Friends of Bill find it pays to play

Photo by Mike Schinkel/Flickr

Two of Gov. Bill Richardson’s longtime friends and advisers –- Michael Stratton and Dave Contarino -– got unwanted time in the spotlight last week.

Stratton saw his name in headlines because he received a more than a quarter-of-a-million payday from a firm involved in a deal at the center of a federal probe that reportedly also has its sights on Contarino, the governor’s former campaign manager and ex-chief of staff.

The question prosecutors want to answer is, did sizable political contributions from a California-based firm, CDR Financial Products, to two political action committees started by Richardson play a role in the state’s decision to give the firm a lucrative contract?

The answer is not only crucial for Richardson’s political future, it may also speak volumes about New Mexico politics in general. Richardson’s withdrawal from consideration as U.S. commerce secretary might have surprised many state residents, but not all. Critics say Richardson has long thrived in New Mexico’s chummy political culture in which personal relationships and doing business with the state government go hand in hand.

Besides Contarino and Stratton, at least three other close allies or confidants to Richardson have sought or received state contracts in recent years under circumstances that raised conflict-of-interest questions.

That friends and confidants of Richardson’s are involved in state business is no surprise. The capital runs on relationships as much as anything else. Access to decision makers is a tradable commodity for companies and others that lobby lawmakers, the governor and other state officials. And it can lead to a nice payday or prominent government posts for those lucky enough to have such relationships.

But such relationships can also run afoul of prohibitions against conflicts of interest, critics say

“He ran the Roundhouse like Tony Soprano ran his empire,” John Grubesic, a former Democratic state senator from Santa Fe and frequent Richardson critic, said of the governor. “All he’s done is to benefit his political cronies. Clearly, it’s a ‘You scratch my back, I’ll scratch yours.’”

Former Republican Party of New Mexico Chairman John Dendahl could not agree more.

Dendahl ran unsuccessfully against Richardson in the 2006 gubernatorial race, the Republicans’ best, last hope to slow down the Richardson juggernaut. It didn’t work. Richardson steamrolled the Republican, winning nearly 70 percent of the vote, despite Dendahl’s repeated accusations that the governor was cultivating a “pay-to-play culture” in state government.

Dendahl, now living in the suburbs of Denver, said Richardson himself may face legal charges.

“Whether he is going to be indicted and subsequently convicted … is an open question,” he said in a telephone interview with NMI. “I know what I have read in copious news stories. There’s a great deal here. Of course, knowing Richardson as I do, there’s a great deal of schadenfreude.”

A governor’s spokesman did not return a phone call seeking a response. But Richardson has vigorously defended Contarino and state officials, saying his administration will be vindicated in the end.

As for the connection between contributions and the awarding of state contracts, Richardson’s response in the past to reporters has been to tell them that he doesn’t know who contributes to him.

That answer doesn’t apply to names in today’s news stories.

Mike Stratton: Tickets and steak

The current probe is focused on an alleged play-to-pay scheme in which contributions to two political action committees started by Richardson — Si Se Puede! and Moving America Forward — may have been rewarded with work from the New Mexico Finance Authority.

Mike Stratton, president of Denver-based Stratton & Associates and a long-time friend of Richardson’s, received $269,000 in 2003 and 2004 from JPMorgan Chase & Co. to help win public finance business relating to “state, county, and local government and corporate entities” in New Mexico, according to Bloomberg News

JPMorgan was the senior underwriter on $1 billion of the $1.6 billion of bonds sold by the New Mexico Finance Authority to pay for GRIP, short for Governor Richardson’s Investment Partnership.

And CDR, the firm at the center of the federal probe and one for whom Stratton also consulted, advised the state agency on the purchase of the particular financial instruments employed, called swaps.

By all reports Stratton remains close to the governor.

He was one of several hosts at a fundraiser in December to help Richardson retire debt from his presidential campaign. In January 2006, he arranged for tickets for the governor and three top aides to a Broncos playoff game in Denver. He also set up a private dinner afterward for Richardson and others at the swank Palm steakhouse.

Stratton, meanwhile, has appeared to benefit from his friendship with Richardson. He reportedly earned $240,000 in consulting fees from the Democratic Governors Association during the two years that Richardson led the organization.

