DALLAS — A former New Mexico state representative accused of misusing $300,000 from an affordable housing bond issue is awaiting trial along with three other executives after a lengthy investigation by the attorney general’s office.
Vincent “Smiley” Gallegos, who served in the Legislature for a decade until the mid-1990s, was indicted last month on multiple counts of fraud, embezzlement, and money laundering for his actions as director of the New Mexico Housing Authority’s defunct Region III office in Albuquerque. Also indicted were Albuquerque bond attorney Robert Strumor and former Region III employee Dennis Kennedy.
David N. Hernandez, a contract attorney for the Region III Housing Authority and former head of the state bar association, is charged with one count of tampering with evidence.
Attorneys for the accused have asserted their clients’ innocence, but the state district court in Albuquerque is awaiting their pleas in the case. No date has been set for trial.
Allegations of fraud and mismanagement arose after the regional agency in 2006 defaulted on state bonds sold in 2003 to buy and rehabilitate homes for sale to low-income buyers. After the state took over payments on the bonds, the State Investment Council referred the case to the attorney general’s office for prosecution.
“The review of Region III’s use of bond proceeds uncovered questionable practices, concluding that, at a minimum, Region III was grossly mismanaged,” the SIC report said. “Among other findings, Region III violated the terms of the bond indenture and possibly the regional housing law by selling properties to those who do not fall within the definition of 'low income,’ selling properties to interested parties, and retaining bond and sale proceeds for their own operating account instead of repaying the bond.”
In the indictment, Gallegos is accused of taking $300,000 as a loan, saying he’d use it purchase land to build homes, but the land was already purchased.
After Gallegos became a lobbyist in 1996, he met often with New Mexico House Speaker Ben Lujan, who has denied working to avoid stripping Region III of its bonding authority, according to reports. One of Lujan’s top aides was revealed to be living rent-free in a home owned by Region III even though she was earning more than $71,000 per year.
Former Metropolitan Court Judge Theresa Gomez also lived in a housing authority home rent-free for 20 months. She has admitted to fixing two parking tickets and canceling an arrest warrant on Gallegos during that time period.
Gallegos also began seeking to expand his authority over other housing agencies in other regions, claiming that he had been instructed to do so by newly elected Gov. Bill Richardson in 2002. Richardson has not commented on the issue.
Since the scandal broke, lawmakers have stripped the housing agencies of their power to issue bonds and consolidated the seven regions into three. Region III was taken over by the Mid-Region Council of Governments.
Under the reforms, the state Department of Finance and Administration and state treasurer were assigned administrative duties over the agencies’ finances.
