Mar. 31—In a 2-1 ruling, the New Mexico Court of Appeals on Friday vacated two felony convictions against former New Mexico Taxation and Revenue Secretary Demesia Padilla on grounds the Attorney General's office didn't prosecute the case before the statute of limitations ran out.

"We're grateful for the opinion of the court dismissing the indictment, and we think justice was done," Padilla's attorney, Paul J. Kennedy, said in a phone call Friday. "The court obviously took a long, hard look at the case and came up with the right result."

Padilla was the longtime tax chief under Gov. Susana Martinez before she abruptly resigned in late 2016 amid a criminal investigation by the Attorney General's Office, then under the direction of former Attorney General Hector Balderas. The state filed charges against Padilla in 2018 accusing her of stealing more than than $25,000 from Bernalillo-based Harold's Grading and Trucking by surreptitiously linking her credit card to the company's checking account. Harold's Grading and Trucking was a client of a business she ran on the side while she headed the state tax agency.

First District Judge Mary Marlowe Sommer dismissed the charges in June 2019 after Kennedy successfully argued the two counts stemmed from crimes alleged to have occurred in Sandoval County, where the Bernalillo-area trucking company is located, or at Padilla's home office in Albuquerque — not in Santa Fe, where the charges were filed.

In August 2019, a grand jury indicted Padilla on the same charges in the 13th Judicial District in Sandoval County. But by then it had already been six to eight years since the thefts allegedly took place between December 2011 and January 2013, according to the Court of Appeals ruling. Kennedy motioned for a dismissal at the time, but the District Court denied his motion, saying a different formula for "tolling" the statute of limitations — a legal doctrine that governs when a statute of limitations can or cannot be paused — applied to the case.

Padilla was tried and found guilty of embezzlement and computer access with intent to defraud or embezzle in 2021. Thirteenth Judicial District Judge Cindy Mercer sentenced her to nine years for each felony count but suspended all 18 years and placed the former Cabinet secretary on supervised probation for five years.

In an opinion authored by Judge Katherine A. Wray, the Court of Appeals on Friday agreed with Kennedy's interpretation of the statute of limitations over the state's, writing the lower court "improperly relied on nonstatutory tolling to exclude the time period between the filing of the complaint and its dismissal."

The 18-page opinion included a complex and detailed dissection of case law related to the statute of limitation in the case as interpreted by Wray and Court of Appeals Judge J. Miles Hanisee, who concurred on the ruling.

Judge Megan P. Duffy, the third judge on the panel of three which considered the case, disagreed. She wrote in an 11-page dissenting opinion — which contained a four-page footnote on criminal procedure — that had a different interpretation of a nearly 50-year-old case regarding the applicability of non-statutory tolling than the one relied upon by her colleagues.

"While there is certainly support for the majority opinion's conclusion that nonstatutory tolling only applies under limited circumstances, [the case] can also be read to have adopted nonstatutory tolling as a general principle that coexists with the tolling provided [in statute]," she wrote. "I would have affirmed the district court's decision to apply that general principal in that case."