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New Mexico's Complex Sunland Embezzlement Case Goes Forward

December 28th 2012

Gov Susana Martinez of New Mexico
New Mexico Gov. Susana Martinez

Annette Morales was a well-traveled woman who moved widely in governmental and professional circles in the borderlands of New Mexico and Texas. Once a familiar face in the New Mexico state capital of Santa Fe, Morales was regarded by some insiders as former Democratic Governor Bill Richardson’s point person for colonias, the underdeveloped and impoverished communities lacking in basic services which are commonplace in New Mexico and other border states.

Morales’ advocacy work was praised by Dona Ana County Commissioner Karen Perez and Dona Ana County State Senator Mary Kay Papen, after the New Mexico State Legislature passed the 2010 Colonias Infrastructure Act, a measure which established an annual, $10 million funding stream for eligible communities within 150 miles of the U.S.-Mexico border. In Dona Ana County alone, 37 designated colonias could receive much-needed funding under the law.

In an official Dona Ana County press release, Perez and Papen were quoted co-crediting Morales for “shepherding this bill to passage.”

But the 49-year-old Las Cruces resident now stands accused of bilking one of New Mexico’s emblematic colonias, the city of Sunland Park bordering El Paso, Texas, and Ciudad Juarez, Mexico.

Last August, the Third Judicial District Attorney’s Office in Dona Ana County charged Morales with embezzlement and fraud stemming from a one-million-dollar contact awarded by the City of Sunland Park to Morales’ company, Medius Inc., for a project related to a new, potentially lucrative border crossing with Ciudad Juarez. The money came from the $11.8 million border crossing fund donated to Sunland Park by local racetrack and casino owner Stan Fulton during the administration of former Mayor Ruben Segura in 2006.

The Dona Ana District Attorney’s case against Morales boils down to allegations of improper spending of contract-related funds, and failing to deliver what she promised.

“Business and banking records for Medius Inc. reveal that Annette Morales has fraudulently used or embezzled hundreds of thousands of dollars that were provided from the City of Sunland Park to Medius for purposes related to the contract,” the criminal complaint states. In pursuing their probe, state investigators seized three computers connected to Morales’ business.

According to the complaint, the contract, payable over the period of one year, was awarded to Medius for a strategic planning project that would analyze the physical infrastructure and housing capacity of Sunland Park, develop a community-regional profile and create an “infrastructure roadmap for the City of Sunland Park that would guide growth and prepare them to seize future development opportunities.”

A review of financial records led prosecutors to charge that Morales spent slightly less than half of the $457,778.80 paid to her by Sunland Park on expenses actually related to the border crossing project during the roughly six-month period that her contract with the city ultimately lasted.

Instead, the criminal complaint alleges, Morales went on a personal shopping spree spending thousands of dollars on home improvements and furnishings, electronics, food and drinks, a 2012 Ford Fusion, a 2010 Ford F-150 and more.

Bonded out of jail, Morales now awaits trial in Las Cruces. According to prosecutors, she could get nine years in prison and/or get slapped with a $20,000 fine. Or she get be put on probation.

Morales’ only other known brush with the law happened in neighboring El Paso back in 2001 when she was charged with misdemeanor theft based on an August 30, 1999 incident. El Paso County Court records show the case was dismissed on July 6, 2001.

Employed by Levi-Strauss when the garment manufacturer was closing down its U.S. operations and moving off-shore, Morales subsequently struck out on her own and opened Medius in Las Cruces. For better or worse, the private research and consulting firm left its imprint on the history and development of border colonias during a critical time of population growth and emerging political influence.

As the owner of Medius Inc., Morales secured some funding for the underdeveloped communities; undertook an assessment of extra housing needed because of an expanded Border Patrol presence in Lordsburg, New Mexico; and played a role in the Model Colonias Initiative, a HUD-sponsored program that was meant to transform the Dona Ana County colonia of Vado-Del Cerro into an example for other similar communities to follow.

“Our mission is to help our clients build better neighborhoods, communities, towns, and cities. Medius has earned a reputation from a keen ability to work closely with clients to quickly meet their needs with workable solutions…,” states Medius’ website.

The website, which claims Medius’ work has resulted in $40 million in investments but gives few details, lists partnerships with other organizations, including the Las Cruces-based Colonias Development Council, a pioneering grassroots advocacy organization for rural, low-income southern New Mexico communities. However, CDC Executive Director Diana Bustamante told Frontera NorteSur that her organization had no partnership with either Morales or Medius.

“We’re not a partner, and we’ve never had any kind of formal relationship with her or her company,” Bustamante said.

Morales’ many projects included six separate New Mexico Department of Finance and Administration (DFA) contracts totaling $348,000 from August 1, 2006 to June 30, 2012. Issued during the Richardson administration, all the contracts were related to implementation of colonias initiatives,” according to DFA Public Information Officer Tim Korte.

