskey, the operator of Susana PAC and Martinezs political campaign advisor, sometimes dubbed the shadow governor. In 2003 Gara formed a pro-business PAC. He selected McCleskey to run the PAC and paid him over $20,000. Also in 2003, the Albuquerque City Council voted 6-1 to remove Gara from the Planned Growth Strategy Task Force as it was apparent that Gara gained his appointment to the task force to use his position on the task force to undermine it. Gara demonstrated through his actions a willingness to subvert the process to secure a predetermined outcome. It was Gara who scored the Downs managerial expertise a perfect 300 out of 300 points, despite a litany of serious problems including having just come off a year-long probation by the NM Racing Commission for the seriousness of the allegations filed against the Downs at Albuquerque. The Downs had also been found committing an unsuitable method of operation and violating board rules on several counts by the State Gaming Commission. (See ISPAC report dated 1/20/12).

Garas perfect score allowed the Downs to win the RFP, by only 15 points out of a total of 1000 points. In 2007/08, Gara contributed $1500 to the congressional campaign of Darren White, who was brought in by the Downs in August 2011, as a consultant to assist us with preparing our request for proposal just two weeks before the deadline to submit its RFP. Jay McCleskey is very familiar with people working on behalf of the Downs at Albuquerque. In 2007/08 McCleskeys wife, Nicole, handled the polling for Darren Whites congressional campaign. McCleskey was close enough to Downs attorney and lobbyist, Pat Rogers, that he was asked by National Republicans to convince Rogers, after others had failed, to become the US Attorney for New Mexico after Rogers and others helped remove US Attorney David Iglesias. (See attached email). McCleskey and Rogers also were involved together in a Republican lawsuit to eliminate drivers licenses for illegal immigrants in New Mexico. A lawsuit was initiated for the purpose of getting addresses for supposed illegal immigrants to see if any had illegally registered to vote. No such voter fraud was unearthed despite their efforts. McCleskey hired Andrea Goff, the daughter-in-law, and business partner of Buster and Beverly Goff, as his lead fundraiser for Susana PAC. Andrea Goff also chaired Martinezs inaugural event. Andrea Goff earned over $29,000 fundraising for Martinez and McCleskey from 4/11-9/11. (See attached printout from Susana PAC). Buster Goff, who along with Beverly gave upwards of $9000 to Martinez and Susana PAC, was APPOINTED BY MARTINEZ TO THE STATE FAIR COMMISSION ON 6/21/11. It was Buster Goff, who was given the unique opportunity on 11/10/11 to alter portions of the Downs contract by administration attorney Mark Shoesmith, who helped Mourning draft the RFP. This privileged ability for Goff to make changes then led to his switching from opposing the contract to casting the winning vote. DUE TO GOFFS TURNABOUT, THE VOTE WENT FROM 3 IN FAVOR AND 4 OPPOSED TO THE CONTRACT TO 4 IN FAVOR AND 3 OPPOSED. DONE DEAL. Darren White, aside from a relationship with Gara and the McCleskeys, appeared in a 2010 campaign advertisement for Susana Martinez. White served on Martinezs transition and policy team and was appointed by Martinez to the New Mexico Judicial Standards Commission.

White was also a close personal friend of Dan Mourning, who Martinez selected to head the State Fair, and who put out the RFP the Downs bid on, and who negotiated the contract with the Downs. There can be no doubt that all of these connections influenced the contracting process. RE: TREATMENT BY MARTINEZ OF THOSE INVOLVED IN THE PROCESS WHO WERE NOT TIED TO MARTINEZ OR SUSANA PAC Tom Tinnin, once trusted enough by the administration to recommend evaluators to assess the RFPs, was dressed down by Martinez after he objected to the administration replacing his choices for evaluator. Tinnin met with Martinez, and after expressing his concerns about the deal to her, Tinnin reported to Thom Cole of the Journal that she told him, he said, that she would take it personally if, as a member of the Board of Finance, he publicly criticized her staffs actions in doing the deal with the Downs. Tinnin submitted his resignation shortly after his meeting with Martinez, believing that Martinez PUSHED HIM FOR APPROVAL of the Downs contract. Charlotte Rode, a Martinez appointee to the State Fair Commission, also expressed concerns about the Downs deal. Rode made several efforts to access critical documents involved in the deal. She even garnered the support of the AGs office to see those documents, but no documents were provided to her. Martinez did not meet with Rode. Instead, she dispatched her Chief of Staff, Keith Gardner, and deputy chief of staff, Ryan Cangiolosi, who promptly dismissed her concerns about the handling of the contract. Rode was rewarded for speaking up about concerns over the deal with an investigation directed toward her. She was targeted by Republican Nate Gentry, who launched document requests against her, undoubtedly at Martinezs request. Gentry claimed to be investigating whether Rode improperly shared the documents she had received. Retaliation against a public servant for looking out for the publics best interest is wrong. Attempts to suppress both Rode and Tinnin demonstrate the depth to which the governor went to ensure the contract went to Windham and Turner. RE: CONCLUSION The purpose of SB 0344 is to ensure the publics confidence that government contracts are awarded fairly and without influence. However, regarding the Downs contracting process, it appears that the letter and the spirit of the law have been disregarded in order to ensure a predetermined outcome. When this happens, the public can no longer rely on their elected and appointed officials to represent their interests. 6

The Downs contract involved political contributions during the pendency of the process, which is specifically prohibited by SB 0344. Governor Martinez orchestrated the outcome through the individuals she selected to be involved in the Downs contract award process. Individuals opposed to the predetermination, were sidelined, or attacked in an effort to force their compliance. Such conduct cannot and should not be tolerated by those who care about open government.