State audit slams Corrections Department for ‘mismanagement’

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When former television reporter Alex Sanchez worked as the spokeswoman for the New Mexico Department of Corrections from 2013-15, her job brought her in close contact with Lucky 8, a production company that was filming a reality television series called Behind Bars: Rookie Year, about new corrections officers at the state prison near Santa Fe.

Sanchez resigned in 2015, and although several sources said she left to work for the television production company, Sanchez would only say at the time that she left for “an opportunity in the private sector.”

Six months later, she was back at Corrections — in a newly elevated position as deputy secretary of administration — and so was Lucky 8, filming another season of Rookie Year in state-owned prisons.

Now, a newly released audit by the State Auditor’s Office suggests Sanchez used her new authority to waive $20,000 worth of fees the production company should have paid to the state. The audit says other fees were waived, too, “but there was no tracking of these amounts.”

The fees were waived in an effort to “build the partnership” between the Corrections Department and the production company that had employed her, the audit says.

The audit also found that Lucky 8 was allowed to continue filming in state prisons, even though it still owed the state about $42,000 from previous invoices.

Questions about the waived fees and Sanchez’s role in them are among several stinging findings in the 122-page audit of the Corrections Department for fiscal year 2016, which ended in June.

“The agency is rife with mismanagement and financial control problems,” State Auditor Tim Keller said Thursday. “It’s definitely one of the poorer run departments in the state of New Mexico.”

Corrections Secretary David Jablonski, appointed by the governor in October and confirmed by the Senate last month, said in an email Thursday, “We have been working with the State Auditor’s Office in correcting all of the deficiencies. We’ve started implementing — and in some cases have already implemented — corrective action to address these findings. We will continue to work on this.”

Keller’s audit doesn’t name Sanchez, which he said is standard protocol, but he confirmed she is the employee the audit refers to when it says, “The involvement of this employee in the determination of amounts billed and fees waived appears to be a conflict of interest as not all of the decisions appear to be in the best interest of the state.”

In response to questions from The New Mexican, Sanchez — now a deputy superintendent at the state Regulation and Licensing Department— said in an email Thursday that when she returned to the Corrections Department after working for Lucky 8, she had a “very clear conversation” with then Corrections Secretary Gregg Marcantel “to ensure there would not be a conflict of interest in the dealings with Lucky 8 productions.”

This included ensuring she would not make decisions on deals between the Lucky 8 and the department, she said.

Sanchez said there were occasions during her term as deputy secretary when she was asked to reach out to the company, “but it was always done with Secretary Marcantel in the loop and sometimes at his direction.”

According to Keller’s audit, however, “no evidence was provided to support that the financial decisions in relation to the [agreements with Lucky 8] were made by another individual within the Department.”

Another finding in the report dovetails with the results of a six-month investigation by The New Mexican last year into the Corrections Department’s failure to monitor its former medical care provider, Corizon.

While The New Mexican found the state had barely audited the firm, which faced of dozens lawsuits filed by inmates who alleged it provided subpar care, Keller’s audit said the three doctors who helped the department’s medical director audit Corizon’s performance were all employed by the massive national prison health care corporation.

“Since the doctors are employed by the Contractor,” Keller’s audit says, “this is an apparent conflict of interest as the doctors are evaluating the quality of service of their employer. This process is the same under the new contract with Centurion,” the state’s new prison health vendor.

The audit found other problems with how the Corrections Department handled its contract with Corizon. For instance, the audit says the department paid Corizon’s final invoices without accounting for $572,514 worth of credits the medical provider owed the state.

“The Department does not anticipate receiving these funds,” the audit says.

But Corrections spokesman Sita Mahesh said the agency is “in the process of collecting the money owed to the Department by Corizon.”

When it hired the new medical care vendor last spring, the audit says, the department failed to properly evaluate contract proposals, and the team that reviewed the proposals didn’t have the right qualifications.

“The pharmaceutical services proposals and the medical services provider proposals should have been evaluated separately during the RFP process,” according to the audit. “Additionally, the evaluation team should consist of individuals who have an understanding of the services to be provided, to ensure a fair and effective evaluation of the proposals.”

The audit also found the department out of compliance with record-keeping rules regarding compensation time awarded to workers in lieu of overtime payments. The Penitentiary of New Mexico “shredded files without scanning documents for backup onto a secured drive,” the audit says.

Mahesh said the department will retain files for four years, as recommended by the audit.

The state has since collected money owed by Lucky 8, he added, and “we have no more shows planned with Lucky 8.”

Keller said the findings speak to management deficiencies at the department, including “a lack of segregation of duties and knowledge of conflicts of interest in the management team.” But he said the findings seemed to indicate “poor management as opposed to criminal activity.”

Keller often issues news releases about his office’s findings. He didn’t in this case, he said, because of a backlog of audits that all were released around the same time, and because “we didn’t see some urgent need to immediately alert the public” about the findings.

However, he said, the online publication of the audit — which he said occurred March 1, five days after it was released to the Corrections Department, as is routine — has resulted in multiple calls from journalists, which has led Keller to suspect there might be more to investigate at the agency.

“We are learning a little bit more each time we talk to folks,” Keller said. “So this may become bigger if there is more information or more to this than what our audit findings showed us.”

The Santa Fe New Mexican is a sister-paper of The Taos News. Contact Phaedra Haywood at 505-986-4068 or phaywood@sfnewmexican.com. Follow her on Twitter @phaedraann.com.

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