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An investigation by the Office of the State Auditor (OSA) has found public officials were not filing required financial disclosures or recusing themselves from official business when personal interests were involved in the City of Hobbs, the OSA released this afternoon.

“This was a failure of multiple elected officials to follow their own ethics ordinance,” stated State Auditor Tim Keller. “These rules help ensure decisions are being made in the best interests of the public, not to advance personal interests. The City of Hobbs should take prompt action to restore taxpayers’ confidence.”

The investigation found the following:

• Hobbs mayor Sam Cobb had a financial interest in the form of a $60,000 home loan to city manager JJ Murphy, which raises a potential conflict of interest with respect to employment decisions. The mayor participated in employment matters involving the city manager, including his compensation, without disclosing the business interest.

• City officials, including the mayor and city commissioners, are required to file annual financial disclosures that include a listing of business interests. The city has no records of any such disclosures for the last several years.

• The city violated its procurement code by purchasing more than $40,000 of goods and services from vendors owned by two city commissioners.

The city’s Code of Ethics requires city officials to disclose any private interest in a matter before the governmental body. A direct financial interest disqualifies the official from participating in the matter. The Code of Ethics requires city officials, including the mayor and commissioners, to file annual financial disclosures. The city’s Procurement Code and the Governmental Conduct Act prohibit elected officials from providing goods and services to the city.

In a letter sent to the City of Hobbs by the OSA, the OSA states it received information indicating Murphy had entered into the home loan agreement with the mayor’s father, S.G. Cobb, doing business as the Cobb Family LP.

“According to the New Mexico Secretary of State, until recently, the mayor was the registered agent and vice president of the business and served as a member of its board of directors,” the OSA’s letter reads. “With the passing of S.G. Cobb on Nov. 28, 2016, it is our understanding that the mayor became the sole owner and board member of the business.”

The OSA instructed Hobbs to take “immediate steps” to ensure adherence to its Code of Ethics, including compliance with annual disclosure requirements and appropriate training with respect to procurement practices.

“Furthermore, any outstanding undisclosed conflicts of interest should be discussed in open meeting and voted on in accordance with the City Code of Ethics,” the letter states. “Since it appears that the city officials may not have complied with disclosure requirements in the past, and the commission may not have acted with respect to recusals or disqualifications that may have been appropriate under the circumstances, there may be other areas of noncompliance.

“The commission should review its past disclosure practices and determine whether additional remedial actions are necessary.”