$1.7 million paid in confidential state settlements

Larry Barker

“It’s embarrassing to many of those involved,” says former State Police Chief Pete Kassetas.

“What could be potentially happening here is people’s silence is being bought with public money,” says State Senator Sander Rue.

We are talking about payouts of nearly $2,000,000 in December last year. But don’t bother looking for the evidence, it’s hidden away. And, the only clues are a handful of canceled checks.

Ground zero for these confidential transactions? New Mexico’s Risk Management Division. Risk Management handles liability claims made against the state. Anytime a public employee or agency is accused of wrongdoing, for everything from civil rights to medical malpractice, the case is handled by Risk Management.

KRQE News 13’s investigation finds, late last year, the Martinez administration negotiated secret deals that cost taxpayers a total of $1,700,000. Sources say the Risk Management Division paid a group of disgruntled public employees huge sums of money in order to keep alleged compromising information about then Governor Susana Martinez under wraps.

“I think the public would be outraged that these cases were settled without proper investigation,” says former State Police Chief Pete Kassetas who has first-hand knowledge of the cases due to his involvement.

The employees filing claims against the state include DPS Deputy Secretary Amy Orlando. When Orlando was transferred to another agency, she filed a claim against the state alleging discrimination.

After DPS Supervisor Terri Thornberry was reprimanded, she alleged discrimination. Thornberry claimed, in part, her work conditions caused her stress, and she “no longer walks her dog.” Even though an investigator determined her claims were not substantiated, Thornberry asked the state to pay her $2.5 million in damages.

DPS employee Dianna DeJarnette also claimed discrimination and the stress caused her, in part, dizzy spells. She asked for $2.5 million to settle the case.

State Police Sgt. Monica Martinez-Jones alleged discrimination because, in part, she had been passed over for promotion. Even though a DPS investigator said the allegations were not substantiated, Martinez-Jones sought a settlement anyway.

Deputy State Police Chief Ryan Suggs alleged harassment, hostile work environment, and retaliation.

After State Police Sgt. Julia Armendariz was transferred out of the Governor’s Security Detail, she claimed to have been discriminated against.  Among her accusations, Chief Kassetas refused to allow her to buy her shotgun when she retired. 

Martinez-Jones, Suggs, and Armendariz demanded $4,200,000, collectively, to settle their cases.

“I wrote two separate emails to Governor Martinez, and her entire staff and the attorneys involved pleading with them not to settle any of these cases, to fully investigate them,” Former Chief Kassetas said. “Nobody listened. They did what they were going to do.”

KRQE News 13 has learned Risk Management officials did not assign investigators before settling the cases in the last days of the Martinez administration.

The newly appointed General Services Cabinet Secretary Ken Ortiz oversees the Risk Management Division. He says investigating claims made against the state is important.

“The first part is to assign an investigator to review the claim,” Secretary Ortiz says. “They would make a determination if this is a credible claim. From that point, our attorneys then would do what’s called a risk analysis. Should we litigate this because it’s defendable and the claims are baseless or is this claim real, and it could potentially cost the state of New Mexico millions of dollars if we went to court on that,”, Secretary Ortiz tells KRQE News 13.

That’s the way it’s supposed to work. However, sources say the $1,700,000 settlements last year were rushed. Of course, individual cases may vary, but state officials generally say it takes 4-6 months to resolve a Risk Management case. The claims filed in the closing weeks of the Martinez administration were settled in 30 days. The files were then sealed from public view.

“The truth should come out eventually. The truth needs to come out,” Kassetas says, “These settlements are cloaked in secrecy, and the public should be able to see them.”

Why were the cases settled so quickly? That’s the $1.7 million question. Confidential sources involved with these cases say the claims were resolved in the final days of the Martinez administration out of fear that personal information about the Governor might be made public.

In a “Confidential Offer of Settlement” obtained by KRQE News 13, attorney Diane Garrity, who represented State Police Sgt. Monica Martinez-Jones wrote, “This case will generate publicity given our current climate. …  (I)f NMSP and DPS do not resolve this case before we file suit, it is likely that the reputations and careers of the Individual defendants … especially Chief Kassetas will be sullied to the point where they may not be able to obtain alternative employment at the conclusion of Governor Martinez’s term….”

In a December 5, 2018 “Updated Confidential Settlement Demand” obtained by KRQE News 13, lawyer Linda Hemphill, who represented Monica Martinez-Jones, Julia Armendariz and Ryan Suggs, referenced “…damaging information about (Governor Martinez) professionally and personally.”

In the same settlement demand, attorney Hemphill writes “…we have compelling and irrefutable evidence, obtained legally, by Julia Armendariz, at the Governor’s insistence, from Governor Martinez’s husband, Mr. Franco, of the Governor’s significant personal issues and instances of inappropriate behavior …”

Hemphill suggests the release of this negative information could “destroy” the Governor’s “reputation or legacy.”

Linda Hemphill concluded her 10-page settlement demand to Risk Management contract attorneys, “For the foregoing reasons, our client’s opening, global demand is in the amount of $4.2 million.”

