In a letter sent to witnesses before the grand jury investigating accusations of pay to play in Gov. Richardson’s administration, United States attorney, Gregory J. Fouratt said that while criminal charges weren’t forthcoming, “pressure from the governor’s office resulted in the corruption of the procurement process” and that the letter “should not be interpreted as exoneration of any party’s conduct in that matter, the New York Times reported late Thursday night.
Richardson’s office had released a statement on Thursday saying, in part: “Governor Richardson has known all along that neither he nor any staff members committed any transgressions during their successful fundraising back in 2004. The U.S. Attorney’s thorough and lengthy investigation has apparently determined the same thing – that no indiscretions occurred.”
Federal investigators were investigating how CDR Financial Products Inc., of Beverly Hills, Calif., got two consulting contracts in 2004 worth about $1.4 million to advise New Mexico on a large bond issue to help pay for road projects across the state. CDR president, David Rubin, a major Democratic contributor, had given more than $110,000 to two political action committees controlled by the governor from 2003 to 2005.
The largest of those donation, $75,000, was made less than a week before CDR was chosen by the Finance Authority to handle the investment of bond proceeds. The investigation focused on whether the governor’s former chief of staff, David Contarino, played a role in hiring CDR.
The allegations of bid rigging have been around for some time now, and what happens next depends on developments in other parts of the country especially the unfolding trial in Alabama. Now even the muni-bond aspect may be out of the way, there are still a few landmines left for Richardson:
In an interview with NMI, Albuquerque pollster and analyst Brian Sanderoff pointed out that federal and state investigators are still looking into allegations in the investment scandal that began in New York and has since spread to New Mexico and other states. That case, which is separate from the probe that has ended, involves some prominent Richardson friends and donors.
The probe that we learned today has ended — the federal investigation into allegations that CDR Financial Products received a lucrative investment contract from the New Mexico Finance Authority in exchange for campaign contributions to Richardson and two political action committees he started — cost the governor the commerce secretary job in Washington. But even as President Barack Obama accepted Richardson’s withdrawal of his nomination for that post in January, the president said he looked forward to Richardson’s “future service to our country and in my administration.”
Richardson said at the time that he would continue serving as governor “for now” and was “eager to serve in the future in any way (Obama) deems useful.”Sanderoff said today that the end of the CDR case probably isn’t enough to convince the president to offer Richardson a cabinet-level job.
“My guess is things will have to settle down awhile before we’ll be seeing any talk of cabinet-level positions,” he said. “As long as there’s talk of other investigations, I think the Obama administration will be shy.”“But if some clear declaration is made by the Justice Department, at some point, that the governor has been cleared [of wrongdoing in any case],” Sanderoff said, “then that would be another story.”
In the investment scandal, the founder a company that was once New Mexico’s investment adviser is under indictment in New York in a pay-to-play investigation there. Among the allegations is that the founder of Aldus Equity, Saul Meyer, helped the son of New York’s then-state comptroller win an investment contract in New Mexico in exchange for his company getting increased business in New York.In addition, Richardson has taken $20,000 in campaign contributions from another man tied to the scandal who is reportedly negotiating a settlement in New York to avoid criminal charges.
How big is the pension scandal?
The pending investment scandal
But, as Sanderoff said, there are some pending situations that could keep Richardson in New Mexico, at least for now. Federal prosecutors have subpoenaed two state agencies in an ongoing investigation into investment practices in New Mexico. Of interest, according to a federal subpoena released in June, is Texas-based Aldus, New Mexico’s former investment adviser. Meyer, its founder, has been indicted in an ongoing New York investigation into pay-to-play allegations there.
Among the allegations in the New York inquiry is that Meyer helped the son of the New York state comptroller, Alan Hevesi, win a lucrative contract in New Mexico for a firm he was representing in return for Aldus’ increased business in New York, according to the criminal complaint. At the time, the comptroller’s son, Dan Hevesi, was acting as a third-party marketer.
Third-party marketers, once obscure figures in the investment world, act as matchmakers between private equity and hedge funds and states looking for a good return on their money. Their practices have grabbed headlines in New Mexico in recent months due to the millions of dollars paid out to them, including $22 million to Marc Correra.
Correra is the son of a friend and prominent fundraiser for Richardson.Richardson has one other direct tie to the investment scandal: Steven Rattner, the former head of Obama’s auto-bailout program, gave $5,000 to Richardson’s 2002 gubernatorial campaign and $15,000 to Richardson’s 2006 re-election bid.
Richardson heads the State Investment Council (SIC) which, in 2005, voted to invest $20 million with Quadrangle Group LLC. At the time of the 2002 and 2006 campaign contributions, Rattner was a managing principal in the company, which he left in February of this year to take the auto-bailout job.Rattner recently left that post and is reportedly negotiating a settlement with the New York attorney general in order to avoid criminal charges in that state.
The nationwide pension scandal, which has rocked New York and led to the highest echelons of the Obama admin is still unfolding, it remains to be seen how that will shake out.
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