Corruption video captures dirty dealing

ALBUQUERQUE (KRQE) - Construction of the Bernalillo County Metropolitan Court building was just another government project until a small group of corrupt politicians, insiders and associates turned it into a crime scene.

Over a five-year period they looted millions, took kickbacks and committed fraud and bribery while engaging in what the top federal prosecutor in the state considers the crime of the century.

"This is the most important case, criminal case to issue from a United States courthouse in New Mexico since we were granted statehood," U. S. Attorney Greg Fouratt told KRQE News 13.

But as important as the case was, it never went to trial as the feds' relentless investigation won guilty pleas from the conspirators. So key evidence critical to the early stage of the case remained secret until News 13 investigative reporter Larry Barker obtained the undercover video.

It was only a matter of time before the conspirator's illegal game would come to an end.

The first to go down: Former Metro Court Administrator Toby Martinez. As the FBI closed in, Martinez turned state's evidence and cooperated with agents.

"And then they went to see Marc Schiff, the architect," Fouratt said. "Marc Schiff cooperated and provided a substantial amount of information."

Schiff's architectural firm designed the new courthouse at 4th Street and Lomas Boulevard in Albuquerque. The secret to his success? Bribes and kickbacks.

More than $900,000 was siphoned off the project as Schiff funneled illegal pay-offs into the pockets of both state Sen. Manny Aragón and Martinez. Schiff told FBI agents his partner in crime was lobbyist and former Albuquerque Mayor Ken Schultz.

Schultz was the bagman secretly delivering envelopes stuffed with cash to other conspirators, according to Schiff. The architect's allegation was not evidence, however, so the FBI needed something solid.

"It's pretty textbook investigation to try to get somebody on tape admitting what they did," Fouratt continued. "And there was no source better than the mouth of Ken Schultz to talk about what Ken Schultz had done."

In exchange for leniency, Schiff agreed to go undercover for the FBI and arranged to meet Schultz at a Santa Fe hotel. Schultz did not know he was being recorded.

"What resulted was a gold mine," Fouratt said. "Generally it was a devastating admission of guilt by Ken Schultz of being a co-conspirator in the architectural side of the fraud involved in the Metro Court case."

Because all the defendants in this case pleaded guilty, there was no trial. This key video evidence was never been made public, and government prosecutors denied a News 13 request for a copy of the recording.

Instead News 13 obtained a copy from a confidential source.

It was Feb. 1, 2006, when Schiff met Schultz at the Hotel Santa Fe. Over the next two hours Schultz bragged about political connections, dirty deals and Manny Aragón.

Schiff: Didn't he kind of like get a lot of money on the Metro Court deal?
Schultz: Yes. Yes, he probably ended up with more than you and I, and Toby was sharing with him. You were paying him.
Schiff: I know I paid him, you know, campaign contributions.
Schultz: Right.
Schiff: Ten thousand in cash that he wanted.
Schultz: What I'm saying is what's been going on with the treasurer and other people.
Schiff: Right.
Schultz: Has not scared, Manny. He's still a cash-and-carry guy.
Schiff: How much did, I mean, Manny, Manny must have taken, I mean huge money out of Metro Court.
Schultz: I'd say probably $100,000.

Schiff said he wanted a lucrative state design contract at New Mexico Highlands University in Las Vegas. Lobbyist Schultz said all it takes is cash under the table.

"With certain jobs, there's only one way you can go if you want them," Schultz explained. "Now, sometimes we can make it look legit. Manny's one of the guys. It's got to be cash; got to be cash."

The Highlands deal would be a $12 million contract with Aragón taking a significant cut.

Schultz: He'd probably be looking for a quarter million.
Schiff: You're kidding me?
Schultz: No.
Schiff: You're kidding me?
Schultz: No.
Schiff: Out of the architect's fee? That would drop the fee down to like 4 1/2 percent.
Schultz: Yeah. If we have a meeting with him, I'm going to let you do the talking.
Schiff: Right. And look him in the eye and say, 'Look, you know, don't you owe us one Manny?'
Schultz: No, no. Aren't we still friends?
Schiff: Well, aren't we still friends? OK.
Schultz: OK? I don't want you to say it that way. From one side of it, we are in a very good position. Anybody we have played these games with can't afford to ever point the finger at us.

With Schiff concerned his fees taking such a big hit, Schultz said other money might be found.

Schultz: The best, the best I am able to do is get you some contracts, to help pay the debt or the bribes or whatever you want to call them. I call it debt.
Schiff: It's extortion is what I call it.
Schultz: You can't say that in public.
Schiff: Why?
Schultz: Because we all get in trouble.

And then Schultz offered some friendly advice. When it comes to graft, don't always go for the big score.

"Little-bitty jobs still have little-bitty payoffs, and to some people little-bitty payoffs are better than none," Schultz said.

To FBI agents and prosecutors building their case against Schultz the tape is the smoking gun.

"He, by his own admission, took cash to Manny Aragón for Manny Aragón's personal enrichment," Fouratt said. "That was taxpayer money.

"He enabled Marc Schiff (to) get a contract by virtue of what was in essence a bribe knowing it to be a bribe. And as he says on the DVD, that's just the way the game is played."

For Schultz, though, the game was over. In April, the ex-mayor pleaded guilty to federal conspiracy charges and was sentence to five years of probation plus paying a share of $591,000 in restitution.

A federal judge sentenced Aragón and Martinez to more than five years in prison and ordered both to pay fines and restitution. Schiff is serving one year in a federal penitentiary.