KRQE News 13 has learned that the “compelling and irrefutable evidence” referenced by private attorneys in both settlement cases was a secret tape recording of Governor Martinez’s husband, Chuck Franco.

Sources say, at the time, New Mexico’s first family was having marital problems. KRQE News 13 sources say then Governor Martinez wanted information on her husband. State Police Sgt. Julia Armendariz claims, through her attorney, the Governor directed her to record a phone conversation with First Gentleman Chuck Franco. Those sources say Franco made politically explosive comments about his wife. Sources tell KRQE News 13 Sgt. Armendariz kept the recording and that her attorney used it as leverage to settle Armendariz’s, and the other, complaints.

Former State Police Chief Kassetas told KRQE News 13 that he was made aware of the Armendariz recording “right before the settlement mediation” in late December. Kassetas says he can’t comment on the nature of the recording because of confidentiality rules. Kassetas said he believes the recording was a factor in settlement of the Risk Management cases.

In a December 20, 2018 email sent prior to a mediation settlement conference relating to the DPS discrimination claims, lawyer Merit Bennett (representing Dianna DeJarnette, Terri Thornberry and Amy Orlando) asked Risk Management attorney Paula Maynes for all “embarrassing or compromising” … information “…regarding the personal life, alcohol or drug abuse or addiction, personal or intimate relationships or marital conflicts of the Governor.”

In a December 21, 2018 email from Chief Kassetas to Governor Martinez and others, obtained by KRQE News 13 through a Public Records request, Kassetas alleged a private attorney was, “…attempting to extort the state based off of potential personal embarrassing events surrounding the Governor and Mr. Franco.”

Kassetas concluded his late December email, “I will not partake in the settlement mediation as I cannot be part of any extortion effort. I beg of you to cancel the settlement mediation scheduled for the 27th and let this case carry over to the next administration, Please do not settle this case,” Kassetas wrote.

“This is public money,” says State Senator Sander Rue (R-Albuquerque) who is an advocate for public accountability in state government.

“This process where claims are filed against the state, and there are settlements made … is cloaked in secrecy,” Senator Rue says. “The way this thing is structured now it leaves itself open to abuse by government officials who use this process essentially to pay off people.”

“I expect — and New Mexicans deserve — nothing less than thorough, factual and consistent investigations when claims are made against the state government,” Governor Michelle Lujan Grisham said in a written statement.

“Given the serious concerns raised about some of the settlements struck by the prior administration, Secretary Ortiz is rapidly developing new procedures for ensuring all appropriate and necessary review is conducted for all (risk management) claims,” Governor Lujan Grisham wrote.

State Risk Management Director last year, Lara White Davis, was directly responsible for approving the settlements. She had no comment on the cases settled late in the Martinez administration.

Chuck Franco told us he was stunned to find his phone conversation was secretly recorded.

State Police Lt. Julia Armendariz is now retired. She admits recording the Chuck Franco phone conversation and refused further comment.

Former Governor Susana Martinez did not want to go on camera but in a written statement said: “I did not encourage, influence or become involved in any risk management settlements.” Martinez continued, “It would be deeply disappointing if someone on the security detail chose to catalog personal information for their own benefit.”

State Police Chief Pete Kassetas retired at the end of the Martinez administration.

“What was done to me was wrong and ultimately what was done to the taxpayers was wrong,” Kassetas says. “I can’t openly talk about everything, but I can talk about myself and my conduct. You know, some people say as Chief, I signed up for this. I didn’t. On a personal level it’s been devastating,” the retired police chief says.

If you want to see for yourself what these settlements are all about, you will have to wait awhile. Lawyers agreed to seal the settlements from public view until June 23, 2023. 

Former Governor Susana Martinez’s issued the following statement regarding the Risk Management settlements that occurred at the end of her administration:

I did not encourage, influence or become involved in any Risk Management settlements.  If these plaintiffs attempted to use unrelated and unfounded personal or private information as leverage for their personal benefit, then that is very disappointing. 

The security detail for any governor is necessarily present for some of the most private experiences. In my case, that included such things as the death of my father, death of my brother, my sister’s serious health episodes and hospitalizations as well as personal disagreements within a marriage. It would be deeply disappointing if someone on the security detail chose to catalog that personal information for their own benefit. 

I hope and trust that Risk Management and the professional mediator in the case would not have allowed any such irrelevant and unfounded claims to influence their handling of any case and I have not seen any evidence that indicates they allowed anything like that to be a factor.

 
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Kassetas Email IPRA 20190516182612320 New Version (Text)

Click here to read Pete Kassetas email

Statement from Governor Lujan Grisham regarding Risk Management settlements:

Objectivity and consistency are paramount considerations as the General Services Department handles claims against the state. The department should be fair to those with meritorious claims while also embodying unimpeachable stewardship of taxpayer dollars. Given the serious concerns raised about some of the settlements struck by the prior administration, Secretary Ortiz is rapidly developing new procedures for ensuring all appropriate and necessary review is conducted for all claims, and I fully trust his process will bear fruit. I expect — and New Mexicans deserve — nothing less than thorough, factual and consistent investigations when claims are made against state government.

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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