NMI’s attempts to reach Stratton proved unsuccessful.

Dave Contarino: ‘Highest respect’

For another primer in how lobbying works in Santa Fe, consider ValueOptions, a Virginia-based company that manages the state’s behavioral health and substance abuse services for about 70,000 New Mexicans. Last year, the company sought to renew its contract, which is worth $300 million. Value Options hired Contarino, the governor’s former chief of staff and presidential campaign chairman.

Contarino and Richardson have been together at least since 2002, when Contarino ran Richardson’s gubernatorial campaign. Reportedly the two men hit it off because both love politics. According to a profile in The Albuquerque Tribune, Contarino can recite players in past political campaigns like someone else might run through old baseball players or long-forgotten Super Bowl champions.

And he’s been around politics for more than 25 of his 47 years, interning with the Democratic National Committee, putting in time on Walter Mondale’s 1984 presidential campaign and working for California Democrat and former U.S. Rep. George Brown Jr.

When Richardson won the governship, he made Contarino his chief of staff. Contarino left that job in April 2006 to work on the governor’s re-election effort. In 2007, he became chairman of Richardson’s presidential campaign. That ended in January 2008.

Meanwhile, executives at ValueOptions had made it a point to contribute to both the governor’s presidential campaign — executives, officers and state lobbyists for the company gave Richardson’s campaign nearly $25,000. In 2006, the company gave $50,000 to the governor’s re-election campaign.

Neither Contarino nor ValueOptions will disclose how much he was paid as a consultant. And the state appears to have chosen OptumHealth New Mexico, instead of renewing ValueOptions’ contract, to run the program. It announced in mid-December that it had asked Optum to enter into contract negotiations.

Richardson is standing by the man he once called his “most senior and trusted aide.”

“I have the highest respect and regard for Dave Contarino,” the governor said last week.

Guy Riordan: Not such a very good friend

“I am a very good friend of the governor’s,” Guy Riordan said back in September 2005. Riordan, a securities dealer from Albuquerque was a big-time contributor to Richardson’s campaigns, giving at least $28,000 to Richardson’s 2002 gubernatorial run. In 2003, Richardson appointed him to the state Game Commission and he reportedly was an early director of Si Se Puede, one of the two political committees at the heart of the ongoing federal inquiry.

Riordan said later that he had attended the Super Bowl and a World Series game in 2004 with Richardson and another political ally and friend of the governor’s — Paul Blanchard, a director of the other political action committee at the heart of the federal probe, Moving America Forward.

Eventually, Richardson distanced himself from Riordan publicly when the securities dealer figured into the federal investigation that ended with ex-state treasurers Robert Vigil and MIchael Montoya going to federal prison. The governor’s office released a statement saying that Riordan was a friend of the governor’s, not “a very good friend.”

Montoya later testified in court that Riordan gave him gifts in return for state business, charges that Riordan and his attorneys denied. By then Riordan had quit the Game Commission and Richardson and others made a very public display of giving Riordan’s campaign contributions to charity.

Riordan testified in court more than a year ago that federal prosecutors were going after the governor.

“They asked me questions about the governor. They asked me questions about his finances. I was furious,” Riordan said during a hearing in December 2007 that was held to determine whether he could continue to work as a securities broker.

A Securities and Exchange Commission (SEC) administrative judge ruled last year that Riordan should be banned from the securities industry for life for paying bribes to Montoya. The judge’s ruling is subject to approval by the SEC before it becomes final.

Jerry Peters: Friend and state contractor

Gerald Peters, known to all as Jerry, is a friend of the governor’s who has given more than $100,000 to the governor’s campaigns, made a jet available to Richardson for political trips and held a fundraiser for Richardson’s presidential campaign.

The Santa Fe art dealer, developer and owner of the Blue Corn restaurant chain, has been around state business for years and made his presence known in 2002 politics when he gave more than $137,000 to Richardson’s gubernatorial campaign.

But in December 2006, Peters appeared to run into a speed bump when a firm associated with him was selected for a big redevelopment project at the proposed headquarters for the state Department of Transportation (DOT). It eventually blew up in the face of aggressive press coverage.

Richardson was asked more than once whether Peters’ financial help to his campaigns played any role in the firm winning the DOT project.

