NM Gov. Richardson said to be clear of fed probe

[August 27, 2009]  SANTA FE, N.M. (AP) -- New Mexico Gov. Bill Richardson and former high-ranking members of his administration won't be criminally charged in a yearlong federal investigation into pay-to-play allegations involving one of the Democratic governor's large political donors, someone familiar with the case said.

The decision not to pursue indictments was made by top Justice Department officials, according to a person familiar with the investigation, who asked not to be identified because federal officials had not disclosed results of the probe.

"It's over. There's nothing. It was killed in Washington," the person told The Associated Press.

A federal grand jury began an investigation in 2008 into a possible pay-to-play scheme in which lucrative work on state bond deals went to a Richardson donor. The federal probe derailed Richardson's appointment as commerce secretary in President Barack Obama's administration.

Richardson withdrew his nomination in January, saying the investigation would have delayed his confirmation although he said expected to be cleared.

Richardson and members of his staff traveled to Cuba this week for a trade mission. Richardson spokesman Gilbert Gallegos didn't immediately respond to e-mail messages seeking confirmation that no charges were expected from the federal investigation.

A spokesman for the U.S. Attorney's office in Albuquerque said he had no information about the Justice Department's decision and couldn't comment.

Federal investigators reviewed whether political contributions influenced the selection of California-based CDR Financial Products as an adviser on state transportation bond transactions, and whether Richardson's former chief of staff, David Contarino, played a role in the hiring of CDR.

Prosecutors also subpoenaed records of another former Richardson aide, David Harris, and one of the governor's close political advisers, Michael Stratton.

Harris served as Richardson's deputy chief of staff and then became executive director of the New Mexico Finance Authority, which selected CDR for the bond financing work. Stratton, a Denver-based political consultant, served as a senior adviser to Richardson's 2008 presidential campaign and was a consultant to CDR and another financial firm when the Finance Authority put together the bond deals in 2004.

The state work generated almost $1.5 million in fees for CDR in 2004-2005.

CDR Chief Executive David Rubin and his firm contributed $110,000 to Richardson political committees in 2003-2005. The largest of those contributions, $75,000, was made less than a week before CDR was selected in June 2004 by the Finance Authority to handle the reinvestment of idle bond proceeds. The firm earned $443,000 in fees for its reinvestment work.

CDR received more than $1 million in fees in May 2004 for serving as a financial adviser on interest rate swaps for the transportation bond issues and as the manager of bond proceeds held in escrow.

The bonds financed a $1.6 billion state transportation program that was called GRIP -- Gov. Richardson's Investment Partnership. The Legislature approved the transportation plan, which included the governor's commuter rail proposal, in the fall of 2003 during a special session.

The Finance Authority is a quasi-public agency that issues bonds and helps develop low-cost financing for state and local projects. The governor indirectly controls the authority because its 12-member board is made up mostly of executive branch department administrators and gubernatorial appointees.

[Associated Press; By BARRY MASSEY]

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