A California financial company, whose dealings with the state led to Gov. Bill Richardson withdrawing as President-elect Barack Obama's commerce secretary nominee, has made a huge political impact on the state — even though nobody seems to remember how the firm got involved with New Mexico.

A federal grand jury is investigating CDR Financial Products — which was paid nearly $1.5 million for work on a state transportation program — and whether $110,000 in contributions to Richardson's political action committees constitute a "pay-for-play scheme." Both Richardson and a CDR spokesman repeatedly have denied wrongdoing.

What is known is that CDR was awarded work by the New Mexico Finance Authority in 2004, about the time huge contributions were made to Richardson PACs. The company answered a request for proposal for financial adviser work on the GRIP — Governor Richardson's Investment Partnership — project.

"I think it might have been J.P. Morgan who recommended them," said Bill Sisneros, executive director of the NMFA, referring to another firm that did work on financing GRIP. "The finance world is a fairly small world."

Allan Ripp, a spokesman for CDR, said Monday that it's possible that Morgan or another financial company recommended CDR for the work, but he did not know for certain.

According to a March 10, 2004, memo from Keith Mellor, NMFA's chief financial office, to members of the authority, CDR had provided "similar services" to The University of New Mexico in the past.

Both Ripp and Sisneros said Monday that they did not know anything about the work CDR did for UNM.

Rick Homans, who was then Richardson's Economic Development secretary and is now the state tax and revenue secretary, chaired the NMFA's Investments Committee, which recommended CDR for the work.

No contract

When CDR was chosen to be part of a team handling SWAP agreements — complicated transactions in which bonds are exchanged for other bonds to keep interest rates down — no contract with the state was issued.

According to the minutes of the NMFA board's March 19, 2004, meeting, "Mr. Mellor said this is a contingent award in that the NMFA will not be entering into a contract with CDR. The contingency arrangement is that if a (Guaranteed Investment Contract) or SWAP opportunity develops and if either one is an appropriate investment vehicle, the NMFA will use CDR as a SWAP/GIC adviser and broker pending Board approval."

Sisneros said the NMFA has records of all the SWAP transactions.

Sisneros, who was hired by the NMFA in June 2004, said had he been in charge at the time, he would have preferred to have a formal contract.

The colorful history of CDR: Bloomberg.com, which has reported on the company for years, interviewed founder and chief executive officer David Rubin in 2006 in an article that mentions New Mexico, the GRIP project and the Richardson contributions.

Bloomberg quoted Rubin saying that CDR has advised clients on more than $158 billion in transactions since it was founded in 1986. The article said CDR has "advised local governments on more than $17 billion of derivatives since 2003."

The company originally was called "Chambers, Dunhill, Rubin and Co." — even though there was nobody named Chambers or Dunhill involved with the firm. Rubin "picked those names because he liked the sound of them together," Bloomberg reported.

Bloomberg also noted that the company "is being investigated by the IRS for possibly profiting from deals at the expense of U.S. taxpayers. According to IRS letters obtained from the cities of Atlanta and Fargo, N.D., and an internal memo from the state of Wisconsin, CDR may have colluded with Bank of America Corp., Bear Stearns Cos. and other companies to make improper fees by selling municipalities unneeded contracts or mispricing investment deals."

In April 2001, Bloomberg, citing court documents from a federal corruption trial, reported that CDR hired Philadelphia lawyer Ron White, who was chief fundraiser for Mayor John Street. The company paid White a $5,000 retainer to help CDR win work with the city.

"Rubin donated $15,000 to Street's election committee from December 2000 to June 2003, the records show," Bloomberg reported. "In addition, CDR gave White three tickets to the 2003 Super Bowl game in San Diego and also provided a limousine ride to the stadium. White brought Philadelphia Treasurer Corey Kemp to the event."

The city of Philadelphia paid the firm $150,000 for financial advice, while banks paid CDR at least $515,000 from profits earned on transactions with the city, Bloomberg reported.

The IRS in 2006 was investigating CDR's relationship with Bank of America in a $453 million sewer-bond deal for the city of Atlanta in 1999, Bloomberg reported.

In November 2006, the daily financial newspaper The Bond Buyer reported that the FBI raided CDR's headquarters in Beverly Hills, Calif., as well as another company in Pennsylvania.

"The antitrust division is investigating the possibility of anti-competitive practices in the municipal bond industry," Justice spokeswoman Kathleen Blomquist told The Bond Buyer. The paper reported "knowledgeable sources said industry practitioners and government employees, including IRS agents, have been called before a federal grand jury, but the FBI, Justice Department, and officials in several U.S. attorney offices declined to comment."

CDR has since moved from its Beverly Hills office to a building in a less fashionable part of Los Angeles — although the Beverly Hills address remains on the CDR Web site.

Bloomberg reported Monday, "The IRS probed whether CDR and banks including Charlotte, North Carolina-based Bank of America Corp. and the former Bear Stearns Cos. of New York conspired to overcharge municipalities such as Atlanta; Fargo, North Dakota; and Johnson City, Tennessee, for contracts to invest bond proceeds and then split the profits."

Ripp on Monday declined to comment on any of the several investigations of CDR except to say the company was cooperating with authorities and that a Securities Exchange Commission investigation in Florida ended in a settlement in which no fines or actions were taken against CDR.

Campaign contributions: Although CDR was quite generous in contributing to Richardson, the company didn't spread much more money around New Mexico. The only other state politician to received money from CDR was Lt. Gov. Diane Denish, who got a total of $10,000 for the 2004 and 2006 elections.

But CDR has been active in contributing elsewhere. According to the Center for Responsive Politics in an article published Monday on its Web site, OpenSecrets.org, CDR and Rubin have contributed more than $279,000 to campaigns at the federal level since 1991.

Richardson's not the only Obama Cabinet nominee to get money from Rubin or CDR. Interior secretary nominee Sen. Ken Salazar, D-Colo., has received $4,000, while secretary of state nominee Hillary Clinton got $1,000.

Individuals at CDR gave $26,200 in the past election cycle to the Democratic National Committee through the Obama Victory Fund, a committee set up to support Obama's candidacy.

Contact Steve Terrell at 986-3037 or sterrell@sfnewmexican.com. Read his political blog at roundhouseroundup.com.