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CDR Contract Mystery Deepens: Firm at Center of Federal Probe Had Low Rating, Former Official Says(Albuquerque Journal (NM) Via Acquire Media NewsEdge) Feb. 8--Federal investigators have been looking into the question for months: How did a Beverly Hills company that gave Gov. Bill Richardson's political committees more than $100,000 land a lucrative state financial adviser contract? Joe Gosline has the same question -- and he was one of the state officials who judged the contract proposals. Gosline is a former controller and chief financial officer of the New Mexico Finance Authority, which awarded the contract to CDR Financial Products in 2004. No one involved in the judging up to now has been willing to speak publicly about details -- refusing to comment or referring questions to lawyers. Gosline broke that silence in a Journal interview last week. He said six firms submitted proposals and recalled that CDR ranked middle to bottom. One of two officials on the "staff evaluation team," Gosline said he was surprised when he later discovered that CDR had been elevated to second place and was recommended for state work. When he asked what had transpired, Gosline said he was told, in effect: "Don't ask." Surprising memo CDR's selection by the NMFA has been the focus of a federal grand jury investigation that led Richardson to withdraw as nominee for commerce secretary in President Obama's administration. Richardson's office has said that CDR was selected through a competitive process and that nothing was wrong with his political groups accepting $110,000 in contributions from the company around the time it received state work. Gosline, who left the NMFA in 2007 as its chief financial officer, agreed to be interviewed by the Journal last week. He has a wrongful termination lawsuit pending against the agency. He was fired in December 2007, according to his lawsuit, for allegedly visiting Internet dating sites at work and for sending sexually explicit e-mail. His lawsuit contends that the accusations are false and unsupported by any records in the NMFA's possession. NMFA records show that Gosline was one of two staff members who evaluated proposals for investment advisory services for the agency in early 2004. Gosline said he discovered that CDR had jumped in the ranking just before the NMFA board of directors met in March 2004 to select a winning bidder. The board, the majority of whom are gubernatorial appointees, oversees issuance of bonds for state and local projects. In 2004, the NMFA was also charged with handling the financing arrangements for Richardson's $1.6 billion transportation project called GRIP. The board's unanimous vote to hire CDR came after the other staffer involved in the scoring, then-NMFA Chief Financial Officer Keith Mellor, wrote board members a memo. In the March 10, 2004, memo, Mellor said that "staff" recommended splitting the award of the RFP between CDR Financial Products and another firm, which ranked higher. The only "staff " whose names appear on records obtained by the Journal are Mellor and Gosline. Gosline said he "wasn't pointing fingers at anyone" but said he never recommended CDR. Gosline said he had talked to Mellor after the original scoring and both agreed that CDR had placed in the "middle to the bottom" of the firms that submitted proposals. Gosline said he asked Mellor about the change in the ranking and was told something to the effect of, "Don't ask me how the scoring got like this." Two scoring sheets? Could there have been two sets of scoring sheets? During his Journal interview last week, Gosline reviewed a document obtained by the Journal from the NMFA that showed the various scores received by the six bidders in the competition. But Gosline said that scoring grid was different from the one he recalled seeing during the 2004 evaluation. The Journal's copy, which the N MFA furnished in response to a records request, included two additional scoring criteria, he said. The new factors focused on each firm's experience with so-called interest-rate swaps, a speciality of CDR. The swaps were a relatively new financing tool that the NMFA had never used. "I saw a grid," Gosline said, "but it didn't have the swaps on it." Without points for swaps, CDR ranked fourth in the group of six bidders, according to a Journal review of the scoring. Adding the swap factors gave CDR enough points to place second, with a score of 97. The NMFA's request for proposals never mentioned swaps specifically. CDR was paid about $1.5 million for work related to the interest rate swaps and a related escrow account. No talk of swaps As part of the evaluation process, Gosline said he and Mellor were joined by members of the board's Investment Committee for oral presentations from the bidders. "Swaps weren't part of the original presentations," Gosline recalled, adding that the discussions focused mostly on asset/liability modeling. Mellor's memo to the board, however, stated that the staff evaluation included an assessment of the firms' swap advisory capabilities. Gosline said he recalled that investment board members who attended the oral presentations included thenstate Economic Development Secretary Rick Homans and Craig Reeves, president of the First National Bank of New Mexico in Clayton. When it came time to select a company in March 2004, Investment Committee chair Homans told the board that this committee recommended Smith Barney/Ryan Labs, the highest ranked, for "overall portfolio strategy and fixed/ variable rate management in the role of Investment Advisor," meeting minutes show. The Investment Committee "further recommends CDR Financial Products to provide swaps, advisory and management services," the minutes state. Homans, a Richardson appointee now serving as secretary for the Taxation and Revenue Department, didn't return a Journal phone call seeking comment. Reeves forwarded the Journal request for comment to NMFA general counsel Rey Romero, who said he would check into a reporter's inquiry about what Reeves might recall about the Investment Committee's involvement. At the time the proposals were evaluated in 2004, Gosline and Mellor both reported to NMFA Executive Director David Harris, a former deputy chief of staff for Richardson who served a year at the NMFA. Harris took a newly created job as vice president for administration at the University of New Mexico in May 2004. His departure from the NMFA was announced just days after the March 2004 meeting in which CDR was hired. Harris' attorney, Paul Kennedy, said last week that neither he nor Harris had any comment. Mellor left the NMFA in 2006, following Harris to the University of New Mexico. Reached there recently Mellor said, "I've been interviewed by the FBI and the federal prosecutor, and they asked me not to comment on anything." Gosline worked for the NMFA for eight years, except for a year when he left the state to work for a private firm in Atlanta. He said he was recruited to return to the NMFA in 2006 and became its chief financial officer, replacing Mellor. To see more of the Albuquerque Journal, or to subscribe to the newspaper, go to http://www.abqjournal.com. Copyright (c) 2009, Albuquerque Journal, N.M. Distributed by McClatchy-Tribune Information Services. For reprints, email [email protected], call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. |