Consultant to Former New Mexico Secretary of State Gets 10 Years in Prison

FBI News:

U.S. District Judge William P. Johnson on Tuesday sentenced Armando C. Gutierrez, 65, of Corpus Christi, Texas, to 10 years in federal prison, followed by three years of supervised release, for his convictions for conspiracy, theft of government property, obstruction of justice, and money laundering.

Gutierrez was ordered to pay $2,500,483 in restitution to the state of New Mexico, including $746,375, which is to be paid jointly with co-defendant Joseph C. Kupfer, 50, of Rio Rancho. The court previously entered an order requiring Gutierrez to forfeit $2,500,483, including his interest in his Corpus Christi residence, to the United States.

Gutierrez’s sentence was announced by Acting U.S. Attorney Steven C. Yarbrough; New Mexico Attorney General Gary K. King; Dawn Mertz, Special Agent in Charge of the Phoenix Division of the IRS-Criminal Investigation; and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.

In announcing the sentence, Acting U.S. Attorney Steven C. Yarbrough said, “Those who do business with the government must be held to the same high standards as government officials. When private citizens enter into contracts to provide services paid for with taxpayers’ monies, they become duty-bound to provide honest services for the monies they receive. The sentence imposed on Armando Gutierrez today appropriately penalizes him for violating that duty when he stole more than $2,500,000 in taxpayers’ monies and failed to provide any services for that money. When individuals—whether public officials or government contractors—abuse the public’s trust in this way, they corrupt the system and erode the public’s confidence in their government. I commend the New Mexico Attorney General’s Office for initiating the investigation of this case and the IRS and FBI for undertaking the comprehensive and complex investigation that permits us to hold Mr. Gutierrez responsible for stealing from the public he contracted to serve.”

New Mexico Attorney General Gary King said, “I am pleased that the fruits of our investigation were used to help secure convictions against those who violated the public trust. I highly commend our AG investigators for their hard work in tracking down the misuse of public funds that led to this prosecution. I very much appreciate the cooperation extended to my office by the U.S. Attorney’s Office.”

“A lengthy prison sentence is what happens when individuals steal federal funds then obstruct and conceal their crimes. In this case, Mr. Gutierrez misappropriated voter education funds and used the money for his own benefit. IRS-Criminal Investigation, along with our law enforcement partners, will continue to aggressively investigate the theft of taxpayer dollars,” stated IRS-Criminal Investigation Special Agent in Charge Dawn Mertz.

“Those of us in government entrusted with taxpayer’s hard earned funds have an obligation to see that money is properly spent,” said FBI Special Agent in Charge Carol K.O. Lee. “In this situation, money that was designated to promote a fundamental right and civic obligation was instead stolen by greedy and unscrupulous individuals more concerned with their own comfort and wealth. The FBI appreciates the efforts of its special agents, as well as the IRS-Criminal Investigation and the New Mexico Attorney General’s Office, to bring these people to justice.”

This case was initiated in December 2010 by the filing of a three-count indictment charging Kupfer and his wife, Elizabeth D. Kupfer, 51, with failing to report at least $768,333 in taxable income during tax years 2004 through 2006 and evading $286,175 in federal taxes. An 11-count superseding indictment was filed in July 2011, adding Gutierrez as a defendant and five counts charging Gutierrez and Kupfer with conspiracy and theft of government property relating to federal Help America Vote Act (HAVA) funds administered by former New Mexico Secretary of State (NMSOS) Rebecca Vigil-Giron.

The superseding indictment also charged Gutierrez with two counts of obstruction of justice relating to a federal audit and investigation into the misuse of federal HAVA funds and one count of laundering unlawfully obtained proceeds and retained the original tax evasion charges against the Kupfers. At the time of the events described in the superseding indictment, Gutierrez and Kupfer were providing consulting services to the NMSOS under HAVA contracts, and Mrs. Kupfer was an employee of the New Mexico Attorney General’s Office (NMAGO) who had been detailed to work for the NMSOS.

