The Santa Fe Review

The day before the city elections, a reader who is a realtor with Sotheby’s told me what she thought about my final dispatch in last month’s issue. “You’re right about one thing,” she said. “If enough people pull the lever for Mr. Coss, we will have more of the same.” She didn’t mean that as a good thing, but her words got me thinking: Would it really be so bad? As mayor, David Coss has done more than anyone at City Hall to support river restoration, and he was crucial in striking the deal to keep the College of Santa Fe, an important cultural resource, from closing. He has given dependable support to affordable housing and Santa Fe’s minimum wage — noble efforts to keep this place from becoming another Aspen.

Then I picked up the newspaper on election morning to see that he had received a last-minute $5,000 donation from Andrew and Sydney Davis, the immeasurably wealthy couple who maneuvered around Santa Fe’s land use laws to build their castle in the sky,  a sad monument to the city’s failure to protect its scenic ridgetops.

How far Mr. Coss has strayed from his roots. Five years ago when the Davises wanted to close off and gate the public street that leads to the mansion — the project was just getting under way — Mr. Coss, who was then a city councilor, showed no sympathy: “I think they’ve basically manipulated the escarpment ordinance to build a trophy home that the rest of us have to look at,” he told the New Mexican. A few months later the Davises sought revenge by contributing $10,000 to David Schutz, the land developer who was opposing Mr. Coss in the 2006 mayoral election. Now the Davises are on board the Coss bandwagon, as is Mr. Schutz himself, who also donated to the mayor’s reelection.

The same thing, of course, happened with Garrett Thornburg. As a councilor Mr. Coss questioned Mr. Thornburg’s plans to plop down his corporate “campus” in the middle of a northside neighborhood. Mr. Thornburg retaliated by supporting Mr. Schutz. But when it came time to shell out for the 2010 campaign, he too had become a believer, another of Mr. Coss’s influential new friends.

I guess you can call that building bridges or loving thy enemy. But inside the voting booth, it didn’t sit right with me. I pulled the lever (o.k., darkened the oval — I miss the old voting machines) for Miguel Chavez, knowing Mr. Coss would go on to win by a landslide. I still think he is the best mayor Santa Fe has had in awhile. The bar was set pretty low. What he lacks and maybe still can gain is a vision, something bolder than his slogan un lugar para todos, or, roughly translated, Can’t We All Just Get Along?

George Johnson
The Santa Fe Review

We are fortunate in Santa Fe to be living in one of the last two newspaper towns. If the Journal is scooped by the New Mexican — or vice versa — it will come back the next day to match or top the story with one of its own. And if both dailies become complacent there is the weekly Reporter nipping at their heels.

Given all that, I’ve been reluctant to believe that the New Mexican is deliberately suppressing the Thornburg bankruptcy story. There are too many good reporters and editors at the paper. But something there is seriously wrong.

Last month in the Journal Jackie Jadrnak reported another disturbing Thornburg development: Larry Goldstone and Clarence Simmons, the executives who were forced to resign after allegations of financial wrongdoing, were seen in a surveillance video removing two computers and a few dozen boxes of records from their old offices north of Santa Fe. They shipped most of the stuff to their lawyers in Washington.

Fearing that evidence might be compromised, Joel Sher, the federal trustee appointed to oversee the bankruptcy, filed a legal complaint insisting on the return of the goods and complaining of Mr. Goldstone and Mr. Simmons’s “continued flagrant disregard for the demands of the Trustee.” Last week the Journal followed up on its story: the two former executives have agreed to comply.

Mr. Goldstone and Mr. Simmons are among Santa Fe’s most prominent citizens. Thornburg Mortgage was once the city’s great financial success story. But any Santa Fean who depends on the New Mexican for news about this matter will have no idea what has been going on.

The Reporter also continues to work the story with a piece last week by Corey Pein: How Much Does Thornburg Pay In Taxes? Drawing on court documents, Mr. Pein shows that the company has earned $19.9 million since filing for bankruptcy last May. After overhead costs, only $816,773 remains for the creditors to fight over. Here is another interesting item:

	[Thornburg], which laid off 130 workers in April and more
	since, has paid all of $973 in unemployment taxes in the
	months since its bankruptcy. Two years ago, Gov. Bill
	Richardson -- who has received many thousands in campaign
	contributions from company founder Garrett Thornburg over the
	years -- signed into law a bill that cut employer
	unemployment tax payments to the lowest rate allowed by
	federal law, saving corporations an estimated $26 million in
	2008.

The company has also paid no property taxes because of the deal it struck with the city in 2007 involving industrial revenue bonds. The tax break was granted under the premise that Thornburg was a crucial component of the local economy.

