The New Mexico Finance Authority has asked the office of Attorney General Gary King to look into trying to recover millions of dollars lost in a deal at the center of a federal pay-to-play investigation.The authority’s chairman, Stephen Flance, said Wednesday that he hoped to recover money from a series of companies that recommended that the agency use complicated financial vehicles called interest-rate swaps.
Ultimately the market for the swaps collapsed, causing the agency to refinance roughly $450 million of $1.7 billion in bonds used to the state’s high-profile transportation program — GRIP, short for Governor Richardson’s Investment Partnership.That refinancing cost $6 million to $10 million, NMFA officials said Wednesday.It is that money that Flance hopes the agency can recover, he said.
“We thought we were getting independent advice, and I think that it was not as independent as we were led to believe,” Flance said of the team of advisers. “I think that they had a product to sell.”
The companies that might find themselves on the business end of the Attorney General’s legal complaint, if it comes to that, are JP Morgan Chase Co. and UBS, among others. The two firms were among those on a team of advisers that recommended the swaps, Flance said.Both JP Morgan and UBS sold a portion of $1.1 billion in bonds for the New Mexico Finance Authority in April 2004, which helped finance the GRIP program. A California company at the center of a federal investigation involving the financial authority, meanwhile, got a state contract to advise the authority on the swaps.
The amount of allegations that have swirled around the New Mexico deals and the characters could make you head spin, no wonder Holder refused to comment on the subject. Of course if the NMFA succeeds it could have national implications for all of the municipalities that have been burnt in these deals. As we speak Jefferson County has turned to the SEC for help with recovering or at least ending some of these deals.
Good luck! If the liabilities are added up, you would bankrupt, Gulf Breeze Florida, Century Florida, CTA, CDR, and the small time little town wannabees that tried to scam the municipal bond market are no deep pockets.
ReplyDeleteJAIL TIME, is the only way that the U.S. taxpayer will ever recover. It will have to be a pound of flesh because the 5 or 10 players who robbed the market blind don't have much for assets compared to what they stole.