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A new kind of politics: Richardson under investigation

Discussion in 'BBS Hangout: Debate & Discussion' started by basso, Dec 15, 2008.

  1. basso

    basso Member
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    is this the type of change for which you've hoped?

    [rquoter]Grand Jury Probes Richardson Donor’s New Mexico Financing Fee

    By Martin Z. Braun and William Selway

    Dec. 15 (Bloomberg) -- A federal grand jury is investigating how a company that advised Jefferson County, Alabama, on bond deals that threaten to cause the biggest municipal bankruptcy in U.S. history, did similar work in New Mexico after making contributions to Governor Bill Richardson’s political action committees.

    The grand jury in Albuquerque is looking into Beverly Hills, California-based CDR Financial Products Inc., which received almost $1.5 million in fees from the New Mexico Finance Authority in 2004 after donating $100,000 to Richardson’s efforts to register Hispanic and American Indian voters and pay for expenses at the Democratic National Convention in 2004, people familiar with the matter said.

    The Federal Bureau of Investigation asked current and former officials from the state agency if any staff members in the governor’s office influenced CDR’s hiring, said the people, who declined to be identified because the proceedings are secret. Richardson, who is President-elect Barack Obama’s designate for Commerce Secretary, has a staff of at least 30 people.

    “They’re looking at everything related to CDR,” William Sisneros, the finance agency’s chief executive officer, said of the FBI probe. “They’re just trying to evaluate all the relationships to see what CDR was doing for the money.”

    Nationwide Investigation

    The investigation reflects another front in nationwide efforts by U.S. prosecutors to investigate so-called pay- to-play in the municipal bond market. The term refers to banks and advisers who make political contributions or personal gifts to public officials in return for fee-paying financing assignments.

    On Dec. 1, Birmingham, Alabama’s mayor, Larry Langford, was charged by federal prosecutors with soliciting $235,000 in loans, expensive clothes and jewelry from Montgomery, Alabama-based bond underwriter Blount Parrish & Co. Langford, the former president of the Jefferson County Commission, included the firm on bond and derivative deals that netted it about $7.1 million. CDR, which wasn’t named in that indictment, advised Jefferson County on the derivatives.

    The New Mexico probe comes two years after the FBI searched CDR’s offices as part of a nationwide investigation into whether banks and advisers conspired to overcharge local governments on financing deals. That probe by the New York office of the U.S. Department of Justice’s Antitrust Division is ongoing, and CDR says it is cooperating.

    No Complaints

    A company spokesman denied wrongdoing in New Mexico.

    “To suggest that there’s a pay for play element is just inaccurate,” said CDR’s Allan Ripp. “There was no involvement by the governor. CDR knows for certain that they were selected on the basis of their track record.”

    New Mexico finance authority officials haven’t complained about the company’s advisory work.

    Richardson, a 61-year-old Democrat, is a former U.S. Energy Secretary who ran for president in 2008. He served 15 years in Congress and was the U.S. ambassador to the United Nations in 1997-98. He was a consultant to Salomon Smith Barney Inc., a unit of New York-based Citigroup Inc., from July 2001 to January 2003.

    Elected New Mexico’s governor in 2002 and re-elected in 2006, Richardson appoints five directors to the New Mexico Finance Authority’s 12-member board, including the chairman. Five other directors are members of his cabinet.

    CDR’s Contributions

    CDR made $1.48 million advising the authority on interest-rate swaps and restructuring escrow funds for $1.6 billion of transportation bonds issued by the agency, according to state records.

    Interest-rate swaps are derivatives, or contracts whose value is derived from assets including stocks, bonds, currencies and commodities, or from events such as changes in interest rates or the weather. Borrowers use them to lower costs and reduce their exposure to swings in interest rates.

    In October 2003, CDR President David Rubin gave $25,000 to Moving America Forward Inc., a political action committee formed by Richardson, disclosure forms show. Seven months later, CDR, known then as Chambers, Dunhill, Rubin & Co., gave $75,000 to ¡Si Se Puede! Boston 2004 Inc., formed to help pay expenses at the 2004 Democratic National Convention in Boston, where Richardson was chairman.

