One unnamed witness who testified before the federal grand jury investigating the allegations was quoted by the news organization as saying he was asked if Contarino, Richardson’s former chief of staff, ordered officials with the New Mexico Finance Authority to hire CDR Financial Products for a lucrative state contract. And “another personal familiar with the investigation” was quoted as saying that Contarino “is a subject of the inquiry and that prosecutors are looking at whether he solicited contributions from firms that worked on finance authority bond deals.”

Contarino, who is 47 and owns a title company in Santa Fe, developed policy and managed Richardson’s political and governmental staffs from 2003 through April 2006, He also ran both of Richardson’s campaigns for governor and his unsuccessful run for president last year. When Contarino left the chief of staff job in 2006 to work on Richardson’s re-election campaign the governor called Contarino his most trusted aide.

It was already known publicly that the ongoing federal investigation centers around whether any staffers in Richardson’s office engaged in pay-to-play politics on the CDR deal, but none had been publicly named before the Bloomberg.com article was published shortly after 10 p.m. New Mexico time on Tuesday.

The Bloomberg.com report threatens to increase the level of scandal surrounding Richardson, who has bowed out of his appointment to be Commerce Secretary. It was already known publicly that the ongoing federal investigation centers on whether any staffers in Richardson’s office engaged in pay-to-play politics on the CDR deal, but none had been publicly named before the Bloomberg.com article was published shortly after 10 p.m. New Mexico time on Tuesday.

Last August Contarino told NMI that he had not been subpoenaed by investigators.

Today Contarino provided this statement via e-mail to the news organization:

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

GRIP, or Governor Richardson’s Investment Partnership, is the state contract at the center of the probe. CDR was paid almost $1.5 million in 2004 advising the finance authority on interest-rate swaps and restructuring escrow funds for $1.6 billion in GRIP bonds. Meanwhile, in 2003 and 2004, CDR Financial gave $75,000 to Richardson’s political action committee Si Se Puede!, and the company’s head, David Rubin, gave $25,000 to Moving America Forward, another Richardson PAC.

‘He never ordered me to do anything with CDR’

Ed Romero, a former ambassador to Spain who was finance chairman for Richardson’s presidential campaign, was quoted by Bloomberg.com as calling Contarino a “very effective political professional” and said he would be surprised if Contarino did anything improper.

Bill Sisneros, who has headed the finance authority since about three months after CDR was hired and was not involved in that decision, told Bloomberg.com that Contarino never told him to choose CDR for other work.

“Dave and I, we’ve talked about CDR but he never ordered me to do anything with CDR,” the article quoted Sisneros as saying. “I’ve never spoken to Bill Richardson about CDR.”

Contarino has remained involved in Richardson’s political activities since the governor’s presidential campaign ended. In July, a fundraiser Richardson hosted to help Hillary Clinton retire her presidential campaign’s debt was held at Contarino’s Santa Fe home.

Scrutiny increases

The news about Contarino came in one of several Tuesday reports that indicated an increased level of scrutiny on Richardson and President-elect Barack Obama following the national embarrassment caused when Richardson withdrew his nomination to be commerce secretary over the weekend because of the ongoing probe.

ABC News was the first to report on Tuesday that David Rubin, head of CDR, had also contributed more than $30,000 to the Obama campaign and a joint Obama-Democratic National Committee fund formed to help elect Obama. Using the investigation of the Richardson administration as a springboard, the Pittsburgh Tribune-Review published an article about that state’s governor, Ed Rendell, receiving $35,000 in contributions from Rubin, whose company has made nearly $600,000 from a contract with that state.

And Bloomberg.com reported in a separate article published earlier Tuesday that one of Richardson’s senior political advisers, Denver political strategist Michael Stratton, lobbied the state of New Mexico on behalf of J.P. Morgan, which won a contract related to the bond deals that are the subject of the federal investigation into CDR. Stratton was paid $269,000 by J.P. Morgan for its work on behalf of that company.

J.P. Morgan officials have already testified before the grand jury in the CDR case.

The later Bloomberg.com article about Contarino quoted Sisneros as saying that Stratton also lobbied the finance authority on behalf of CDR. Stratton, a senior adviser and bundler for Richardson’s presidential campaign, declined to comment to Bloomberg.com.

Stratton has also remained active in Richardson’s political activities since the governor’s presidential campaign ended. In December, he co-hosted a fundraiser in Washington to help Richardson retire his campaign’s debt.

