City audit alleges fraud in Las Cruces government involving $1.8 million in public funds

(Editor's note: An initial version of this article referred to a state audit. Rather, this is a city audit that had been forwarded to the state auditor.)

LAS CRUCES, New Mexico -- A 767-page city audit released on Tuesday alleges criminal activity and $1.8 million in mismanaged funds by former employees and contractors of the city of Las Cruces - one of whom is a well-known restaurant owner.

The audit states that there is "probable cause to believe criminal violations have occurred" in actions reportedly taken by former economic development director Philip San Filippo, former city manager Stuart Ed and city contractor Marci Dickerson.

"I am deeply disappointed I was not provided an opportunity to insure accuracy of the information and answer any questions regarding my decisions and actions," wrote Ed in a statement to ABC-7. " The Report's assertions are not entirely accurate nor complete in their representation."

“This is the first time I have ever seen this,” Dickerson reacted to ABC-7. “I was never questioned, nor were any documents required or requested from me. When I contacted the auditor to see what I can do to help with the facilitation of the audit, they refused to talk to me.”

Dickerson currently owns the Game I, the Game II and Dickerson's Catering.

On page 24 of the document, the audit stated that San Filippo loaned $25,000 to Dickerson for her restaurant, the Game II, and failed to disclose the conflict of interest, which the audit states "should have been precluded (him) from any direct or indirect involvement with procurement around Marci Dickerson’s companies."

Dickerson said she was "shocked" by the document's findings. She denied any allegations of bid rigging and called the investigation political.

"It's no secret in the Las Cruces community that city councilors as well as the mayor are not big fans of mine," she told ABC-7.

Much of the audit concerns the handling and management of the Las Cruces Country Music Festival. The city contracted with Dickerson's catering company to manage the event in fiscal year 2016, according to the findings.

"The Las Cruces Country Music Festival lost money in each year of its existence, with taxpayers spending more than a million dollars to put on the event, with minimal gain to the City in the form of economic benefits," reads the document on page 50.

The city audit recommends a criminal investigation into the matter and its findings have been sent to the state auditor's office for review.

"State laws were violated including but not limited to fraud, embezzlement, criminal violations of the procurement code, bid rigging and money
laundering," reads the conclusion of the investigation, on page 47 of the document.

The document adds that: "Concerns exist that federal criminal violations occurred, including misappropriation of funds."

The city contracted with the McHard Firm for the investigation, which lasted eleven months and produced "data equivalent to approximately 3 million pages of documentation," according to the city.

San Filippo told ABC-7 that he was "reading over the document" and will have comment soon.

You can read the full audit here.