Monday, May 04, 2009

The Corruption Cases: Insider News And Perspective, Plus: The Political Back Story On What's Really Going On; Plus: Guv Weighs Commission Appointment 

Big Bill & US Att. Fouratt
There's no bigger story on the back-burner in New Mexico politics than the federal grand jury investigation into the CDR saga going on in downtown Albuquerque. And it continues to go on. We think top players telling us that the probe has been extended for at least another three months--through July--- may be on safe ground. In our last episode of the CDR pay-to-play saga that cost Big Bill a spot in the Obama cabinet, we learned of the all-important statute of limitations.

Federal white-collar crimes normally have a statute of limitations of five years, but it is not unusual for potential defendants in securities or tax cases to waive the statute of limitations to gain time to develop arguments that the activities in question were legitimate. Barring waivers, charges stemming from the GRIP bond investigation would have to be brought by the end of April.

Well, there were no April indictments which is why those saying that the parties involved have agreed to an extension may be on safe ground.

Also, people familiar with the matter are saying they've learned that Richardson's longtime fund-raiser, Amanda Cooper, has been given immunity by prosecutors as they continue their wide-ranging investigation of the Governor's fund-raising from firms and financial agents that did business with the state. In addition to raising money for his governor campaign and serving as deputy manager for his presidential bid, Cooper headed two PAC's for Richardson--Si Se Puede and Moving America Forward. She is the step-daughter of NM US Senator Tom Udall, adding to the political drama.

Sources also say Chris Romer, a Colorado banker, state senator and son of a former Colorado governor, has also been given immunity by federal prosecutors as the probe, which began last August, continues. Romer worked for JP Chase Morgan, the lead banker in the NM CDR bond deal.

CDR gave $100,000 to various Big Bill political committees. At issue is whether CDR was given state work in exchange for the contributions and if so, who were the players or player who engineered the deal. CDR earned about $1.5 million for advising the state's finance authority on the $1.6 billion GRIP program.

Dave Contarino
Legal beagles say they wonder most about who will be indicted, if anyone, and if the ultimate political sensation--an indictment of a sitting governor is a possibility. The Guv and his supporters have called the federal probe a fishing expedition, but that doesn't mean someone won't end up on the hook.

Those mentioned most frequently as potential targets, besides the Governor, are David Harris, former head of the NM Finance Authority which CDR did business with and now a vice-president at the University of New Mexico, David Contarino, former chief of staff to Big Bill and Mike Stratton of Colorado, a longtime Richardson friend, political adviser and businessman who lobbied the state on behalf of CDR.

As for Richardson, it seemed remote to observers we spoke with when the story first broke that he would be subjected to an indictment. The burgeoning scandal cost him his Commerce Secretary nomination, but the recent explosion in other possible corruption-related news--not just CDR--has the conventional wisdom perhaps not so skeptical that the Governor could face serious legal peril. The insider perspective is that to get to Richardson, the feds would have to get Contarino. He is who the governor did business with, not underlings.

US Attorney Greg Fouratt would have to have a lot of confidence to go after Big Bill because if he failed, it would likely be the end of him. But the incredible amounts of money Richardson raised--$13 million alone for his 2006 Guv re-election effort--has left multiple routes for investigators to travel. There remains much to worry about on the Fourth Floor of the Roundhouse.

(For the uninitiated, a background report on the CDR story here. National blog coverage on recent developments on the State Investment Council are here.)

AG Eric Holder
Other informed speculation we are getting from senior sources says that US Attorney General Eric Holder may be called on to personally examine any potential indictments in the politically potent CDR case. Our legal experts say that would not be unusual. With Republican Greg Fouratt holding the US attorney position, having the Democratic attorney general appointed by Obama pass judgment on any indictments before they are handed down would also be aimed at negating charges of a political prosecution that are sure to arise if indictments hit. But it would seem to be a difficult position for Holder. If he lets indictments go forward, Democrats here could charge he caved to Republican Fouratt. If he doesn't, charges that politics played a role in ending the case will be shouted. Not an enviable position to be in with NM still a possible swing state for Obama in 2012.

Other observations heard include how aggressive the Federal Bureau of Investigation in NM has become in recent years and even more so in the aftermath of the bursting of the economic bubble.

Seasoned political players also ponder the future of Fouratt, who has been anything but shy when he appears before the press touting his successful prosecution of the Bernalillo County Metro Courthouse scandal. They say there could be an irony developing. Democratic US Senator Jeff Bingaman, who could have moved to return Fouratt to his former position as a prosecutor in the US Attorney's office and have Obama appoint a new Democratic US Attorney soon after taking office, did not do that. Insiders wonder if it could be Fouratt who will be a serious challenger to Bingaman in the 2012 election. That's a long way off, but nevertheless worth mentioning. What also could be a long way off is a new US Attorney for NM. Removing Fouratt now would drag Bingaman into the corruption case mix.