‘Putting this matter to rest’

Meanwhile, Richardson has scheduled several public events for today and Thursday in Albuquerque and Santa Fe unrelated to the federal investigation as he attempts to move past the scandal. And, as reported by the Albuquerque Journal, Richardson “appears to have embarked on a national damage-control campaign via e-mails to supporters of his own yearlong presidential bid.”

“Thank you for your past and continued support. I look forward to putting this matter to rest and in the meantime I am preparing for the upcoming New Mexico legislative session,” states a Monday e-mail from Richardson to supporters. The e-mail also states that it was paid for by Richardson’s now-defunct presidential campaign, which has still not retired all of its debt.

TPM Muckraker noticed something interesting buried in a Washington Post article “on the incipient infighting between the [Barack] Obama and Richardson camps about who’s to blame for the aborted Commerce Secretary nomination.”

It turns out the FBI agents conducting the background check on New Mexico’s governor for his Senate confirmation hearings bumped into the FBI agents conducting the investigation for the CDR scandal which eventually caused Richardson to pull his name from consideration for the spot of secretary of commerce.

From TPM:

The Post reports:

The seriousness of the matter became apparent after the FBI began its own background check on Dec. 2.

And a little further down:

FBI agents assigned to comb his background learned independently that an inquiry was underway in New Mexico, the [Justice Department] source said.

TPM suggests this might be an indication that the FBI probe is zeroed in on Richardson more than previously thought.

But another thought is perhaps this means that the investigation into the CDR scandal was not disclosed as fully as it should have been by Richardson. I find it hard to believe that the FBI and the Obama transition team would not be aware of the inquiry until the background check began. It could have been done before Obama announced Richardson as his pick, using a simple LexisNexis search.

Also, from the Richardson end, should this not have been disclosed on the extensive questionnaire given to all applicants to Obama’s administration?

Photo by Obama-Biden Transition Project/Flickr

When Barack Obama announced his nomination of Bill Richardson to be commerce secretary in early December, my initial thought was something along the lines of, “That must mean the federal investigation of the governor’s administration has ended.”

After all, articles about the probe into allegations of pay-to-play had first been published on my blog and in the New Mexico Independent and the Albuquerque Journal in August. It was a serious investigation: I knew weeks before Obama’s announcement that people close to the governor had been subpoenaed, and that the probe was focused on whether people at the highest levels of Richardson’s administration had helped CDR Financial Products secure a lucrative state contract in exchange for contributions to two Richardson political action committees.

So didn’t the Obama people know that too? They must, I reasoned at the time, and Obama certainly wouldn’t appoint anyone in such a precarious situation to such a position, so that must have meant the probe was over.

How wrong I was. We learned within days, as the national media explored the situation, that the investigation had only become more serious as the U.S. Attorney’s Office had empaneled a grand jury to investigate.

I began to have my doubts in mid-December that Richardson would make it through the media scrutiny and Senate confirmation hearing to actually become commerce secretary, so I began adding an additional statement to articles related to Obama’s nomination of Richardson that read something like, “assuming the Senate confirms him” — just in case.

Getting into a mess

So, frankly, I wasn’t surprised when Richardson withdrew his nomination on Sunday because of the investigation. This is a governor who has been dogged by pay-to-play allegations throughout his tenure. This is a governor who has appeared tired, worried and distracted for months. This is a governor who uncharacteristically ducked out of a press conference last month when the topic turned to the CDR investigation.

Ironically, that press conference was about an economic development project related to the state’s spending of millions of dollars on a highway interchange that will benefit a company that has contributed a lot of money to Richardson’s campaigns.

Surely Obama knew all of this. So why did he get himself into this mess in the first place by appointing a scandal-prone governor who was in the midst of a federal, criminal investigation?

The best answer comes in an ABC News report that indicates that Obama transition team members believe Richardson wasn’t forthcoming with them about the federal investigation. The implication is that the Obama transition team either didn’t do its homework and really didn’t know about the federal investigation, or that the Obama team did know about the probe, but Obama took Richardson’s word when the governor assured him there was nothing to the allegations and the probe would wrap up quickly.

The real Bill Richardson

Either is a mistake on Obama’s part. But perhaps, I’m realizing, Obama just doesn’t know the Bill Richardson that is known by those in New Mexico who are paying attention. This is a governor whose administration has repeatedly awarded state contracts and handed out state jobs and appointments to people who have, coincidentally or not, given lots of money to his campaigns and PACs. This is a governor who appears to believe he’s made of Teflon and flaunts the fact that he’s comfortable with blurring ethical lines even as he proposes ethics reforms that would make what he’s doing illegal.