    Cooperation Expected

    “The Governor’s Office is aware of questions surrounding some financial transactions at the New Mexico Finance Authority,” said Gilbert Gallegos, a spokesman for Richardson. “We expect any state agency that is approached with federal officials” to cooperate, he said, declining to comment further. Calls to Richardson were directed to Gallegos.

    Darrin Jones, an FBI spokesman, declined to comment, as did Norman Cairns, a spokesman for the U.S. Attorney’s office in Albuquerque. CDR’s lawyer, Richard Beckler, a partner at Howrey LLP in Washington, declined to comment. Obama spokeswoman Jen Psaki declined to comment.

    A member of the agency’s board, Craig Reeves, said he was asked by federal agents about hiring CDR and whether the donations had any role.

    ‘Many Things Discussed’

    “That was one of many things we discussed,” he said, declining to comment on the specific scope of the investigation. He said no one at the governor’s office discussed retaining CDR with him when the decision was made.

    One of the people called to testify before the Albuquerque grand jury said federal investigators asked if Richardson’s office directed the state agency to select CDR. Investigators also asked about how responses to a request for investment advisory services were scored.

    Another person familiar with the probe said the thrust of the investigation is whether people in Richardson’s office influenced the selection of CDR. The person said the U.S. Attorney identified subjects of the investigation, not targets, which means prosecutors have yet to gather substantial evidence linking anyone to a crime.

    To be charged with a felony, a person has the right to be indicted by a grand jury, the U.S. Constitution says. The panel of 16 to 23 people is meant to act as a buffer between prosecutors and their suspects, said James Montana, a former federal prosecutor and partner with Chicago-based law firm Vedder Price.

    Grand Jury

    Acting in secrecy mandated by law, grand juries review documents and hear evidence from victims, witnesses and occasionally the subjects of the investigation.

    While the Justice Department will sometimes give a target notice of an investigation and invite that person to appear, neither step is required and such appearances are “extremely rare,” said Montana. To indict, 12 of the grand jurors must agree there is probable cause a crime was committed.

    CDR advised the New Mexico Finance Authority on the purchase of swaps from New York-based Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., JPMorgan Chase & Co., UBS AG of Zurich and Royal Bank of Canada in Toronto as part of Richardson’s $1.6 billion transportation proposal in 2003.

    GRIP Bonds

    Richardson’s plan -- known as GRIP, Governor Richardson’s Investment Partnership -- called for refinancing more than $400 million of the state’s existing transportation debt and selling new bonds through the finance agency to pay for improvement projects. CDR earned $951,566 for advising on derivatives tied to the bond issues and $443,265 for restructuring the escrow funds of the refunded bonds, agency documents show.

    David Harris, the executive director of the state finance agency when the interest-rate swaps were done, was Richardson’s deputy chief of staff before he was appointed to the agency. He was also interviewed by the FBI, said Paul Kennedy, his lawyer. Kennedy declined to comment further.

    CDR was hired after responding to a Dec. 30, 2003, request for proposals from the New Mexico Finance Authority for investment advisory services.

    Splitting the Mandate

    Six companies answered the request, which contained two questions out of 39 items related to experience with interest-rate swaps and guaranteed investment contracts. A joint venture from Smith Barney and New York-based Ryan Labs Inc. received the top score of 99 percent. CDR had the second-highest score of 97 percent, authority records show.

    Rather than select the Smith Barney/Ryan Labs team as both investment and swap adviser, the authority’s then- Chief Financial Officer, Keith Mellor, recommended splitting the mandate. The agency gave the swap adviser job to CDR, which received the same score as the Smith Barney/Ryan Labs team on the swap section of the proposals, authority records show.

    The chair of the committee that recommended CDR’s selection, Rick Homans, declined to comment. At the time, Homans was the Secretary of New Mexico’s Economic Development Department. He now serves as the secretary of the Taxation and Revenue Department.

    IRS, SEC

    In a March 10, 2004, memo to the finance authority’s board, Mellor said the agency chose CDR as swap adviser because it specialized in assisting state and local governments, including the University of New Mexico, with derivatives. The authority’s board approved the selections at its meeting later that month.

    “It may not be surprising that the state would have split the assignment based on what they measured or assessed to be respective strengths,” CDR spokesman Ripp said.

