{"id":8688,"date":"2009-10-29T19:01:57","date_gmt":"2009-10-30T01:01:57","guid":{"rendered":"http:\/\/www.nmpolitics.net\/index\/?p=8688"},"modified":"2009-10-30T14:41:14","modified_gmt":"2009-10-30T20:41:14","slug":"cdr-financial-indicted-in-bid-rigging-probe","status":"publish","type":"post","link":"https:\/\/nmpolitics.net\/index\/2009\/10\/cdr-financial-indicted-in-bid-rigging-probe\/","title":{"rendered":"CDR Financial indicted in bid-rigging probe"},"content":{"rendered":"
\"A

A screen shot from CDR\u2019s Web site.<\/p><\/div>\n

Indictment details a phone call \u2018between New Mexico and New York\u2019 that involved alleged bid-rigging related to \u2018the award and performance of an investment agreement for a state housing agency\u2019<\/h4>\n

CDR Financial Products<\/a>, the company that was at the center of the scandal that cost Gov. Bill Richardson<\/a> the U.S. commerce secretary post, was indicted along with its founder and two other employees today as part of a national probe into bid rigging in the municipal bond market.<\/p>\n

The 39-page, nine-count indictment<\/a> charges the company, founder David Rubin and two other CDR employees with \u201cconspiring to rig bidding on investment contracts sold to local governments\u201d in several states, Bloomberg<\/a> is reporting.<\/p>\n

The indictment raises more questions than it answers in New Mexico, considering that it comes two months after Richardson and former staff members were told they wouldn’t be charged<\/a> in a separate probe into CDR\u2019s dealings with the Richardson administration.<\/p>\n

One of the allegations in the indictment mentions New Mexico, stating that, \u201con or about May 20, 2004, the day of the bid, during an interstate telephone call between New Mexico and New York,\u201d an unidentified person \u201cchecked with a co-conspirator at CDR to make sure that a bid rate suggested by Rubin would be a winning bid and then submitted a bid in accordance with Rubin\u2019s suggestion.\u201d<\/p>\n

That\u2019s in relation to \u201cthe award and performance of an investment agreement for a state housing agency,\u201d the indictment states, but it doesn\u2019t name the housing agency or even the state in which it\u2019s located.<\/p>\n

Though it may not be related to today’s indictments, it\u2019s noteworthy that the date of that New Mexico-New York phone call roughly coincides with CDR\u2019s attempt to win a contract from the New Mexico Finance Authority (NMFA) related to the GRIPgate scandal.<\/p>\n

On June 18, 2004, Rubin gave $75,000 to a political action committee started by Richardson, according to the Albuquerque Journal<\/a>. Five days later, staff recommended that CDR be given a sole-source escrow services contract. The NMFA awarded the contract on June 30 of that year.<\/p>\n

A month later, CDR was paid $443,265 for handling that escrow account.<\/p>\n

CDR had at least one other contract in New Mexico. It underwrote $27 million in bonds the scandal-plagued Region III Housing Authority<\/a> sold to a French bank in 2003.<\/p>\n

The governor\u2019s office did not immediately respond to a request for comment on today\u2019s indictments.<\/p>\n

More details<\/h3>\n

Here are more details from Bloomberg:<\/p>\n

\u201cThe indictment in U.S. District Court in New York alleges that CDR and its employees conspired to fix prices on investment contracts that local governments buy with the proceeds of municipal bonds. CDR managed the bidding process for the investments on behalf of local governments.<\/p>\n

\u201cThe indictment is the first to result from a more than three-year investigation of the U.S. municipal bond market. A conspiracy to fix prices on the investments would have cost taxpayers by giving them lower returns than they would receive in a competitive auction. More than a dozen banks, brokers and insurers have been subpoenaed under the investigation.\u201d<\/p><\/blockquote>\n

And this from The Associated Press<\/a>:<\/p>\n

\u201cProsecutors said the company secretly manipulated the bidding process to enrich themselves and the bidding companies at the expense of the municipalities, the IRS or both.<\/p>\n

\u201cUnder the scheme, CDR would arrange in advance which company would win a particular bid for bond business and arrange kickbacks to CDR in the form of inflated fees, authorities said. If convicted of the most serious charge against them, the three men face a maximum prison sentence of 20 years.<\/p>\n