The timing of any indictments remains of more than passing interest to Light Guv Diane Denish, at this stage the likely 2010 Dem Guv nominee. If indictments came over the summer would they hasten the entry of former ABQ GOP Congresswoman Heather Wilson into the Guv contest? And would the trials, if any, fall in the middle of the general election campaign? And how would Denish fare in that environment? So far, her often frosty relationship with Richardson has served her well in that regard. The public does not see Denish tied to Bill's hip bone. However, her campaign contributions have not undergone the same scrutiny. R's will start looking as she inches closer to power, especially if the CDR case is alive and well.


We mentioned the new aggressiveness of the FBI in New Mexico and we saw it in action again recently when ABQ City Councilor Michael Cadigan--arch-foe of Democratic Mayor Marty Chavez, jumped at the chance to reveal he has been interviewed by an FBI agent on a pay-to-play accusation. The charge by Bode Aero is that the mayor demanded a discount for airplane rentals for his brief US Senate campaign last year. Bode says it refused and claims in a lawsuit the Chavez administration denied it a contract to continue operating out of Double Eagle II airport.

This sounds like a molehill, not a mountain, but in the aftermath of a financial collapse that cost taxpayers and the American economy trillions of dollars, molehills exist in a nourishing environment.


While the CDR case simmers, a possible new scandal has burst into the headlines where even bigger money is involved. The integrity of the investments of the state's crown jewels--nearly $12 billion in permanent funds--is at stake. Big Bill has tried to get ahead of the curve by suspending one company under scrutiny for its dealings with our State Investment Council (SIC), but this snowball has just begun rolling. How big it gets by the time it stops is anyone's guess.

This is another case where the FBI has started to interview key players. Insiders are watching most closely the deals lined up by Marc Correra. He was a middleman who helped clients win approval from the State Investment Council to invest in their companies or hedge funds. He shared in over $11 million in commissions on 24 deals. His father, Anthony Correra, has won the license to open a racino in Raton, but it is threatened as the Gaming Control Board demands more proof that the elder Correra can finance the $50 million deal.


While the epic bull market endured, it was easy to look the other way. The state enjoyed annual surpluses in the hundreds of millions and everyone was getting a piece of the pie, but those days are gone and perhaps not to return for generations.

Questions arising in thoughtful political circles include:

Will State Investment Officer Gary Bland be replaced? On the job since 2003, it was under his watch that the SIC mess occurred. Is it time for fresh perspective for this vital position?

Why does former Richardson deputy chief of staff David Harris continue to serve on the SIC, even as the federal grand jury probes Harris' role in the CDR affair? Again, should fresh perspectives be sought?

Richardson has slapped a six month ban on the placement agents who deal with the SIC. Why not make that ban permanent and propose it in the probable Special Session later this year? Let SIC staff and its members do what they are supposed to do--prudently decide to invest our tax dollars without Wall-Street high-rollers in the background shaking down anyone and everyone to get money into their hedge funds. Richardson says he will consider it.

Should the state revise rules that were loosened to allow more investment of our permanent fund money in private companies and hedge funds? The state lost $19 million when Eclipse Aviation went bankrupt. The permanent funds did fine before the spate of private investment which was touted as a way to help build the state's economy. Is such investment really necessary? Look at the problems it is causing. Job one is to protect the permanent funds for future generations, not necessarily enhance the rate of return of those investments beyond historical averages, or speculate in start-up companies or other risky ventures.

Where is the Legislative oversight? With millions of capital outlay available in recent years for each legislator--Republican and Democrat--oversight of the SIC and other sectors of state government have been negligible. Legislators have been busy spending not watching. And while the cat's away the mice will play. The Legislative Finance Committee has promised hearings on the SIC events. They can't come soon enough.


We pounded the table during the recent legislative session for a Senate Rules Committee hearing on the reappointment of Jamie Koch to the University of New Mexico Board of Regents. Not to vilify Koch, but to scrutinize his controversial stewardship and send a message to the state education and other bureaucracies that they are being watched. (Richardson did force Koch to step down as president of the UNM Regents. He remains on the board.) Corruption flourishes in an environment of lax oversight. It isn't always easy for a part-time citizen Legislature to lower the boom on errant bureaucrats and political appointees, not to mention a powerful chief executive, but we've now seen what lopsided domination of state government by the executive can bring.

In addition to a long, hot shower in the form of multiple investigations to clean up its corruption mess, New Mexico needs checks and balances restored to its government. Like the economic collapse, the recovery process will take years.


We're getting this from a source close to the Governor regarding his appointment to the Bernalillo County Commission to replace Deanna Archuleta of ABQ's SE Heights who has taken a job in the Interior Department in D.C.

Governor Richardson did interview seven candidates on Friday. These are all individuals who sent him a letter of interest and resume. However, the Governor is disappointed with the lack of the female candidates, particularly Hispanic females, who have expressed interest. Whoever he appoints will be replacing the only woman on the commission...He is inclined to hold off on a decision in order to wait and see if he gets more female applicants.

Hear that ladies? Get your resumes in. The most prominent female applicant is Judy Espinosa, who recently left as head of NM Expo, a post she was appointed to by Big Bill and who one politico pegged here as the front-runner for the appointment. Looks like the Guv is going to keep everyone guessing.

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