Alleged rent payments raise questions in Padilla probe

But according to a lawyer for the Kansas-based company, the payments were no big mystery.

“All the money we paid Ms. Padilla was for rent under a lease agreement,” the lawyer, Justin Kohlbeck, told The New Mexican in an email Friday. “She was the landlord of one of our New Mexico branches.”

The payments are just one part of the state attorney general’s investigation into Padilla and her husband, Jessie Medina Jr., a probe that appears to be touching on a range of possible criminal activity, including tax evasion, embezzlement and violations of the Governmental Conduct Act.

But the revelation of the rental agreement raises the question of why Padilla’s lawyer, Paul Kennedy, refused to let her discuss it with investigators after she had already answered many of their other questions about other parts of the probe during a voluntary interview on Tuesday.

In an affidavit made public Thursday, Special Agent Ed Griego with the Attorney General’s Office said he could find no evidence that Padilla owned any of the properties in New Mexico occupied by QC Holdings. Because of that, he said, he deduced the payments Padilla received from QC Holdings were not rental income.

Padilla abruptly resigned Thursday, a day after agents raided her state tax offices seeking personal and business income records for her and her husband. No charges have been filed against the couple. They did not return phone calls seeking comment Friday.

Much of the investigation appears to center on more than $25,000 Padilla transferred to her personal credit card account after she became secretary of the Taxation and Revenue Department. The money came from the bank account of a Bernalillo trucking company for which she had prepared taxes for several years before joining Gov. Susana Martinez’s Cabinet in 2011.

Padilla told investigators the transfers were for money the company owed her for past work, but the company owners told investigators they never authorized the payments, according to the affidavit. They also said Padilla continued to work for them for more than a year after she became secretary, a potential violation of state law. The owners said they fired her during a heated confrontation in February 2013 after discovering the payments.

Investigators also are looking into the source of $128,000 in unexplained deposits made to Padilla’s bank account in 2012 and 2013, including the payments from QC Holdings, according to the affidavit.

QC Holdings lists on its website 16 branches in New Mexico. The payday lending storefronts operate under various names, including Nationwide Budget Finance, First Payday Loans, Check Advance Loans and Quick Cash.

Six of the shops are in Albuquerque; three are in Farmington and Gallup. Española, Grants, Las Cruces and Rio Rancho each have one of the company’s lending shops.

Asked which branch rented from Padilla, Kohlbeck, the company’s attorney, replied by email that “QC Holdings does not wish to provide any further comments on this matter at this time.”

James Hallinan, spokesman for Attorney General Hector Balderas, declined to comment on the company’s assertion that the payments were for rent.

“As this is an ongoing criminal investigation, it is not appropriate for the Office of the Attorney General to comment on the evidence being gathered,” he said.

The Attorney General’s Office on Friday denied The New Mexican’s request for records of two other search warrants, issued in September and October, that detail the seizure of Padilla’s bank account records. Patricia Salazar, records custodian, said the office could not release the records because they were under a court-ordered seal.

But the office on Friday did release its Dec. 14 search warrant affidavit requesting approval to seize records from QC Holdings.

In that search warrant affidavit, investigators sought to seize from QC Holdings records from Jan. 1, 2011, to Feb. 8, 2013, concerning payments to Padilla; stock held by Padilla; employee, contract, investment and rental agreements with Padilla; and other records.

“These records will allow affiant to examine the purpose of payments to Demesia Padilla,” Griego wrote in the affidavit. “Because the deposits from QC Holdings appear to be income not reported on Demesia Padilla’s Financial Disclosure Statement, any records showing her control of the account and the source and nature of the deposits may constitute evidence of a criminal violation of the Financial Disclosure Act.”

Kohlbeck said Friday that the company has received the search warrant and is “in the process of gathering the documents to respond to it.”

The state’s financial disclosure law requires public officials such as Padilla to report annual sources of income and property ownership, but unlike some other states, New Mexico does not require any specifics about the source of the income or property owned. Money from rent, for example, can be listed simply as “rental income.” The law also doesn’t require specific amounts to be disclosed, asking only for general amounts such as “over $5,000.”

Padilla does not list QC Holdings as an income source in any of the six years of financial disclosures reviewed by The New Mexican. But she does list rental income on each disclosure except for her 2015 report.

Padilla also says on financial disclosures from 2011-16 that she and her husband own various properties and land in seven counties around the state. But she does not list the addresses of those properties, and her reports do not make clear how many properties she owns.

The Santa Fe New Mexican is a sister-paper of The Taos News. Contact Justin Horwath at 505-986-3017 or jhorwath@sfnewmexican.com.