For some reason, the real Bill Richardson apparently isn’t widely known outside of New Mexico. Perhaps indicative of that reality is a Seattle Times editorial that asks, in response to Richardson’s withdrawal, “Why on Earth is New Mexico Gov. Bill Richardson anywhere near a cheesy scandal that forced him to withdraw his name to be President-elect Obama’s commerce secretary?”

“The question grates on his political fans, who imagined even bigger roles for him,” the editorial states.

Somehow, the newspaper’s editorial board has apparently missed all the articles — many that didn’t circulate outside New Mexico but others that appeared in publications such as USA Today and FOXNews.com — that help portray an accurate picture of the real Bill Richardson: one who has spent his tenure as governor blurring ethical lines and has faced allegations of pay-to-play from the very beginning.

The warning signs were there. Somehow, Obama missed them all.

Gov. Bill Richardson held a hastily called press conference Monday in which the questions he didn’t answer from reporters were more telling than what he actually said.

In his first meeting of the new year with local media, Richardson declined to say whether he had hired a lawyer or whether he had demanded an internal investigation to ensure his administration had done everything correctly in letting a state contract that under investigation by federal prosecutors.

Aside from repeating his statement from Sunday, Richardson did not talk about the federal investigation that derailed his cabinet nomination.

In response to a question of whether he had demanded an internal investigation to ensure that his administration had acted properly in doing business with California-based CDR Financial Products, Richardson said, “I am not going to answer that.” He refused to answer that question again as he was leaving the press conference. To listen to the entire press conference, go here.

Richardson also refused to say whether he had hired a lawyer. “I am not getting into any more questions on this,” he said.

The governor’s tight-lipped approach Monday was only a little more open than his performance during a press conference last month. At that press conference, he declined to answer questions regarding the federal investigation of CDR.

Richardson did talk about the conversation he shared with Lt. Gov. Diane Denish on Sunday, when he notified her of his withdrawal from the U.S. commerce secretary nomination, which meant Denish wouldn’t be taking over the governorship as planned.

“We spoke yesterday morning,” Richardson said. “I gave her a briefing of what the president-elect was going to say, what I said. We had been having conversations prior to that about, you know, a potential delay. She was disappointed. But she emphasized that she wanted us to work very closely together as we always have been. As I said, she is going to make a very fine governor someday.”

He also said that it was his idea to withdraw and not President-elect Barack Obama’s.

“I didn’t want a possible inquiry going on to delay the enormous progress we need to rebuild this economy,” the governor said.

Richardson went on to talk about his reaction to withdrawing his nomination:

Yesterday I was hurting over this decision. I lost a cabinet appointment, but I think we have to focus on what people are losing in this country. The Amercian people, people in New Mexico are losing their jobs, they’re losing their savings, they’re losing their homes. That’s the real tragedy. Mine is minor compared to that. I think what we need to do is move ahead with the agenda for New Mexico. I am fully engaged in getting my budget priorities, and my legislative package. I am meeting with the cabinet tomorrow. We’re going to have some two good announcements about continuing jobs in New Mexico on Wednesday. And so I am moving forward aggressively in what is going to be my focus on from now on — governor of New Mexico.”

A federal grand jury has been investigating a lucrative contract awarded to CDR Financial Inc., which made big contributions to political action committees formed by Bill Richardson.

The e-mail hit the familiar themes that we have seen from Richardson yesterday and today: he believes he is innocent, but does not want to drag out the confirmation hearings any further than necessary.

Richardson says he withdrew his name “with great sorrow” but that he “could not in good conscience ask the President-elect and his Administration to delay for one day the important work that needs to be done.”

The full text of the e-mail is below.

