Mora County Diverted $3 Million in Wildfire Recovery Interest
Summary
A forensic audit ordered by New Mexico's State Auditor after a whistleblower tip found that Mora County -- population 4,096, still recovering from the largest wildfire in state history -- withdrew $3,044,278.33 in interest earned on $41,160,256.63 in zero-interest disaster loans and spent it on vendors connected and unconnected to wildfire recovery, without tracking where most of it went. Because the loans were restricted to Hermit's Peak/Calf Canyon Fire damages, that diverted interest may shrink the county's FEMA reimbursement and could trigger the loans' immediate-repayment provisions. Separately, the same audit found the county spent $168,358.09 renovating the privately owned Chief Theater after the state's own finance department told the county's attorney in writing that doing so would violate New Mexico's constitutional anti-donation clause. The renovation was never finished; the theater remains unusable. The State Auditor's cover letter calls the 21 findings a breach of the public trust.
The audit⧉ -- a forensic investigation the State Auditor ordered after a county whistleblower came forward -- covers financial activity from January 1, 2020 through May 1, 2025. New Mexico's Senate Bill 6⧉ authorized the loans in 2023 specifically to bridge the gap before reimbursement arrived, restricted to repairing fire-damaged public infrastructure and repayable from the first dollars of that federal money. The county applied for and received five of them between June 2023 and February 2024. Then it posted the funds to its books, removed them again, and its external auditor filed them under a courthouse-repair fund as unassigned balance -- "contrary to the loan agreements,"⧉ as the forensic report puts it.
The interest had "no restriction" -- so it went everywhere
Once the loan principal moved into New Mexico's Local Government Investment Pool, it began earning interest, and the county treated that interest as fair game. Employees told auditors the money had "no restriction,"⧉ since -- unlike the loan principal -- it didn't have to be paid back. Over 13 deposits between July 2023 and February 2025, the county withdrew $3,044,278.33⧉. Only the first three withdrawals were properly recorded as deposits in the general ledger; auditors found no matching entries for the other ten, with a bank-to-book variance each month that lined up almost exactly with the missing amount.
Because the county never tracked the deposits, it also couldn't reliably say what the money bought. One withdrawal of $186,956.07⧉ was pitched to the Board as covering the county attorney's overdue invoices and a Microsoft bill -- then landed in the budget under different categories entirely, split between "Other Contractual Services," a settlement fund, and vehicle maintenance. Another, $186,925.65⧉, was approved with no stated purpose at all; a county official told the Board only that the manager "hasn't told me what it's earmark[ed] for, but he told me he's claiming it. So that's his money." Because the loans are restricted to fire-damage repair, federal rules may treat the interest the same way⧉ -- meaning 's eventual reimbursement to the county could shrink by whatever interest it spent outside that purpose, and the loans' own terms could require immediate repayment.
View data as table
| SB6 loan principal | 41,160,256.6 | Zero-interest disaster loans -- none withdrawn during the analysis period |
|---|---|---|
| SB6 loan interest | 3,044,278.3 | Withdrawn in 13 deposits; only the first three were recorded on the county's books |
A theater the state already said no to
The same audit documents a separate, smaller, more clear-cut case: $168,358.09⧉ the county spent renovating the historic Chief Theater, a 1935 building across from the courthouse owned not by the county but by a nonprofit⧉, Tapetes de Lana, Inc. -- an organization that, records show, hasn't filed a tax return since 2017.
New Mexico's constitution bars local governments from paying for capital improvements on private property, and the county had been told so directly: as early as December 2019⧉, its own manager told the Board she was checking with the state on what it would take to avoid violating that rule. In June 2023⧉, the state's Department of Finance and Administration put it in writing to the county attorney: the project "cannot move forward since the appropriation would be used to make capital improvements to a privately-owned facility."