\u201cThe company could face a maximum fine of $100 million for the bid-rigging charge.\u201d<\/p><\/blockquote>\n

A spokesman for CDR told Bloomberg his firm hadn\u2019t fully reviewed the complaint but rejected the allegations.<\/p>\n

\u201cThe government is alleging a certain kind of conspiracy that is just baseless,\u201d Allan Ripp was quoted as saying. \u201cCDR sternly asserts these charges are wholly without merit.\u201d<\/p>\n

The GRIPgate scandal<\/h3>\n

In August, the U.S. attorney for New Mexico confirmed that Richardson and others wouldn\u2019t face charges following a yearlong investigation into allegations of pay to play related to a lucrative state contract given to CDR.<\/p>\n

CDR was paid to advise the NMFA on interest-rate swaps and restructuring escrow funds for $1.6 billion in bonds related to the transportation project dubbed GRIP, or Governor Richardson\u2019s Investment Partnership<\/a>. The allegation was that CDR received the state contract \u2013 which paid the company almost $1.5 million \u2013 in exchange for $110,000 in contributions to two Richardson political committees and his 2006 gubernatorial re-election campaign. That included the June 2004 contribution of $75,000.<\/p>\n

That probe led to political hard times for Richardson, who withdrew his nomination<\/a> to be President Barack Obama\u2019s commerce secretary on Jan. 4.<\/p>\n

In confirming in a letter<\/a> to attorneys for Richardson and others who were under investigation that the probe was being closed, U.S. Attorney Greg Fouratt wrote that his office\u2019s investigation found that \u201cpressure from the governor\u2019s office resulted in the corruption of the procurement process\u201d and said that the letter \u201cshould not be interpreted as exoneration of any party\u2019s conduct in that matter.\u201d<\/p>\n

Fouratt\u2019s letter also stated that the decision to drop the case in August \u201cshall not preclude the United States or the grand jury from reinstituting such an investigation without notification if\u2026 circumstances warrant \u2026\u201d<\/p>\n

The indictment<\/h3>\n

Here\u2019s the indictment. You\u2019ll find the mention of New Mexico on Page 27.<\/p>\n

Rubin Indictment<\/a> <\/embed><\/object><\/p>\n
<\/div>\n

Update, 7:15 p.m.<\/strong><\/p>\n

State GOP Chairman Harvey Yates Jr. said in a prepared statement that it\u2019s \u201cdisturbing that the same firm which was at the center of a federal probe here in New Mexico is again facing such serious charges.\u201d<\/p>\n

\u201cIt is also unfortunate that these developments seem to substantiate the sentiment that U.S. Attorney General Eric Holder decided prematurely to quash the investigation concerning alleged pay-to-play activities involving the Richardson administration and CDR,\u201d Yates said. \u201cThe question as to whether this was done as a matter of justice or whether this decision was politically motivated remains unresolved in the minds of many New Mexicans.\u201d<\/p>\n

\u201cAnd we renew our call for Mr. Holder to provide transparent and honest answers concerning this matter,\u201d Yates said. \u201cHe should start by releasing the FBI file covering the FBI\u2019s investigation into CDR\u2019s activities in New Mexico.\u201d<\/p>\n

The New Mexico Independent\u2019s Trip Jennings contributed to this report. This article has been updated for clarity.
\n<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

UPDATED: The company that was at the center of the scandal that cost Gov. Bill Richardson the U.S. commerce secretary post was indicted along with three employees today as part of a national probe into bid rigging in the municipal bond market.<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11,1],"tags":[112,142,122,114,107],"class_list":["post-8688","post","type-post","status-publish","format-standard","hentry","category-news-and-analysis","category-uncategorized","tag-bill-richardson","tag-crime","tag-gripgate","tag-public-corruption","tag-roundhouse"],"_links":{"self":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/8688","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/comments?post=8688"}],"version-history":[{"count":0,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/posts\/8688\/revisions"}],"wp:attachment":[{"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/media?parent=8688"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/categories?post=8688"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/nmpolitics.net\/index\/wp-json\/wp\/v2\/tags?post=8688"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}