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State investigates Hispanic Cultural Center Foundation

14 April 2011 Written by:

State Department of Cultural Affairs (DCA) Secretary Veronica N. Gonzales has ordered a “full and independent” audit of how the National Hispanic Cultural Center Foundation spent $812,500 in state funds lawmakers provided for completion of the Center’s Torreon Building fresco in Albuquerque, DCA spokesman Doug Svetnicka confirmed Thursday.

Citing “serious mistakes with the distribution of funds for this project,” Gonzales demanded Foundation President Clara Apodaca return a total of $379,855 to the state, in a letter dated March 30.

The Foundation already returned the $138,361 unspent balance of that money in a response from Apodaca dated March 31, Svetnicka confirmed.

“We do not know at this time the specific amount of additional monies that will be repaid,” Svetnicka wrote in an e-mail to Veritas New Mexico. “Sec. Gonzales has initiated an independent audit of this project that will help determine this amount.”

The Legislature made three appropriations in 2007 and 2008 totaling $812,500 for the completion of Santa Fe muralist Frederico Vigil’s Torreon Building fresco, depicting New Mexico’s Spanish and Native American history.

That money was to go toward production of the fresco, but the money was sent directly to the Center’s independent fundraising Foundation instead of to the Center. The Foundation subsequently spent nearly 30 percent of that money — $241,494 – on “impermissible” expenses, according to Gonzales’s letter — including documentary films about the fresco and “administrative fees” that went to reimbursing Foundation lobbying, meal and salary expenses.

Gonzales is traveling this week and was unavailable for comment, Svetnicka said.

Apodaca would not speak with Veritas Wednesday, or even schedule an interview about Foundation finances.

But in a copy of Gonzales’s March 30 letter to Apodaca, provided by Svetnicka Thursday morning, Gonzales requested the return of $138,360.97 of unexpended state fresco money, plus another $241,494 of fresco money already spent by the Foundation for items deemed “impermissible” under state laws and regulations.

In her March 31 response letter to Gonzales, Apodaca questions the DCA’s authority to perform an external audit on the Foundation, which is a private, nonprofit corporation, but “welcomes DCA to perform an independent external audit of all financials should they deem it necessary.”

Apodaca also notes in the letter that under previous DCA secretary Stuart Ashman, an internal DCA “audit” was performed on fresco project expenditures, and that it concluded the Foundation had “adequately accounted for all funds.”

In reality, that inquiry was a “Special Review” conducted by DCA auditor Michael Miera — not a formal audit.

Miera’s special review report, dated Dec. 21, 2010, noted several problems, including:

  • The absence of a signed memo of understanding (MOU) between the state and the Foundation, laying out how the legislative appropriations sent to the Foundation should be spent. (Without this document, the dispersal of state funds to the Foundation may have violated the state Constitution’s Anti-Donation Clause.)
  • The Foundation’s use of state money for the fresco, to “reimburse” the Foundation for previous payments to the artist (which were made with private donors’ money).
  • The hiring of a Foundation staffer as a documentary film producer with $38,045 of the state fresco appropriation funds.
  • Missing invoices and records for $10,000 spent on an item listed as “First Video – Fresco.”

Former Center board member Matt Martinez, who publicly alleged Nov. 18 the Foundation had misappropriated state fresco funds, had called for independent audits by the IRS and State Auditor Hector Balderas.

But Apodaca assured Balderas in a Dec. 28 e-mail that a signed copy of the missing MOU had been located, that no further reimbursements to the Foundation for previous expenses would occur, and that the Foundation had adopted a “Conflict of Interest procedure” to avoid hiring Foundation staffers as contractors in the future. (The Foundation’s 2008 IRS tax returns stated that a conflict of interest policy was already in place. Veritas has asked the Foundation for copies of both policy documents.)

However, the MOU, a copy of which was obtained from the DCA, while signed by Ashman and Apodaca, was not dated. That raises questions about its legal standing and whether it was signed before or after the Foundation was given state funds.

Photo courtesy of Peter St. Cyr.

Documents cited in this report

March 30, 2011 letter from Dept. Cultural Affairs Secretary Veronica Gonzales to National Hispanic Cultural Center Foundation CEO Clara Apodaca, demanding the return of state Torreon Building fresco funds

March 31, 2011 response from Foundation CEO Apodaca

Dept. of Cultural Affairs’ Dec. 21, 2010 internal “special review” report on Foundation accounting and expenditures

Foundation CEO Apodaca’s Dec. 28, 2010 e-mail to State Auditor Hector Balderas

Foundation’s 2008 IRS tax returns

Undated Foundation memo of understanding with Dept. of Cultural Affairs

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