Former City utility manager settles lawsuit for $500K

ALAMOGORDO – A former Alamogordo utility billing manager who was the target of several audits and a criminal investigation by the city of Alamogordo has settled his federal discrimination lawsuit against the city for $500,000, according to federal court documents.

Armando F. Ortega claims he was discriminated and retaliated against by city officials in 2014 because he was Latino, according to U.S. District Court for New Mexico documents.

According to court records obtained by the Daily News, Ortega, who was originally hired by the city in 1997, was considered an exemplary employee and then received a series of promotions and raises that earned him a promotion to customer service manager in 2006. But Ortega was ultimately fired by the city in April 2015.

The city – all the employees and city officials named in the lawsuit – denies any wrongdoing and says no wrongdoing should be implied because the city settled the lawsuit, which it says was done strictly for economic reasons, according to the records.

Former city Finance Director LeeAnn Nichols, former City Manager Jim Stahle, former Mayor Susie Galea and former Acting City Manager Robert Duncan were the main focus of Ortega’s lawsuit. None are currently employed by the city because they either resigned or retired from their positions. All four officials denied any knowledge of wrongdoing or committing wrongdoing against Ortega, according to the records.

Ortega’s problems with the city began when city officials received an anonymous complaint from a subordinate that he had created a hostile work environment and that certain friends and relatives received preferential treatment with respect to connection charges, payment plans to bring delinquent accounts current, and other billing activity, according to court records.

According to records, Ortega claims that after receiving the single anonymous complaint and without receiving any corroboration as to its veracity, the city improperly instituted a full-scale investigation of him, including hiring an outside human resources investigator and auditor.

The lawsuit claims, with respect to similar allegations against other non-Latino individuals, the city had never hired an outside investigator, or an outside auditor or both in reference to an unsubstantiated anonymous complaint.

The city did inform Ortega of their intent to investigate him but improperly withheld a copy of the anonymous complaint and failed to follow appropriate administrative procedures thereby denying Ortega his due process, according to the lawsuit.

Before receiving the official written reports from the investigator and auditor, former city Finance Director LeeAnn Nichols, Ortega’s supervisor at the time, notified Ortega that she was formulating disciplinary action against him, according to the lawsuit.

During the same meeting, Ortega notified Nichols that he was filing a complaint with the Equal Employment Opportunity Commission about his claim that the investigation was being conducted in an unfair way because it was conducted differently than any other investigation by the city, which he believed was because he was Latino, according to records.

After Ortega filed a complaint with the EEOC, the investigator and auditor’s written report and recommendation issued a finding that almost all the allegations against Ortega were unsubstantiated, the records state.

The report did find Ortega had created an impression of a conflict of interest by approving payback agreements for delinquent water customers to whom he was related, according to records.

At the time the city’s policies did not prohibit that type of behavior and were wholly within Ortega’s discretion, according to records. The auditor also recommended the city review their policies and institute clearer guidelines and training for employees to follow when adjusting water bills.

According to the lawsuit, Ortega continued to be the target of discriminatory and retaliatory actions because city officials proposed a lighter discipline if Ortega withdrew his EEOC complaint, which Ortega said was intimidation by city officials.

The Daily News attempted to contact city and elected officials mentioned in the lawsuit seeking comment for this story but they declined because they said they were not familiar with the information contained in the lawsuit or the settlement agreement.

Mayor Pro-Tem Al Hernandez said he has read the complaint in the lawsuit.

“From what the complaint says, I believe that,” Hernandez said, supporting Ortega’s claims. “It was only from what was in the complaint and from what we were told in different types of meetings.”

He said he kept up with the case as it progressed through the court.

“I believe that was the case,” Hernandez said. “I really don’t know what the reasons were. I know that we did get an anonymous complaint and that’s where it started. There’s two sides to every story. I think our former mayor flew off the handle and made it a personal vendetta to go after Mr. Ortega.”

He said the city changed its code of conduct because of what she (former mayor Galea) was doing.

“You asked me if Mr. Ortega was discriminated against,” Hernandez said, “I can tell you first hand that to be a fact by the former administration. The reason I can say that is because I feel I was discriminated against. I was told I had to abstain from anything to do with this case because of my knowledge of it, and I had some type of connection to Mr. Ortega.”

He said he is not related to Ortega.

“The only thing that ties us together is the color of our skin – that’s flat out discrimination,” Hernandez said. “It’s the only thing I can come up with.”

The city conducted a total of four audits that determined the city had deficiencies in their policies and procedures and then made recommendations to the city about their billing policies but did not cite any specific wrongdoing by Ortega, according to records.

The lawsuit claims, former Mayor Galea undertook a publicity campaign to admonish and shame Ortega in media outlets that was in violation of the city’s charter and policies.

Galea also began a letter-writing campaign via email to members of the public demanding a “criminal investigation” of Ortega, records show.

Galea also posted on Facebook, sent emails and conducted a public meeting to berate Ortega, according to records.

A status hearing is pending in the 12th Judicial District Court to determine why the city has not released the content of Galea’s Facebook page, according to court records. A resident sued the city asking it to release saved images of Galea’s Facebook page, which the court viewed as a public record.

The lawsuit claims former City Manager Jim Stahle talked to then-Police Chief Robert Duncan into convincing a New Mexico State Police officer – who Duncan knew from his days as a State Police officer – to investigate and then to file criminal charges against Ortega after Ortega was fired.

Newly elected 12th Judicial District Attorney John Sugg has recently executed search warrants on the city Water Department’s billing office, in what he says will be an independent investigation.

“We will complete our investigation and make the appropriate decision based on what our investigation tells us,” Sugg said. “We had no role in the civil lawsuit. The city of Alamogordo was involved with that lawsuit. The District Attorney’s Office had zero role with what happened with the civil litigation nor was it a concern or consideration and it’s not going to be in our investigation.”