“Look, I’ve said it before. There’s no connection between donations and what happens in state government,” Richardson said in August 2007. “That’s always been an established principle.”

Peters, meanwhile, defended his firm, saying it was the only one to submit a bid on time.

Later, the governor asked for a review of how the Transportation Department bid and awarded the project. The review found the project “suffered from poor planning and poor decisions,” the report said, while the department lacked necessary expertise, skirted purchasing rules and made questionable use of state aircraft, the Albuquerque Journal wrote in March 2008.

The questionable use of aircraft refers to the two men indicted in a separate federal investigation — engineer Raul Parra and Toby Martinez, the DOT project manager — who flew with then-Transportation Secretary Rhonda Faught to Dallas on January 2005. The two men were involved in the DOT project.

Parra and Martinez later pleaded guilty to corruption in the Metro Courthouse scandal that netted former Senate president pro tem Manny Aragon in October 2008.

Despite the governor’s demand of an internal investigation into the DOT headquarters project, Richardson so far has refused to answer whether a similar internal inquiry has been conducted to see if there were any improprieties in how the state handled the CDR deal at the center of the federal probe.

Johnny Cope: Fishing for state financing

Johnny Cope is a prominent Richardson supporter, oilman and chairman of the the state’s Transportation Commission. He is also business partners with 2nd Congressional District U.S. Rep Harry Teague. Together they own an aircraft that Richardson used often for his presidential campaign. In fact, as of September the single largest debt still owed by Richardson’s presidential campaign –  $203,850 — was for the use of the plane owned by Cope and Teague.

Cope also spreads his money around. He and 10 companies owned by him contributed more than $170,000 to candidates for state office during the 2006 elections. Richardson received the lion’s share of Cope’s contributions — $107,000 — and his running mate, Lt. Gov. Diane Denish, took in at least $37,500.

Cope also has been involved in what he acknowledged were situations that raised questions, such as the time he registered as a lobbyist for Wexford Health Services of Pittsburgh in 2005, a year after the company won a contract potentially worth more than $100 million to provide health care for state prison inmates.

Cope told the Albuquerque Journal in 2007 the job was out of character for him.

Another time, Cope, tried to push through legislation that state lawmakers said smelled fishy. It involved legislation that would have provided a state loan guarantee for a fish farm project in southwestern New Mexico; Cope and another Transportation Commission member, David Schutz, were investors in the farm. The firm, N.M. Tilapia Corp., assembled a high-powered slate of lobbyists, including former House Speaker Raymond G. Sanchez and former Gov. Toney Anaya.

The legislation would have made the state liable for possibly millions of dollars if the company had defaulted on a loan. One senator called the proposed funding mechanism in the bill a rare, if not unprecedented, vehicle for the state to help finance a private company. Ultimately, the Senate tabled the bill, in effect killing it, during a late night session.

Cope appeared resigned to the Senate bill’s defeat at the time.

“We lost,” Cope said. “You don’t have to write another bad story. It’s over.”

The governor said he knew nothing of the bill, but many around the Roundhouse found that hard to believe. Richardson and his staff are known to keep very close tabs on the Legislature.

Time for ethics reform

The governor, meanwhile, is attempting to move on from the scandal that has enveloped two of his close advisers. Last week his office sent out a press release announcing that Richardson will “aggressively pursue ethics reforms in the upcoming legislative session.”

The governor, the release said, wants lawmakers to create an independent ethics commission and cap the amount of money an individual and others can contribute to political campaigns. New Mexico is one of a handful of states that doesn’t limit campaign contributions.

The cause of ethics reform has not fared well under Richardson. In recent years the governor has impaneled two ethics reform task forces that made a series of recommendations, most of which were ignored or were met with hostility during subsequent legislative sessions.

“I’ve proudly signed the ethics bills that have made it to my desk in recent years,” the governor said in the news release. “This year, I look forward to signing those important reforms that, in past years, have failed by only a few votes.”

At least one advocate said Sunday that the proof of Richardson’s intentions will be in what gets passed this session.

“In the past people have talked a good game,” Steven Robert Allen of Common Cause New Mexico told the hosts of a public affairs show on KOB TV yesterday. The proof of the support for such reforms is in what gets passed, he added.