Richardson adviser worked for firm feds probing

Barry Massey | The Associated Press

1/7/2009 - 1/7/09

One of Gov. Bill Richardson's longtime friends and political advisers worked as a consultant for the California firm at the center a federal pay-to-play investigation that derailed the Democratic governor's appointment as commerce secretary.

Federal investigators are looking at whether political contributions influenced the selection of the firm, CDR Financial Products, for lucrative bond deals in New Mexico and whether Richardson's former chief of staff, David Contarino, played a role in CDR being hired.

A Denver-based firm operated by Mike Stratton, Richardson's longtime friend, was a consultant for CDR, including in 2004 when the company worked on bond deals with the New Mexico Finance Authority that are part of the grand jury investigation. The firm earned almost $1.5 million in fees for those transactions.

CDR and its chief executive, David Rubin, contributed $110,000 to Richardson political committees in 2003-2005.

Richardson said Wednesday there was nothing improper in how the state awarded the work to CDR.

"In my view, the state and its officials have done nothing wrong. They behaved with the best of intentions and the best conduct," Richardson said at a news conference in Albuquerque.

He praised Contarino as "an outstanding public servant" and said he had the "utmost integrity, talent and he's responsible for some of the successes of our administration."

Contarino, in an e-mailed statement, said: "As chief of staff and co-chairman of the Governor's Finance Council, it was my job to be involved in GRIP and many of the Administration's economic and financial initiatives.

In all of my actions, I acted appropriately and I am confident that the investigation will bear out that fact."

The bonds deals involving CDR were for a Richardson administration highway construction program enacted in 2003, called GRIP — Governor Richardson's Investment Partnership.

Stratton's work for CDR is significant because as a close friend and adviser to Richardson he was in position to know about the governor's fundraising machinery, including the committees that received contributions from CDR. Stratton also was familiar with the key players in the Richardson administration.

Stratton and one of his associates did not immediately return telephone messages Wednesday seeking comment.

Allan Ripp, a spokesman for CDR, said Stratton's work for CDR lasted at least until 2007 and started "somewhere in the early 2000s" but he was uncertain of the exact year. Richardson was elected governor in 2002 and took office in January 2003.

Ripp said Stratton worked for the Beverly Hills-based financial firm as a "business development consultant" with responsibilities to "target states and municipalities where CDR might be able to obtain business or work with the various agencies on swaps and derivatives work." He said Stratton's consulting had "not anything to do with political contributions."

Stratton is a longtime Democratic political consultant and played a role in several presidential campaigns. According to his Web site, he was a co-director of President Clinton's 1993 presidential inaugural committee. Richardson and Stratton have been friends more than 25 years.

CDR's largest contribution to Richardson's causes went to one of the governor's political committees in 2004 that helped pay for expenses of some of Richardson's staff and supporters at the Democratic National Convention that summer. Stratton worked with the governor during the convention, helping Richardson carry out his role as convention chairman.

Stratton later was a paid consultant to the Democratic Governors' Association when Richardson was chairman. He advised Richardson — and raised money for him — during the governor's failed bid for the 2008 presidential nomination.

Bill Sisneros, executive director of the Finance Authority, said in an interview with the AP that he received numerous telephone calls from Stratton's firm in June 2004 on a possible reinvestment of bond escrow proceeds by CDR.

Sisneros said federal investigators have questioned him about his contact with Contarino on the CDR deals. Sisneros said he had discussed the escrow reinvestment plan with Contarino but was not directed to hire CDR.

"Even to this day I've never had a conversation with Gov. Richardson about CDR," said Sisneros.

Sisneros said the escrow reinvestment was a "market driven transaction" — not done because of any influence from Stratton's firm or the governor's office.

CDR was selected because of its expertise in specialized financial transactions used for management of bond proceeds held in escrow, Sisneros said, and because the company had been evaluated three months earlier when CDR was selected by the authority's board as a financial adviser to help assemble a bond financing deal for a $1.6 billion state transportation package.

Sisneros said Joan Coplan, who is a senior consultant for Stratton and Associates, had telephoned him repeatedly about the opportunity for reinvestment of the bond proceeds held in escrow and the authority's possible use of CDR. Stratton's firm was "kind of pitching their guy" for the escrow reinvestment, he said.

"The only person that was lobbying the Finance Authority was Michael Stratton's office," said Sisneros.

The escrow restructuring was approved by the authority's board as a "sole source procurement" of services with CDR — with no competitive bid process before the firm's selection. The authority took that approach because it needed to quickly make the reinvestment before it was precluded by a change in federal regulations.

CDR's largest contribution to Richardson — $75,000 — came as the authority was considering the escrow reinvestment plan. The authority's chief financial officer recommended CDR for the work in a memorandum dated June 23, 2004 and the authority's board approved the firm's selection on June 30.

The $75,000 contribution from CDR — then called Rubin, Chambers and Dunhill — was dated June 18. The money went to a little known committee called Si Se Puede! Boston 2004 Inc., which Richardson had formed in February 2004. At the time of the convention, the largest amount of money raised by the committee came from CDR and other companies that helped put together the complex bond financing package for the Richardson administration's transportation program.

Rubin — CDR's chief executive — made a $25,000 donation to a Richardson committee in late October 2003, when the Legislature was debating the transportation construction program. That contribution went to another Richardson political committee, Moving America Forward, which the governor had formed to increase voter registration among Hispanics and American Indians in advance of the 2004 presidential election. Rubin gave $10,000 to Richardson's re-election campaign in 2005.

Contarino left his job as Richardson's chief of staff in April 2006 to help run the governor's re-election campaign. He also was campaign manager for Richardson's bid for the Democratic presidential nomination, which Richardson abandoned in January 2008.