    CDR, which Rubin founded in 1986, has been involved in investigations by the Internal Revenue Service, Securities and Exchange Commission and Department of Justice into whether banks and brokers conspired to rig bids on municipal derivatives and profit from deals at the expense of U.S. taxpayers.

    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.

    Philadelphia Fees

    In 2002, Bank of America fired an employee in its municipal derivatives department after he told his manager that he paid $182,393 to CDR and two rival banks and another adviser on transactions in which they played no role, according to records from the NASD and North Carolina’s state court in Mecklenburg County.

    Bank of America said in February 2007 it would cooperate with the Justice Department in its national investigation of bid-rigging and price fixing in the municipal derivatives market.

    CDR also advised states and local governments on the purchase of interest-rate swaps.

    In April 2001, CDR hired Ron White, a bond lawyer and chief fundraiser for Philadelphia Mayor John Street, as a consultant, paying him a $5,000 retainer to help the company win business with the city. Rubin donated $15,000 to Street between December 2000 and June 2003, according to Pennsylvania state filings.

    ‘Move Fast Forward’

    In addition, CDR gave White three tickets to the 2003 Super Bowl in San Diego and provided a limo ride to the game. White brought along Philadelphia treasurer Corey Kemp, according to a federal criminal indictment brought against White and Kemp in 2004.

    On Feb. 11, 16 days after the game, Kemp told White that city Finance Director Janice Davis agreed to “move fast forward” on a $150,000 swap advisory contract for CDR, according to transcripts of FBI wiretaps.

    Banks paid CDR, which wasn’t accused of wrongdoing, at least $515,000 from profits they earned on transactions with the city, documents show.

    “The firm has never participated in any pay for play,” CDR’s Ripp said. “Contributions are publicly disclosed. The firm contributes to candidates and campaigns it supports.”

    Mayor Arrested

    CDR also was paid $1.8 million to advise Jefferson County, Alabama, on more than $5 billion of interest-rate swaps, meant to lower borrowing costs on $3.2 billion of sewer bonds.

    A combination of soaring rates on the bonds and interest-rate swaps is threatening the county with a bankruptcy that would exceed Orange County, California’s default in 1994. Jefferson County paid JPMorgan and a group of banks $120.2 million in fees for derivatives that were supposed to protect it from the risk of rising interest rates.

    Those fees were about $100 million more than they should have been based on prevailing rates, according to James White, an adviser the county hired in 2007, after the SEC said it was investigating the deals.

    Ripp has said CDR stands by the pricing of the swaps and said White’s estimates were incorrect because they didn’t take into account the county’s credit profile, collateral provisions between the county and the banks and the precise time of the derivative trades.

    Proud of Work

    CDR’s Ripp declined to comment on the arrests in Jefferson County, saying “the firm is certainly proud of its work for the county.” Langford, the Birmingham, Alabama, mayor, has denied wrongdoing in connection with the county’s bond deals. Langford’s attorney, Thomas Baddley, didn’t return a call seeking comment. A telephone call to William Blount, the chairman of Blount Parrish & Co., wasn’t immediately returned Sunday.

    The IRS challenged the tax exemptions on municipal bond deals that CDR worked on, including one for a New Mexico housing agency, and proposed the bonds be subject to federal income tax. The IRS said in April 2007 that the company pocketed fees drawn from earnings on invested bond proceeds that should have been paid to the U.S. Treasury.

    “As in all lease-to-own transactions, this was a unique, customized structured financing that was vetted and scrutinized closely by bond counsel as well as the issuer and all deal participants,” CDR has said.

    ‘Massive Boxes’

    In September 2007, CDR settled allegations by the SEC that it committed securities fraud for failing to disclose that it received secret fees on Florida bond deals from New York-based American International Group Inc., the insurer rescued this year by the Federal Reserve in Washington. CDR and AIG neither admitted nor denied wrongdoing.

    In New Mexico, the finance agency was first contacted by the FBI in August, said Sisneros, who was appointed after the CDR deals were done.

    The agency, which is cooperating, has given investigators “massive boxes” of documents related to the bond and swap deals, he said. Investigators called with follow-up questions as recently as three weeks ago, said Rey Romero, the agency’s general counsel.

