Copyright © 2021 Albuquerque Journal

SANTA FE – The State Ethics Commission has authorized its staff to take legal action against a former Sandoval County employee accused of illegally testifying last year in a property tax hearing.

It will be the commission’s first civil enforcement action against an individual and third overall since the independent agency’s authority began last year.

The case centers on provisions in the Governmental Conduct Act prohibiting ex-government employees from leaving an agency and then representing clients before the agency on a matter they’d worked on, or from being paid to represent anyone before the agency at all for one year – a ban often referred to as a “revolving door” law.

At issue is testimony by Gabriel Vargas, a former employee in the Sandoval County Assessor’s Office who went to work for Double Eagle Property Tax Consultants.

The firm’s owner said Vargas did not do anything wrong. He complied with the one-year ban and met other requirements of the law, its representatives said.

But the State Ethics Commission, in a resolution adopted last week, said it had reason to believe Vargas violated the Governmental Conduct Act.

“‘Revolving-door’ laws help ensure that government employees work for the public interest only,” Jeremy Farris, the commission’s executive director, said Tuesday in a written statement to the Journal. The laws “are particularly important for government employees who assess property values, because the valuation of property affects the funding for local governments, schools, and community colleges.”

In a brief interview, Vargas said Tuesday that he left the Assessor’s Office because he needed the scheduling flexibility to care for his daughter as she underwent cancer treatment, not out of any malicious intent.

Double Eagle owner Scott Clark said he and Vargas took steps to comply with the law, honoring the one-year ban on work in Sandoval County.

“Being a businessman in the Albuquerque community for forty years,” Clark said in a written statement to the Journal, “I strive to run my business with integrity and always do the right thing.”

A key to the ethics dispute is a Sept. 1, 2020, hearing before the valuation protests board in Sandoval County.

It occurred a year and a day or two after Vargas left the Assessor’s Office.

In the meeting, Vargas, now working for Double Eagle, testified against his former colleagues and presented evidence to support reducing the proposed tax assessment on an office building by Rust Medical Center in Rio Rancho, according to court records.

The valuation board largely sided with Vargas and reduced the assessed value of the Presbyterian Healthcare Services property from about $14.1 million to $11.4 million. The change will reduce its annual tax bill by about $35,000, according to a subsequent lawsuit filed by Sandoval County Assessor Linda Gallegos.

Double Eagle Property Tax Consultants had been hired by Presbyterian to protest the tax assessment.

Clark said the Assessor’s Office had incorrect information about the composition of the building, a factor in the protest board siding with Vargas.

“We did our job and achieved the fair and correct assessment for our client,” Clark said.

The Sandoval County assessor, however, is challenging the reduced value in court, contending Vargas broke the law by participating in the hearing. He was a commercial appraiser assigned to the property when he served as a county employee, according to the assessor’s lawsuit, and had assessed the property in prior years.

The assessor’s lawsuit, for example, alleges Vargas had “entered” the value of the property for the prior tax year, in 2019, while working for the county and had access to county information about the property.

That work “clearly disqualified him from presenting testimony on the exact same issues on behalf of” Presbyterian, attorneys for Sandoval County say in one court filing.

Vargas disputes that characterization of his work.

At the valuation hearing, for example, Vargas testified that during his tenure at the county he didn’t measure or inspect the Presbyterian property, and he didn’t perform his own appraisal of it, according to court records. Any value he placed on the property for the year prior was at the direction of a supervisor, not his own appraisal, Vargas said.

Furthermore, he said, a new county appraiser was assigned to the property in 2020 and set the value that was under protest.

The revolving-door ban in the Governmental Conduct Act permanently prohibits a former public employee from representing someone on a matter in which the ex-employee “participated personally and substantially” during their tenure with the government.

The act also has a broader one-year ban that prohibits ex-employees from being paid to represent anyone before the agency where they worked.

The purpose, according to Sandoval County’s lawsuit, is to insulate the government from improper influence by former employees.

The county contends that even though Vargas testified a day or two after the one-year ban, he was clearly involved in working on the tax dispute before then.

Regardless, the county’s appeal of the assessment decision – levying allegations against Vargas – is pending in the New Mexico’s 13th Judicial District.

The State Ethics Commission, meanwhile, is initiating its own involvement.

The commission on Friday authorized its staff to demand Vargas and Double Eagle comply with the Governmental Conduct Act. The resolution also allows the staff to file a civil enforcement action in court.

The lawsuit may seek civil penalties and “disgorgement,” a legal term meaning Vargas and Double Eagle would have to give up illegal profits.

“The Commission authorized this civil enforcement action,” Farris said, “to enforce New Mexico’s revolving-door laws and to deter public corruption and the appearance thereof caused by unlawful post-public employment.”

The commission is an independent state agency established after a voter-approved constitutional amendment in 2018. Its enforcement authority began in 2020.

The agency handles ethics complaints filed against state officials and others. It’s also empowered to go to court to enforce ethics and campaign laws.

The commission’s two other civil enforcement actions targeted groups accused of spending money to influence New Mexico elections without properly revealing their campaign finance activity.

Each case resulted in a settlement requiring financial disclosures.

It’s possible the litigation will have a broader impact on property tax consultants.

In Tuesday’s statement, Clark said there are several other tax consulting firms that have ex-assessor’s employees working for them. The standard practice, he said, is that they don’t work in the county where they were employed for at least one year.

Clark said he hoped to settle the ethics action informally, but if not, the firm would seek legal damages “for harassment to get this stopped and for us to represent the taxpayers of New Mexico with their property tax issues in Sandoval County.”

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