Also read the comments at http://www.topix.net/forum/source/krqe/TN9DGK1CH1O359SAR and http://www.topix.net/forum/source/santa-fe-new-mexican/T1MEBC8F557QJ9NR4. One of them wrote, "Trust me, as I have some information on this. It was not a No Bid Contract. They issued an RFP for the work. The company wasn't going to be the top pick for the RFP. Then they made a donation to the Gov. 4 days later, they had the contract."
Asked whether the probe focused only on CDR's actions in securing or executing the contract, the person with knowledge of the investigation said, "It is more than that."
Gov. Richardson ducked a reporter's question from KRQE TV and when the station reported that, the Governor's deputy chief of staff, Gilbert Gallegos, had the nerve to send an email accusing the reporter of misconduct. You can watch the news clip and read the email exchange between Gallegos and the TV station at http://www.krqe.com/dpp/news/politics/politics_krqe_santa_fe_gallegos_complaint_200812171333. Michael Herzenberg from KRQE also reported that "One contribution reportedly was made just after CDR got the first deal. The other donation was made four days before it got the second job."
In a KOAT TV article, http://www.koat.com/news/18313553/detail.html, titled, "Donor Probe Could Impact Richardson's Confirmation Process", it says, "Calls to the Obama transition team for a comment on the grand jury probe were not returned."
By Carol D. Leonnig
Washington Post Staff Writer
Tuesday, December 16, 2008; Page A04
A federal grand jury is investigating whether a financial firm improperly won more than $1.4 million in work for the state of New Mexico shortly after making contributions to political action committees of Gov. Bill Richardson (D).
The probe focuses on whether the governor's office urged a state agency to hire CDR Financial Products. The probe is in a highly active stage at a time when President-elect Barack Obama has chosen Richardson as his nominee for secretary of commerce, according to two sources familiar with the investigation.
The grand jury in Albuquerque is expected to hear testimony today from several key witnesses, including officials at Richard's political action committees and bankers at J.P. Morgan who worked with CDR on the state's investments.
The inquiry is part of a long-running nationwide investigation into "pay-to-play" practices in local government bond markets. In other cities, federal investigators are questioning whether financial firms have lavished politicians with money and gifts in exchange for fee-paying work advising municipal and local governments on investments. Authorities indicted the mayor of Birmingham, Ala., this month on charges of taking hundreds of thousands of dollars in gifts and loans from a firm that led the city into toxic investments and massive bankruptcy.
In the New Mexico case, the FBI and federal prosecutors are investigating how CDR, based in Beverly Hills, Calif., won lucrative fees from the New Mexico Finance Authority in 2004 soon after donating $100,000 to two Richardson organizations.
From 2003 to 2004, CDR Financial gave $75,000 to Sí Se Puede, which paid for expenses at the Democratic National Convention in 2004. CDR's president and founder, David Rubin, also gave $25,000 to Moving America Forward, which funded Richardson's efforts to register Hispanic and American Indian voters.
Rubin was generous to Obama's campaign as well, giving $29,000 to help elect the senator to the White House. Yesterday, the Obama transition office declined to comment on the development.
Gilbert Gallegos, a spokesman for Richardson, said the governor was "aware of questions surrounding some financial transactions at the New Mexico Finance Authority" and expected state officials to cooperate fully. Gallegos declined further comment.
The U.S. attorney's office in New Mexico also declined to comment on the investigation, which began in the summer. Several Finance Authority board members have publicly confirmed being interviewed by the FBI. Paul Kennedy, an attorney for Richardson's former chief of staff, David Harris, confirmed that his client had been interviewed by the FBI in the summer but declined to comment further.
CDR's attorney, Richard Beckler, declined to answer questions about the probe's focus.
"CDR has always tried to abide by these byzantine campaign finance regulations and is cooperating fully with this investigation," Beckler said in a telephone interview yesterday.
CDR made $1.48 million advising the authority on interest-rate swaps and refinancing of funds related to $1.6 billion in transportation bonds issued by the agency, state officials confirmed. Interest-rate swaps are financial contracts based on the value of commodities, loans or other assets, and debtors sometimes use them to lower borrowing costs. But many swaps have recently proven unwise as the assets upon which they were based plummeted in value.
The state hired CDR after requesting proposals for a bond adviser on Dec. 30, 2003. Sources familiar with the investigation said CDR initially did not make the list of the top three bidders. But the authority committee considering the bids redid the selection process and split some work, eventually hiring CDR for a part.
Committee Chairman Rick Homans was Richardson's economic development secretary at the time. He is now Richardson's taxation and revenue secretary and has declined to comment.
Staff researcher Julie Tate contributed to this report.