George Johnson
The Santa Fe Review

It’s Sunday morning now and the Journal’s Mark Oswald has done it again, with a superb piece of explanatory journalism on the collapse of Thornburg Mortgage. Thornburg is one of the 10 largest corporate bankruptcies in the United States since 1980 — a list that includes Enron, WorldCom, and Lehman Brothers. Why the New Mexican doesn’t find this fertile ground for reporting remains a mystery.

George Johnson
The Santa Fe Review

The Reporter has moved again to the front of the pack with the most incisive look yet at the latest developments in the Thornburg Mortgage bankruptcy. In the story, Thornburglars, Corey Pein interviews two parties in the case and poses the crucial question:

	Was Garrett Thornburg duped by his longtime colleagues? Or did he
	and the board decide to throw their old friends under the bus?

The Thornburg Variations, a compilation of Mr. Pein’s reports on the company, is now online. Maybe the New Mexican can arrange to purchase reprint rights.

George Johnson
The Santa Fe Review

Mark Oswald, the editor of Journal Santa Fe, has written to note that he had the story on the appointment of a Thornburg trustee on Saturday, two days before Reuters. Apologies for missing that. Unlike the perfunctory brief in the New Mexican, the Journal had a full report, including some helpful context:

	The federal court system's Web site, in a section on
	bankruptcies, explains that the appointment of trustee in Chapter
	11 cases is "a rarity" and comes in cases of fraud, incompetence
	or to protect interests of creditors owed money by the bankrupt
	company.

George Johnson
The Santa Fe Review

There was more bad news last week for Thornburg Mortgage. According to Reuters, a federal court has taken control of the company by appointing an independent trustee to oversee the bankruptcy proceedings. This is a very big deal but the news got only a brief in the New Mexican — followed today by another Bob Quick puff piece about Thornburgh’s other venture, Thornburg Investment Management. The newspaper might just as well have reprinted the company’s press release.

George Johnson
The Santa Fe Review

While the New Mexican business desk lumbers along, the Journal has been pursuing the scandal at bankrupt Thornburg Mortgage. Last month the company’s principals, Larry Goldstone and Clarence Simmons, were forced to resign after they were accused by the Justice Department of taking money owed to creditors and spending it on themselves. Mark Oswald, the editor of the Journal’s northern New Mexico edition, went on to report that because of the “shocking allegations” Garrett Thornburg himself had resigned from Thornburg Mortgage’s board.

That was mostly window dressing. Mr. Thornburg remains at the helm of another entity, Thornburg Mortgage Advisory Corporation, which manages what is left of the mortgage company. Last week, we learn from Sunday’s Journal, he took another step to distance himself: a legal complaint accusing his old friends of “self-dealing,” “corporate waste,” and “unjust enrichment.”

We’re supposed to believe that until their sudden betrayal, everything Mr. Goldstone and Mr. Simmons did was for the greater good of the company and its stockholders. After the two executives underwent a Jekyll-and-Hyde-like transformation, they were removed from their posts. Now everything is fine again.

Maybe the feds will buy this story. Otherwise a judge will be appointed to take over Thornburg Mortgage and preside over its liquidation. If that happens who knows what else will come scurrying from under the rocks?

George Johnson
The Santa Fe Review

The Journal has picked up on the Thornburg accusations (and the resignations of Mr. Goldstone and Mr. Simmons) with a thorough piece by editor Mark Oswald, and Corey Pein advances the story another notch on the Reporter website. But there is nothing in the New Mexican about one of the most important local business stories of the year. All we’ve gotten recently from the paper is an admiring piece of free PR about Garrett Thornburg’s other company (the nonbankrupt one).

George Johnson
The Santa Fe Review

Corey Pein has good cause to gloat over his scoops for the Reporter: Thornburg “Misappropriation”? and Feds Claim ‘Gross Mismanagement’ At Thornburg — Or ‘Incompetence’ At Best. Numerous shareholder suits have been filed accusing the principals of Thornburg Mortgage of mismanaging the company, which is enmeshed in one of the largest corporate bankruptcies ever. Now two of them, Larry A. Goldstone and Clarence G. Simmons III, are suspected by Federal officials of mismanaging the bankruptcy for their own benefit. The details are in a motion (available on the Reporter’s website) asking for the appointment of a trustee to protect Thornburg’s creditors. Incidentally the $8,000 I invested in Thornburg stock is now down to $6, while Mr. Goldstone is still receiving $188,000 a month from the bankrupt company. (Please see the impressively researched piece Mr. Pein wrote earlier this month about Santa Fe’s richest people.)

George Johnson
The Santa Fe Review