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Copyright © 2019 Albuquerque Journal
It was an extravagant golfing trip to Scotland – an excursion paid for, in part, with University of New Mexico funds. But that getaway that then-UNM athletics director Paul Krebs embarked on four years ago with several family members, several prospective donors and former Lobo men’s basketball coach Craig Neal has haunted Krebs ever since, culminating Wednesday with the filing of five felony counts against him.
Attorney General Hector Balderas’ office filed a criminal complaint Wednesday morning charging Krebs with fraud, money laundering, evidence tampering, criminal solicitation and making or permitting false public voucher, all felonies. The charges were filed in state District Court in Albuquerque.
The AG’s Office alleges that Krebs went out of his way to skirt university safeguards put in place to vet such trips and that he subsequently tried to quiet the scandal through deception. The court document accuses Krebs of “using his powers and resources of public office to obtain personal benefits or to pursue private interests.”
The complaint says he urged others to destroy public records and that he also tried to conceal a $25,000 donation he made in an apparent attempt to quiet criticism over the trip.
Krebs has been embroiled in scandal since 2017, when journalists began unearthing details about a 2015 athletics department fundraising golf trip to Scotland attended by Krebs, Neal and former Lobo Club executive director Kole McKamey. The university spent about $64,000 in public money on the excursion, including nearly $25,000 to pay some costs for three private donors who attended: Paul Gibson, Darin Davis and Raleigh Gardenhire.
Paying for private individuals’ expenses may have violated the state Constitution’s anti-donation clause, Balderas said when launching a subsequent investigation into the trip.
Details of the trip sparked public outcry.
Krebs in May 2017 announced that an “anonymous” donor had contributed $25,000 to cover UNM’s losses, a donation his attorney, Gene Gallegos, acknowledged in late 2018 that Krebs himself made.
However, Krebs and the University of New Mexico Foundation – which processed the donation – never publicly revealed the source despite repeated inquiries from the media.
High-ranking UNM Foundation officials also refused to identify the donor to Balderas’ office, giving “many contradictory statements,” which prompted the Attorney General’s Office to search the foundation headquarters last September.
The nine-page criminal complaint filed in state District Court charges Krebs made the donation “as a way to deflect questioning from the public and media.” It alleges he took a series of steps to conceal his after-the-fact payment but also that he intentionally mischaracterized the trip in the planning stages and paid for it with a UNM purchasing card in small increments to circumvent university policy that would have required a higher level of approval.
Krebs’ Scotland golf package was described as “a trip to a ‘Men’s Bball Tournament in Ireland,’ Craig Neal’s package was shown as a ‘Trip w/MBBall,’ and Kole McKamey’s package was shown as ‘VP Travel.’ Three purchases for local ‘donors’ were listed as ‘Donor Cultivation for MBBall,’ ” the complaint says.
Krebs used “his powers and resources of public office to obtain personal benefits or to pursue private interests,” the complaint states.
His wife, son and in-laws also went to Scotland, though there is no indication UNM paid for their travel.
Krebs – who retired from UNM amid the scandal and now runs a higher education consulting firm, according to the complaint – did not immediately respond to a Journal request for comment Wednesday, nor did his attorney, Gene Gallegos, a former UNM regent.
But when Krebs retired in June 2017, he told the Journal, “I understand why people may question the Scotland trip, but it was a working trip designed to raise money. As I’ve said, I’ve got nothing to hide. I welcome any engagement from the (state) auditor. I’m not running away from anything. I’ll leave it at that.”
Gallegos told the Journal in October 2018 that he and Krebs were willing to cooperate with the inquiry. However, the complaint said Krebs “declined to be interviewed” after Attorney General’s Office agents and Gallegos scheduled a meeting for Dec. 19, 2018.
But Gallegos last fall denied that his client had broken the law.
“If you read the search warrant (filed last fall for Krebs’ credit card records), it sounds like maybe Paul wasn’t the best employee, but it doesn’t have anything to do with crimes,” he said.
A UNM spokeswoman said Wednesday the complaint “does not suggest any wrongdoing by UNM.”
“However, we will continue to cooperate fully with the AG’s office as we have in the past,” spokeswoman Cinnamon Blair added in a written statement. “Since this is an ongoing investigation, it is not appropriate for us comment any further.”
Much of the criminal complaint focuses on the $25,000 donation and the alleged multifaceted effort to hide the donor’s identity, reiterating details outlined in previous search warrant affidavits filed by Balderas’ office.
According to the complaint, several reporters filed public records requests regarding the donation after Krebs publicly announced it on May 23, 2017. Those requests were “not met.”
The Office of the State Auditor then asked the UNM Foundation about the donation in a meeting on July 25, 2017.
At 2:01 p.m. the next day, foundation general counsel Pat Allen said the donor had been contacted and indicated the gift was to “support the stewardship and development efforts associated with the athletic department 2015 fundraising trip to Scotland.”
Eleven minutes later, Krebs emailed his wife, Marjori, a UNM employee, asking her to print and hand-deliver a letter to the foundation office. The letter he included – signed only “The Donor” – used the same language Allen had to describe the $25,000 donation.
Krebs told Marjori that Larry Ryan, a UNMF vice president, was expecting the letter and it should have “no name, return address or anything associated with us on the letter or envelope” and “not be traceable if public.” He also told her to “Delete everything I sent when done so nothing discoverable in (public records) request. Including from your delete file. Thanks,” according to the complaint.
The Attorney General’s Office subsequently seized Paul Krebs’ credit card records and Marjori Krebs’ bank records.
It also in December executed a search warrant on the Lobo Club – the chief fundraising arm for UNM athletics – seizing records related to Pit suite sales and other documents.
UNM had in 2017 acknowledged that it had failed to collect more than $400,000 in payments for use of the skyboxes in the Pit. The search warrant affidavit alleged that Krebs had in some instances sidelined Lobo Club employees who were trying to collect money owed for those suites.
Hearing with judge
Balderas said his office chose to file a criminal complaint – rather than pursue an indictment – to allow for a preliminary hearing in which a judge will determine whether there’s “probable cause” to move forward with charges.
It’s a process that will give the public insight into exactly what happened, he said.
“This case is about protecting public funds for higher education institutions, and we look forward to transparently bringing this case forward,” Balderas told reporters at the Capitol Wednesday. “This is an important matter for the entire state of New Mexico.”
Krebs could face up to 15 years in custody, if convicted, Balderas said.
Prosecutors, he added, haven’t made a final decision on whether to charge anyone else in the case.
The attorney general also called on university leaders to dramatically improve accounting and financial oversight, especially within the athletics program.
“These are assets that the students own,” Balderas said. “The lack of record-keeping created an environment where it was easy to commit crimes.”
Journal staff writers Dan McKay and Katy Barnitz contributed to this report.
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Source : https://www.abqjournal.com/1277458/krebs-charged-with-fraud-money-laundering-other-felonies.html