State is cooperating with federal probe of GRIP bonds
The New Mexico Finance Authority says it’s “cooperating fully” with federal investigators who are looking into the dealings between the state and a
Investigators are looking into at least two financial contributions the company involved, CDR Financial Products, made to political committees formed by Gov. Bill Richardson around the time it won the state contract related to Governor Richardson’s Investment Partnership (GRIP) in 2004. The situation was first reported on this morning by the Albuquerque Journal.
The NMFA announced its cooperation with federal authorities in a statement sent late this afternoon. The news release confirmed that the investigation relates to “the 2004 issuance of bonds for the GRIP transportation program” and states that NMFA will make no further comments until the probe is complete.
The GRIP project is a massive undertaking first approved by the Legislature in 2003 to improve roads around the state and build the Rail Runner. According to a 2006 Bloomberg.com article, CDR Financial was paid $951,566 “advising the New Mexico Finance Authority on $420 million of interest-rate swaps in 2004” related to the GRIP project.
Meanwhile, in 2003 and 2004 CDR Financial gave $75,000 to
Si Se Puede!, according to a 2004 Associated Press article, raised $191,000. Of that, $130,000 — including the $75,000 from CDR Financial — came from companies working on the GRIP bonds.
Governor’s office won’t answer specific questions
“The governor’s office is aware of questions surrounding some financial transactions at the New Mexico Finance Authority,” he said. “We expect any state agency that is approached with questions to cooperate with federal officials.”
During the special session that recently ended, the Legislature appropriated an additional $200 million to help finish outstanding GRIP projects.
Spokesmen for the U.S. Attorney’s Office and FBI refused to comment on the investigation.
David Harris, who ran NMFA until mid-2004, confirmed to the Journal that he was interviewed by the FBI. His attorney, Paul Kennedy of
The Journal also quoted William Fulginiti, executive director of the New Mexico Municipal League and member of the NMFA board, who said he has been interviewed in the last week by FBI agents working on the case. He said it was a “fairly quick interview. They just asked some basic questions about the procedures in selecting vendors.”
A company under scrutiny
In a separate case, CDR Financial has been under investigation for almost two years, along with dozens of other banks and financial companies, in relation to an IRS probe that found dozens of municipal bond deals that allegedly “robbed federal taxpayers out of more than $100 million,” Bloomberg reported. Federal prosecutors are trying to determine whether banks and brokers conspired to fix prices on bonds bought by municipalities to invest the proceeds that weren’t immediately spent.
The Journal reported that, earlier this year, “local governments in
In addition, the Securities and Exchange Commission sanctioned CDR Financial in 2007 for work it did on fee arrangements on government bonds in
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