The federal investigation of CDR Financial Products, the probe that derailed Gov. Bill Richardson's appointment as U.S. Commerce secretary, has been completed and now is in the hands of U.S. Attorney General Eric Holder.

That's what New Mexico Finance Authority Chairman Steve Flance told a legislative oversight committee Wednesday.

Flance, a longtime Santa Fe development consultant, answered legislators' questions about the authority's dealings with CDR, a Los Angeles company to which the NMFA awarded about $1.5 million to handle part of the state transportation bonds for Governor Richardson's Investment Partnership in 2004. This was about the same time the company made hefty contributions to Richardson's political committees. Richardson has denied any wrongdoing.

Flance also told lawmakers that before the Finance Authority got involved with CDR, it was encouraged by financial advisers to use alternative financing methods. But, Flance said, these financial advisers later turned out to have conflicts of interest.

"We thought we were getting independent advice, but they had a product they wanted to sell," Flance told reporters. That's my own opinion."

Flance told the committee that there are groups of financial investors whose job it is "to work the states." Indeed, New Mexico is one of several states in which federal authorities are investigating CDR and other companies.

Flance said he was told by NMFA lawyer Rey Romero the CDR investigation was completed. Romero told reporters he couldn't say who had told him the investigation was over.

Flance's statement confirms what some news organizations have reported recently, based on anonymous sources. But Flance appears to be the first official to say it in public.

News accounts of Holder's appearance in Albuquerque last week said the attorney general refused to answer questions about the investigation.

While answering questions by members of the committee, Flance talked about how the Finance Authority got involved in "swaps," a complex financing method that has been called into question since last year's stock market collapse.

"The mistake we made was listening to financial advisers who had an interest in the work," he said. "Some conflicts of interest were not disclosed to the board."

Flance later told reporters he was referring to an advisory group set up by former Finance Authority director David Harris to look at alternative ways to finance GRIP. Advisers on that group included representatives of J.P. Morgan and other companies that later handled some of the bonds, Flance said.

Concerning the investigation, Flance said he and other board members have been interviewed by FBI agents, whom he described as "friendly" and mainly interested in documents. He said he never testified before the CDR grand jury — and that no current board member or current NMFA staffer has testified. He wouldn't comment on past NMFA staffers or board members.

It's known that the grand jury is looking at Harris, who left the NMFA in 2004, as well as former Richardson chief of staff Dave Contarino, Mike Stratton, who worked as a Richardson presidential campaign official as well as a CDR lobbyist, and Chris Romer, a Colorado state senator who works for J.P. Morgan.

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