The county spent the money anyway -- against a 2017 renovation contract⧉ between the theater's owner and its contractor that was never put out to bid and never mentioned the county at all. Construction started and was never finished; county employees told auditors the theater remains unusable⧉. By December 2024, when the Board next discussed the project, Tapetes de Lana's own director was serving as Mora County's County Manager⧉.
View data as table
| 2017 renovation contract (not-to-exceed) | 740,000 | Contract between the theater's private owner and its contractor -- no bidding process, no reference to the county |
|---|---|---|
| County paid, 2020-2022 | 168,358.1 | Construction started and was never finished; the theater remains unusable |
"A breach of the public trust"
The forensic report lists 21 findings⧉ in total, including commissioners directly running day-to-day operations⧉ that state law assigns to the county manager, routine purchase-order splitting to dodge competitive bidding, and what auditors called a "poor tone at the top"⧉ that fed noncompliance across the county. In his cover letter releasing the report, State Auditor Joseph Maestas told the Board of County Commissioners⧉ its failures were not procedural but a "breach of the public trust," occurring "under the authority and watch of the County's elected governing body."
The takeaway
- The disaster loan itself was never the problem -- its interest was. Mora County left all $41.16 million in SB6 principal untouched through May 2025, but withdrew $3.04 million in interest the principal earned and spent most of it without a paper trail, exposing the county to reimbursement cuts and possible immediate loan-repayment demands.
- The county was warned about the theater in writing, years before it finished spending. New Mexico's finance department told the county's own attorney in 2023 that funding a privately owned building's renovation would violate the state constitution's anti-donation clause -- after the county's own manager had flagged the same risk back in 2019. The county spent $168,358.09 on it anyway, and the building still can't be used.
- Money and people moved in the same small circle. The nonprofit that owned the theater the county funded later supplied the county's own manager. For a county of 4,096 people, that overlap is easy to happen into -- which is exactly why the audit calls for the conflict-of-interest disclosures and documented decision-making the county didn't have.
All findings are from the New Mexico Office of the State Auditor's Mora County Special Audit (Forensic Investigation) Report⧉, performed by Carr, Riggs & Ingram, LLC and released April 27, 2026, read in full including the State Auditor's cover letter and the county's point-by-point management responses. The report documents ten further findings not detailed here, including undisclosed conflict-of-interest statements, improper use of emergency procurement to bypass competitive bidding, invoices approved without required signatures, and a lack of fraud-awareness training for county staff. Dollar figures throughout are the report's own; sums and comparisons were independently recomputed and check out against the report's stated totals.
Sources(1) ▾
- New Mexico Office of the State Auditor / Carr, Riggs & Ingram, LLC, Mora County Special Audit (Forensic Investigation) Report (2026-04-27) — The New Mexico Office of the State Auditor's forensic investigation into Mora County's handling of Senate Bill 6 wildfire-recovery disaster loans and interest, commissioned after a whistleblower tip, covering County financial activity from January 1, 2020 through May 1, 2025. Source for the $41,160,256.63 in Senate Bill 6 disaster loans (pp. 4, 35-37), the $3,044,278.33 in loan interest withdrawn and its disbursement-by-disbursement usage (pp. 38-40), the Chief Theater renovation history and its $168,358.09 in county spending on a privately owned building (pp. 26-29), the county's 2024 Census population estimate (p. 10), the 21 numbered findings (pp. 63-77), and the State Auditor's own cover-letter assessment of the county's governance failures. osaconnect.osa.nm.gov · original document
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Mora County, New Mexico -- population 4,096, still recovering from the 2022 Hermit's Peak/Calf Canyon Fire, the largest wildfire in state history -- took in $41,160,256.63 in zero-interest disaster loans⧉ from the state and, according to a forensic audit released by New Mexico's Office of the State Auditor⧉, never withdrew a dollar of the principal. What it did withdraw was the interest the loan money earned while it sat untouched: $3,044,278.33⧉, most of it never recorded in the county's own books, spent on purposes the county itself couldn't consistently explain.