    Sisneros and board chairman Stephen Flance, a developer, met with investigators in August.

    “None of the board members are under suspicion as far as I know,” said Flance, who said he hadn’t been subpoenaed.[/rquoter]
     
  2. SamFisher

    SamFisher Member

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    A new kind of suck: thread titles that are lies.

    Same as the old kind of suck.
     
  3. Major

    Major Member

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    Did you not read the article, or did you make up a false title just because?
     
  4. leroy

    leroy Member

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    You are pathetic, basso.
     
  5. Wild Bill

    Wild Bill Member

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    Did you really expect anyone to read that? I'm sure some did, but seriously, isn't that something you could just footnote? I agree with alot of your posts, but as Mr. O'Reilly says, "Keep it pithy!"
     
  6. Qball

    Qball Member

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    Can't spell BaSso without the BS...
     
  7. B-Bob

    B-Bob "94-year-old self-described dreamer"

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    No, you're still cutting and pasting with no insight, logic or analysis. And then you win another Trollie Award by topping your heap of fail with another smelly turd of an irrelevant, repetitive, agenda-uber-alles thread title.

    Congrats!

    Mods, could we get basso a random thread title generator? Random would provide more insightful and relevant thread titles.

    Here's one: FRYING ALLUVIAL CUISINE
    (just try: the random word generator, for starters.)
     
  8. Texasboy1978

    Texasboy1978 Member

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    OK, so I was trying to give Basso the benefit of the doubt about a Muslim remark he made in another thread, but after seeing this, it is clear that he is just and ignorant guy that probably lives in a trailer park in New Caney.
     
  9. rimrocker

    rimrocker Member

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    It's official: Barack Obama elected 44th president
    1 hr 17 mins ago
    http://news.yahoo.com/s/ap/20081215/ap_on_go_pr_wh/electoral_vote/print

    RICHMOND, Va. – As 13 electors cast ballots Monday for the nation's first black president in the Confederacy's old Capitol, Henry Marsh emotionally recalled the smartest man he ever knew — a waiter, who couldn't get a better job because of his race.

    "He waited tables for 30 years, six days a week, 12 hours a day, from 12 noon to 12 midnight, and he supported his family," Marsh, 75, a civil rights lawyer and state senator, said of his father as he fought back tears. "He suffered a lot. He went through a lot."

    In all 50 states and the District of Columbia, the 538 electors performed a constitutional process to legally elect Democrat Barack Obama the 44th president.

    More than 131 million voters cast ballots — the most ever in a presidential election. But Obama's election is not complete until Congress tallies the outcome of Monday's Electoral College vote at a joint session scheduled for Jan. 6.

    Monday's voting was largely ceremonial, the results preordained by Obama's Nov. 4 victory over Republican Sen. John McCain. Obama was to win 365 electoral votes, to 173 for McCain. With only Hawaii still to vote, all the electors had cast ballots in accordance with the popular votes in their states.

    In many states, the formal, staid proceeding was touched with poignance, particularly among people old enough to recall a time when voting alone posed the risk of violence for black Americans.

    The contrast at Virginia's Capitol, where the Confederate Congress met, was particularly striking.

    Gov. Timothy M. Kaine noted in his speech that the 200-year-old Capitol was where lawmakers just 50 years ago orchestrated the state's formal defiance of federal school desegregation orders. But he also noted that it is where L. Douglas Wilder took his oath as the nation's first elected black governor in 1990.

    "This temple of Democracy shines very brightly today," Kaine told a standing-room-only crowd attending what had always been a sparsely attended afterthought.

    In Florida, state Sen. Frederica Wilson, 66, never thought she would see a black man elected president.

    "White water fountains, colored water fountains. You couldn't sit at the lunch counter, go to the bank or get a hamburger," Wilson said after signing a document certifying that Obama got all 27 of her state's electors.

    "The pain will always be there, but I think there's a realization that people have evolved," she said.

    In North Carolina, 61-year-old Janice Cole said Monday's event was a joyous marker for black people to put old Dixie's trouble past behind them.

    "Sen. Obama reminds us that only in America could this story be possible," Cole said.