In May 2012, not long before her arrest for embezzlement and fraud, Morales attended an El Paso meeting of the Bi-National Advisory Committee (BNAC), a new outfit focused on the El Paso-Santa Teresa-Chihuahua Border Master Plan. Heavy on government and private industry representation but light on participation from other sectors of civil society, the committee was formed to oversee the mounting series of infrastructure developments for a section of the border where movers and shakers are attempting to carve out a new link in the Asia-North American trade. Its 18 voting members include 10 representatives from the U.S. and 8 from Mexico.

According to the meeting minutes, Morales requested that two additional ports of entry along the New Mexico-Chihuahua border, Antelope Wells-Berrendo and Columbus-Palomas, be included as part of the master plan, and that more voting members from New Mexico have a voice on the committee.

Morales’ BNAC proposal came after her relationship with Sunland Park and the ongoing border crossing project there decidedly went south.

Medius’ one-year contract was approved at a Sunland Park City Council meeting held on March 2, 2011, when Daniel Salinas, the mayor pro-tem at the time, proposed the business agreement in a motion seconded by City Councilor Annette Diaz. Yet a little more than six months later, Sunland Park abruptly canceled the contract, citing “unsatisfactory work performance,” according to the Dona Ana County criminal complaint.

Morales challenged the termination, filing a breach of contact lawsuit against the small border city. A May 2012 report from New Mexico State Auditor Hector Balderas on financial irregularities in Sunland Park stated that Morales ultimately settled the legal conflict for $87,000.

Balderas’ report contends irregularities and possible illegalities marked the issuance of two other Sunland Park contracts connected to the border crossing. In all three contracts, the State Auditor noted violations of the state Procurement Code and City of Sunland Park purchasing regulations, as well as the absence of complete city council voting records.

Besides Medius, the two other contracts included a $240,000 deal with border consultant Javier Ortiz, who is listed as a professional contact on Medius’ website, and a $2.4 million contract with El Paso-based EnviroSystems Management Consultants.

A common thread in the three questioned contracts was the political and facilitating role performed by Daniel Salinas, who formally proposed or seconded the contracts in different city council sessions.

Salinas, who was officially declared the victor of the controversial March 2012 Sunland Park mayoral election, is himself in big legal trouble. Last spring, he was jailed in Dona Ana County on extortion, fraud and other charges related in good measure to the EnviroSystems contract. According to Jose Arguello, a Dona Ana County prosecutor working on the Morales and other Sunland Park cases, Salinas’ first trial could start in mid-January 2013.

By the end of 2012, the Dona Ana County prosecutors had pursued assorted charges against Salinas, Morales and 21 additional former city officials, contractors and other individuals in a series of cases collectively known as the Sunland Park scandals. Virtually all the defendants await trial on alleged crimes including voter fraud, MVD fraud, extortion and bribery.

(For background on the recent Sunland Park legal cases. readers can go to a previous article here.)

In an interview with Frontera NorteSur earlier this fall, Assistant Dona Ana County District Attorney Steve Blankenship was asked what might have motivated the allegedly errant public officials. Blankenship said rank opportunism figured high as the reason. “I think these were individuals who were in positions of power and authority for personal gain,” he said.

Prosecutors Blankenship and Arguello said their office had spent “countless hours” on the Sunland Park cases with limited resources, but had an obligation to the public to fulfill. “We’re public officials ourselves, and we have a duty to the public and part of that duty is to be as thorough to the public as we can, and we’re going to do that,” Arguello said.

Blankenship called the cases the biggest public corruption matter in Dona Ana County’s history.

To put the issue into a broader perspective when considering the alleged misspending of public money in Sunland Park, it’s important to consider the municipality’s socio-demographics.

The 2010 Census portrayed the town of more than 14,000 people as a community even poorer than is the norm in one of the nation’s poorest states. Sunland Park’s poverty rate during 2006-2010 was 47.2 percent, compared with the state figure of 18.4 percent.

In the same years, median household income was calculated at $23,171 for Sunland Park and $43,820 for New Mexico. In 2010, Sunland Park’s per capita income was $9,697 versus $22,966 for the state. The mobile homes a visitor passes in the original Sunland Park settlement of Anapra are typical of a lot of the housing stock and family patrimony in the community.

“You can drive through Anapra and Sunland Park and you can see the (corruption) victims,” Blankenship maintained. “You can see why Sunland Park is still an impoverished area.”

Like the other defendants in the Sunland Park cases, Annette Morales is, of course, innocent until proven guilty. Messages seeking comment for this story were left at Medius’ office phone number over a multi-week period but were not returned.

Trial dates for Morales and the majority of the Sunland Park defendants still have not been set, according to Arguello.

In the aftermath of the 2012 elections, cases which were first pursued by defeated Dona Ana County District Attorney Amy Orlando are now in the legal court of newly-elected District Attorney Mark D’ Antonio. In addition, two newly-elected judges, Marci Dyer and Darren Kugler, have been assigned to hear the numerous cases, Arguello said.

Meantime, investigators are continuing to pour through evidence as the Sunland Park probes are far from over. “There’s ongoing investigation and analysis,” Arguello said. “They’re for the most part complex cases involving a lot documents…”


Kent Paterson edits Frontera NorteSur: on-line, U.S.-Mexico border news from the Center for Latin American and Border Studies of the New Mexico State University.


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