Updated – Citing a “serious breach of the law,” New Mexico Secretary of State Dianna Duran has fined the National Hispanic Cultural Center Foundation $5,000, the maximum allowed, for violations of the Lobbyist Regulation Act.

Duran also demanded Foundation accounting records and expenditure reports for its lobbying efforts since 2006.

Legislative appropriations secured by the Foundation are now at the center of a separate state investigation into alleged misappropriations and commingling of state funds with private money in the Foundation’s bank account.

“(I)t is clear from your own records that the Foundation engaged in lobbying for and obtaining appropriations without following the reporting requirements of the Lobbyist Regulation Act,” Duran wrote in a May 19 letter disclosed Saturday to Veritas NM. “This violation alone constitutes a serious breach of the law, and is exacerbated by the mutually contradictory reports you have filed. Therefore, I am imposing (a) fine on the Foundation in the amount of $5,000.”

Duran’s decision to impose the fine appeared to have been based largely on a Dec. 3, 2010 Foundation expense report first obtained by Veritas New Mexico, in which Foundation President Clara R. Apodaca described the Foundation’s lobbying of lawmakers for state appropriations between 2006 and 2008. SOS Director of Elections Bobbi Shearer asked Veritas NM for a copy of the expense report on May 11 and was provided a public link to the news site’s Document Cloud account.

Apodaca has publicly denied lobbying lawmakers, but her expense report states the Foundation spent $154,000 on salaries and meals between 2006 and 2008, as part of its “successful” lobbying of “approximately 70″ lawmakers in Santa Fe.

“We were successful in obtaining appropriations from the following legislators,” Apodaca wrote in the report, which lists 18 state lawmakers by name.

In a May 10 letter to Duran, Foundation attorney Brad Hayes had acknowledged that activities covered by the lobbying law had occurred, but claimed Foundation officials did not believe they had lobbied legislators.

His letter made no reference to Apodaca’s 2010 expense report.

The Foundation should not be fined for “inadvertent” violations, Hayes argued.

That appears to have provoked Duran’s ire. She described the Foundation’s violations as “particularly problematic.”

“To certain entities, in certain reports and accounts, the Foundation has represented itself as not being involved in lobbying,” Duran wrote. “However, to other entities in other reports, the Foundation has not only stated it is involved in lobbying, but has reported its efforts at lobbying as having been successful. It is not within my purview to pass judgment on any number of questions that arise from this matter, but merely to determine the simple questions which have arisen regarding compliance or noncompliance with the reporting requirements associated with lobbying.”

The Foundation has 10 days to appeal the fine, Duran’s letter indicated.

Questions mount over Foundation finances

In 2007 and 2008, lawmakers appropriated $812,500 in taxpayer funds for muralist Frederico Vigil’s fresco of New Mexico history at the Center’s Torreón Building.

The money was turned over to the NHCC Foundation, the private fundraising company whose sole mission is to support the National Hispanic Cultural Center in Albuquerque.

But most of that money did not go to the artist, state and Foundation records show.

Much of the money was used to reimburse the Foundation for lobbying expenses, salaries and meals, records show.

Cultural Affairs Cabinet Secretary Veronica Gonzales has ordered an independent audit of the Foundation’s use of state fresco funds, and the return of more than $379,000 of that money.

Apodaca has acknowledged the fresco exhibit still lacks lighting and visitor seating, and has said it needs roof repairs and floor work.

It is not entirely clear how other grants and donations to the Foundation were used. As of June 30, 2009, only 42 percent of Foundation donations and other revenue went to support the Center, according to a 2009 Foundation audit report.

Bank statements would confirm whether or not the Foundation’s financial reports to the state and IRS were accurate.

But Apodaca has refused to disclose bank statements for the Wells Fargo account in which state money was kept, according to Department of Cultural Affairs spokesman Doug Svetnicka. Auditors with Moss Adams will demand to see the Foundation’s bank statements as part of Gonzales’s state-commissioned independent audit of fresco funds, Svetnicka said.

Other key Foundation and state fresco financial documents appear to be missing.

Apodaca has failed to respond to numerous requests for interviews or to comment on the Foundation’s lobbying and its management of state fresco funds. Nor has she responded to requests for comment on the Foundation’s solvency or the resignation of three of her chief financial officers over the past year and a half — two of them since April 2010.

Apodaca’s personal 2008 gift of $30,000 to the Foundation, listed in the Foundation’s glossy annual report as a “donation,” was subsequently quietly reclassified by the Foundation as a “loan,” records show — the terms and conditions of which were not disclosed to the Foundation’s auditor.

Last year, former Gov. Bill Richardson removed Matt Martinez, who had been asking questions about Foundation finances, from the NHCC board. In a Dec. 13 e-mail to then-Cultural Affairs secretary Stuart Ashman, Apodaca suggested Richardson had removed Martinez from the board as a favor to her.

Apodaca’s failure to register as a lobbyist or file lobbying expense reports with the state as required by law, and the Foundation’s use of state fresco funds on lobbying, salaries and meals, were first reported by Veritas NM.

Veritas NM reader Frances Gabaldon first noted that Foundation staff lobbyists named in Apodaca’s expense report do not appear in the Secretary of State’s current 2011 list of registered lobbyists. Veritas obtained archived lobbyist registration records for 2006, 2007 and 2008, and confirmed that no Foundation staff or officials had registered during those years, either.