    As pro football legend, Franco Harris signs his autograph countless thousands of times. But the signature he made as one of 21 Pennsylvania electors for Obama was the one the Pittsburgh Steelers great running back won't ever forget.

    "That was special," the Pro Football Hall of Famer said. "This was the most valuable thing I've ever signed my name to."

    In Augusta, Maine, the moment was freighted with emotion for Jill Duson, the first black mayor of Portland and chairwoman of Maine's four electors.

    "Every time I think of it, I get a little misty eyed," Duson said. "I am undone by the election of Barack Obama and what it says to me as a black American, and his victory in the whitest state."

    Sedrick Rawlins, a retired 81-year-old dentist from Manchester, Conn., traveled to Selma, Ala., in 1965 to help the Rev. Martin Luther King Jr., with the bloody march to Montgomery. The night Obama won the election, he said, he wept with joy. On Monday, he couldn't stop smiling.

    "The election is one thing, but it's really official when they seal those ballots with wax and send them off," Rawlins said.

    Colorado elector Wellington Webb, Denver's first and only black mayor, said the chance to cast an electoral vote for the first black president was the honor of a lifetime, one that would have made King proud.

    "He would find the dream fulfilled," Webb said.
     
  10. Apollo Creed

    Apollo Creed Contributing Member

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    Please do not quote asso out of the respect of the many who have him on ignore.
     
  11. rockbox

    rockbox Around before clutchcity.com

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    Basso probably wonders why nobody wants to hang out and have a beer with him. At least TJ is witty and entertaining.
     
  12. Invisible Fan

    Invisible Fan Member

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    Clutchfans needs a cone of silence feature, where the troll thinks he's posting but no one can read his idiocy.
     
  13. Nice Rollin

    Nice Rollin Member

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    lol. he didnt read it
     
  14. rocketsjudoka

    rocketsjudoka Member
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    I read it and will admit that a lot of it is over my head. I don't think Richardson has much to worry about at the moment but I'm not surprised that the kind of complex financial schemes that the piece talks about is causing problems.
     
  15. pgabriel

    pgabriel Educated Negro

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    Against my better judgement I'm going to defend basso on this one, although as usual his thread title is incorrect. However, through investigating this group, Richardson's office is being questioned. I don't think the complexity of the transactions matter, what matters is how they got they got the job, if they got it by providing money to a Bill Richardson PAC.
     
  16. rocketsjudoka

    rocketsjudoka Member
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    That's a good summation and that was the gist of what I got out of it. Finance is not one of my strong suits and trying to follow the ins and outs of derivatives and other financial tools makes my eyes glaze over so I will admit to not completely understanding it all my. From what I gathered there is a question whether there was a quid pro quo between Richardson and the CDR group. There is some evidence there might but it seems fairly tenous, for now, and Richardson's office is cooperating with the investigation.
     
  17. B-Bob

    B-Bob "94-year-old self-described dreamer"

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    CDR continues to disappoint. Oh moes! I mean noes. :(
     
  18. basso

    basso Member
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    there you go, and i thought it was fairly self-evident, so i fail to see what the hue and cry is about, other than some folks seem to object to any news that puts B-Ho in a bad light (in this case by continuing to question those w/ whom he chooses to associate), and by those who object to the overall "theme."
     
  19. FranchiseBlade

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    The problem is that this doesn't make Obama look bad, It is questionable that Richardson even looks bad.

    The overall theme of change has been clearly illustrated in multiple ways from Barack. Check out rimrockers thread about Obama's change. Looks like there are several GOP members who are experiencing the new kind of politics.

    You, posting articles that aren't in anyway significant on Obama.
     
    #19 FranchiseBlade, Dec 16, 2008
    Last edited: Dec 16, 2008
  20. pgabriel

    pgabriel Educated Negro

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    projecting

    edit: also basso, this may be the first legitimate subject you've posted in regards to Obama's relationship albeit this is still very tenuous and there so far isn't much, and not to mention its still only guilt by association even if anything actually comes of this. But if you are referencing the Blagojevich topic, to say Obama associates with questionable characters because someone on his staff may have talked about who will replace him as senator is just flat out stupid and deceptive.
     
    #20 pgabriel, Dec 16, 2008
    Last edited: Dec 16, 2008

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