Report concludes former Spaceport America director violated state law

WASHINGTON — The ousted director of New Mexico’s Spaceport America repeatedly violated state law and policies while running the commercial launch site in a “dysfunctional” manner, according to a report prepared for state officials.

The New Mexico Office of the State Auditor released a report Nov. 24 that outlined evidence of numerous violations of procurement laws, open meeting acts and other state policies by Dan Hicks, who served for nearly four years as executive director of the spaceport, best known as the operations base for suborbital spaceflight company Virgin Galactic.

The report “details a severe breakdown of internal controls that resulted in possible waste and abuse of taxpayer funds,” the office said in a statement about the investigation.

The state government put Hicks on administrative leave June 12 after Zach DeGregorio, at the time the spaceport’s director of finance and administration, filed a complaint with state officials about what he believed were improper activities by Hicks. DeGregorio resigned from the spaceport later that month. The board of the New Mexico Spaceport Authority voted Oct. 16 to fire Hicks.

Officials hired a private firm, The McHard Group, to investigate those claims. Their 362-page report found, in their view, ample evidence that both Hicks and DeGregorio violated laws and policies, from improper contracting processes to conducting business by the spaceport’s board outside of public meetings to filing false travel vouchers.

The report described in detail examples of Hicks’ violations of law and policy. Investigators said Hicks justified trips to meetings of the National Space Council and its advisory group by claiming he was a member, which was not the case. Hicks issued contract solicitations and selected awardees often without the approval of the spaceport’s board as required. There was also a “lack of controls” over the spaceport’s budget, including overspending that put the spaceport at times in danger of running out of money.

The report concluded that, based on the evidence, “Dan Hicks violated criminal and administrative statues, as well as the State of New Mexico Governmental Compliance Act, and Governor [Michelle] Lujan Grisham’s Code of Conduct, during his tenure as Director of the Spaceport.”

The report also described Hicks as an “extremely dysfunctional manager” and “at times a forceful bully” who sought greater control over the management of the spaceport, and its budget, than allowed by state law. That alarmed the spaceport’s anchor tenant, Virgin Galactic, “who became increasingly dissatisfied with Mr. Hicks’ management” and complained to the governor’s office.

While DeGregorio filed the complaint that triggered the investigation, the report found he was also complicit in violations of law and policy. “Mr. DeGregorio collaborated with Mr. Hicks to circumvent rules to procure contracts, spend money on unapproved travel, file materially false vouchers, move money off approved [purchase orders] to cover other expenditures, and generally fail to control the Spaceport’s finances in any responsible way.”

The report, submitted to the Office of the State Auditor two days before the spaceport’s board voted to fire Hicks, recommended that its findings be referred to the state attorney general for a formal criminal investigation.

In a statement, Alicia Keyes, secretary of New Mexico’s Economic Development Department, whose oversight includes Spaceport America, said she was aware of management issues at the spaceport early this year. The report mentions in passing a meeting that state officials held with Hicks in March “in which he was chastised for inappropriate behavior and given an ultimatum.”

“The Economic Development Department, supported by the governor, moved quickly to investigate allegations of impropriety at the spaceport,” Keyes said in that statement. “It is now time to move forward and repair the breakdowns that allowed these abuses to happen.”

How that repair process will go forward remains unclear. Scott McLaughlin, director of business development at Spaceport America, has been serving as interim executive director since June, but state officials have not announced a timetable for selecting a new executive director. The spaceport’s board, chaired by Keyes, is scheduled to meet Dec. 2.

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