The court severed the three tax evasion counts from the other eight counts in the superseding indictment for purposes of trial and scheduled separate trials for the Kupfers on the three tax evasion charges (the tax trial) and for Gutierrez and Kupfer on the conspiracy, theft, obstruction of justice, and money laundering charges (the HAVA trial).

The tax trial commenced on August 13, 2012, and concluded on August 17, 2012, when the jury returned a guilty verdict against the Kupfers on all three tax evasion charges. The evidence established that, during the years 2004 through 2006, Kupfer received income, including federal HAVA funds, from Kupfer Consulting (KC), a business owned and operated by Kupfer, and the Kupfers reported income from KC in their joint personal tax returns. During those three years, the Kupfers received $1,304,421 in revenue from KC but reported only $502,541 in their tax returns. The Kupfers concealed approximately $768,333 in income by providing incomplete information to their tax preparer and thus avoided paying taxes on that money.

The HAVA trial began on January 22, 2012 and ended on January 31, 2013, when the jury returned guilty verdicts against Gutierrez and Kupfer on the conspiracy and theft of government property charges and against Gutierrez on the obstruction of justice and money laundering charges. In summary, the evidence established that, between April 2003 and December 2006, the NMSOS administered almost $20 million in federal HAVA funds, which were designated for voter education, increasing voter registration, and meeting new standards for election administration and voting systems, through a number of contracts. The contracts included a multi-million-dollar contract for voting-related advertising awarded to A. Gutierrez and Associates Inc. (AGA), which was owned and operated by Gutierrez and three small contracts for increasing voting accessibility for the disabled that were awarded to KC, Kupfer’s business.

According to the evidence, Gutierrez and Kupfer conspired together to defraud the United States by stealing federal HAVA funds and converting the funds to their own use. Between September 2004 and October 2006, AGA received a total of $6,271,810 in federal HAVA funds from the state of New Mexico, but Gutierrez submitted documentation supporting only $3,385,151 in services and costs, resulting in an overpayment of $2,500,483 to which AGA was not entitled. In addition to the three small contracts totaling $70,000, which were awarded to KC by the NMSOS, AGA made nine payments totaling $746,375 in federal HAVA funds to Kupfer between October 2004 and November 2006, which far exceeded the value of any work that Kupfer ever actually performed for AGA under the HAVA contract.

In early 2007, the Election Assistance Commission began an audit into the use of federal HAVA funds by the NMSOS. The AGA HAVA contract immediately became the primary focus of the audit because AGA could not provide documentation to support the federal HAVA funds AGA received. In an effort to provide documentation for the federal HAVA funds AGA received, AGA provided 187 fraudulent invoices totaling $1,137,000 that purported to represent payment to media vendors when, in fact, AGA never paid any vendors based on these invoices. Subsequent to the EAC audit and in response to federal grand jury subpoenas, AGA and KC submitted fraudulent invoices that purported to support the nine payments totaling $746,375 that KC received from AGA between October 2004 and November 2006. Three of these invoices sought payments in the aggregate amount of $236,605 for production of a poll worker training video that was actually produced by another subcontractor at the cost of $75,000.

May 14, 2013, Mrs. Kupfer was sentenced on her tax evasion conviction to three years in prison, followed by three years of supervised release. Mrs. Kupfer also was ordered to pay $288,339 in restitution to the IRS.

Kupfer’s sentencing hearing is scheduled for September 11, 2013. At sentencing, Kupfer faces a maximum penalty of five years in prison on the conspiracy charge and a maximum penalty of 10 years in prison on each of the theft of government property charges. He also may be fined up to $250,000 on each count of conviction.

The case was investigated by the IRS-Criminal Investigation and the Albuquerque Field Office of the FBI, with assistance from the New Mexico Attorney General’s Office. The case was prosecuted by Assistant U.S. Attorneys Tara C. Neda, Jeremy Peña and Cynthia L. Weisman.

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