February 1, 2014
Texas District 77: Candidate Lyda Ness-Garcia filed for bankruptcy included is $200,000 in student-loan obligations
The bankruptcy records touch on the candidate's long history of delinquently paying federal taxes and fines from the Texas Ethics Commission.
Ness-Garcia, candidate for the Democratic nomination to the District 77 seat, Tuesday said her financial problems were due the breakup of her marriage and an illness. She said many other Texans experience similar difficulties.
Ness-Garcia did not mention the bankruptcy or her most serious ethics violation in an interview last week. Her opponent in the March 4 Democratic Primary, state Rep. Marisa Márquez, on Tuesday said the omissions show that Ness-Garcia is unfit for the office.
"Clearly, this candidate is lying," Márquez said, "not only to the press, but also to the public, and clearly the voters deserve better."
Ness-Garcia insisted that she has been forthcoming about her bankruptcy.
"It's all in the public domain," she said. "It wasn't a question you asked me specifically. I answered the questions you asked me. I'm not hiding anything."
Asked if there was a way for the public to readily learn about the bankruptcy aside from going to the bankruptcy court or looking up the case on a subscription-only website, Ness-Garcia could not point to any public statements on her part.
Ness-Garcia ran unsuccessfully for judge in 2008 and for City Council in 2011.
She said she hadn't publicly explained the reasons for her struggles in the past out of a desire to protect her children. But in an email Tuesday, she described her problems.
"My family and I went through the hardest of times," she said. "My past financial struggles have never been secret and they have defined me and made me that much stronger.
"I never talked about why all this happened before because it was tragic and intensely personal and I had young children to protect," Ness-Garcia said, "I was a single mother and small business owner struggling with the end of a marriage that ended in significant betrayal and debt that took a financial toll on me. In the midst of this, I discovered that I had cervical cancer like a lot of women — our mothers, sisters, daughters we know. It was the darkest time I have known.
"This is my story. It is real and it is universal and I lived it," Ness-Garcia said. "They are resolved and behind me and my financial house and health is in order."
In December 2012, Ness-Garcia filed a petition for Chapter 7 bankruptcy seeking to have the court wipe out some of the debts she could not repay. The filing said she owed $877,000 and had $256,000 in assets.
Among her largest liabilities was almost $200,000 in student-loan obligations, which typically can't be wiped out in bankruptcy court.
Also among the liabilities is a $4,382 court judgment stemming from her 2008 run to be a district court judge. The Ethics Commission found that Ness-Garcia had illegally taken a campaign contribution from a corporation.
In its order, the Ethics Commission wrote that Ness-Garcia, a lawyer, should have known the contribution from Bingham Investments Inc. was illegal.
"The respondent was licensed to practice law in 1998 and she signed the campaign treasurer appointment forms acknowledging that she was aware of the restrictions on political contributions from corporations and labor organizations," the order said.
Ness-Garcia did not pay the fine from the violation, so the Texas Attorney General sued and in 2011 got a court judgment against her, according to records obtained from the Ethics Commission under the Texas Public Information Act.
As recently as December, Ness-Garcia hadn't paid the judgment.
"The Texas Ethics Commission has notified me that you just paid $500 toward the judgment fines. That payment has been applied to TEC Account #00061857," said a Dec. 4, 2013, letter from Sherri Eble, who handles bankruptcy and collection for the attorney general. "Fines imposed by the commission are civil penalties and are excluded from (being wiped out in bankruptcy.)
"Your name will not be removed from the delinquent filer list on the (Ethics Commission) website nor will this office issue a release of judgment until the judgment is paid in full."
Last summer, the Times asked Ness-Garcia about a $500 delinquent fine that was listed on the Ethics Commission website. She said she thought the matter had been taken care of and that her name was listed in error.
Asked last week about the fine, Ness-Garcia said it stemmed from a campaign-finance report that was filed a week late during the 2008 election. She did not mention her other ethics violation. On Tuesday, she said she couldn't remember when she paid the $4,500 that Eble said she owed.
Ness-Garcia's bankruptcy filing also showed she owed more than $200,000 to the Internal Revenue Service. Typically, federal taxes also can't be wiped out — or "discharged" — as part of the bankruptcy process.
Records at the El Paso County Clerk's office show that Ness-Garcia had liens against her property for underpayment of income taxes in 2004, 2005, 2006, 2007, 2008 and 2010.
"Once I owed the IRS money, I could not get out from underneath," Ness-Garcia said. "I was struggling. I wasn't working. I was now a single parent. Those penalties, I kept drowning in them."
Records at the clerk's office show that in May and August, the liens, totaling $206,000, were cleared. Ness-Garcia couldn't say exactly how.
"They did forgive and discharge a portion of it," she said "I'm not very aware of all the intricacies because I was not part of all of those negotiations. I was just told what my obligation was and what I needed to do."
Ness-Garcia was asked if her financial and ethics problems should influence voters' opinions of her.
"I never talked about it because I had a young child and I protect her and my young children above everything else, but I think it's a real and personal story that I lived through and many other people have lived through," Ness-Garcia said. "If my opponent wants to make this about my past struggles and my children that's because she doesn't want to talk about our future and what our voters need for our community."
Ness-Garcia said she is now on a solid financial footing and can afford the time that service in the Legislature will take from her law practice.
Márquez declined to comment on Ness-Garcia's family situation. But Márquez said her opponent needs to take responsibility for her actions.
"Bankruptcy. Tax liens. Attorney-general lawsuits. Ethics violations. These are a matter of record," Marquez said. "Lyda Ness-Garcia is suffering the consequences of her actions. However, the voters of District 77 are, too."
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