	Dear [First Name], For nearly three decades, I have been honored to serve my state and our nation in Congress, at the U.N., as Secretary of Energy and as governor. So when the President-elect asked me to serve as Secretary of Commerce, I felt a duty to answer the call. I felt that duty particularly because America is facing such extraordinary economic challenges. The Department of Commerce must play an important role in solving them by helping to grow the new jobs and businesses America so badly needs. It is also because of that sense of urgency about the work of the Commerce Department that I have asked the President-elect not to move forward with my nomination at this time. I do so with great sorrow. But a pending investigation of a company that has done business with New Mexico state government promises to extend for several weeks or, perhaps, even months. Let me say unequivocally that I and my Administration have acted properly in all matters and that this investigation will bear out that fact. But I have concluded that the ongoing investigation also would have forced an untenable delay in the confirmation process. Given the gravity of the economic situation the nation is facing, I could not in good conscience ask the President-elect and his Administration to delay for one day the important work that needs to be done. So, for now, I will remain in the job I love, Governor of New Mexico, and will continue to work every day, with Lieutenant Governor Diane Denish, to make a positive difference in the lives of New Mexicans. I believe she will be a terrific governor in the future. I appreciate the confidence President-elect Obama has shown in me, and value our friendship and working partnership. I told him that I am eager to serve in the future in any way he deems useful. And like all Americans, I pray for his success and the success of our beloved country. I’ve included President-elect Obama’s statement in response to my own: Statement of the President-elect: It’s with deep regret that I accept Governor Bill Richardson’s decision to withdraw his name for nomination as the next Secretary of Commerce. He is an outstanding public servant and would have brought to the job of Commerce Secretary and our economic team great insights accumulated through an extraordinary career in federal and state office. It is a measure of his willingness to put the nation first that he has removed himself as a candidate for the Cabinet in order to avoid any delay in filling this important economic post at this critical time. Although we must move quickly to fill the void left by Governor Richardson’s decision, I look forward to his future service to our country and in my administration. Thank you for your past and continued support. I look forward to putting this matter to rest and in the meantime I am preparing for the upcoming New Mexico legislative session. All my best wishes, Bill Richardson Governor of New Mexico

Contributions are not tax deductible for Federal income tax purposes.

All content © 2009 Richardson for President

Locally, the progressive blog Democracy for New Mexico asks a pertinent question: Why now? Barb Wold writes that it might not have so much to do with anything going on in the FBI investigation into the CDR contracts — but with Rod Blagojevich. “What definitely has changed since the Richardson pick is that the Blago-Burris-Reid thing has blown up in Obama’s face,” Wold writes. “Thanks in no small part to the wacky over-reaction of Sen. Harry Reid and other Dem Senators, as well as the Obama team itself.”

Jim Scarantino at the libertarian blog New Mexico Liberty basically says “I told you so.” Scarantino also takes a shot at fellow blogger Joe Monahan, whom Scarantino calls “the gossip columnist of the political class.”

Meanwhile Childress, on her own blog says, “Heaven forbid we let Illinois outshine us.”

Local conservative blogger Mario Burgos says this will reflect badly on Lt. Gov. Diane Denish because of the infamous comments she made in the past about Richardson being too touchy and… somehow conflates this with Patricia Madrid saying you pay for access in a 2006 debate with Heather Wilson.

Nationally, some blogs had more fun with the story. Gawker and Wonkette in particular took their usual no-holds-barred approach. Gawker snarks that Richardson can now restart his beard that he famously shaved before being nominated by Obama for the Commerce gig. Wonkette, meanwhile, laments that their favorite New Mexican has quit Obama’s cabinet, saying, “This is all Rod Blagojevich’s fault!”

The Field, a prominent progressive blog, says this is just Obama’s “No Drama” policy in action.

A blog at Mother Jones echoes Scarantino, saying that we should have all seen this coming. James Ridgeway writes, “The New Mexico governor has, over the last decade, left behind a wide trail of questionable business dealings, many of them involving the energy industry.”

A Forbes blog says that Richardson’s withdrawal hurts Denish the most.

Secretary Martin Chavez?

National Latino leaders say President-elect Barack Obama should nominate another Latino for commerce secretary to replace New Mexico Gov. Bill Richardson, who withdrew his name from consideration for the position Sunday.

The League of United Latin American Citizens has already put together a list of 10 Latino elected officials it feels would be good candidates, which Politico says will be presented to the Obama transition team. And our own Albuquerque Mayor Martin Chavez is on the list, by the way.

Maybe the political gyrations in New Mexico caused by federal politics aren’t quite over yet.

LULAC Executive Director Brent A. Wilkes said the organization wants to see the Obama administration maintain its trajectory of having three Latinos in the Cabinet. The other two nominees are Rep. Hilda Solis, D-Calif., for labor secretary, and Sen. Ken Salazar, D-Colo., for interior secretary.

Richardson was called the “most important” in terms of Latino appointments by Gilbert Sandate, chairman of the Coalition for Fairness for Hispanics in Government.

Sandate and Wilkes both said they understood why Richardson withdrew his name from consideration. Nonetheless, they both expressed regret. Wilkes said he thought Richardson still had a “wonderful career” ahead. And Sandate said Richardson “is the bellwether … the high-water mark and the leading Hispanic political figure as far as we are concerned.”

We thought the dust was about to settle. Domenici was out. So were Wilson and Pearce. And Bill Richardson — well, we all knew he came back to New Mexico to run for governor primarily so he could get another job in Washington, and we started 2009 thinking he was leaving to become commerce secretary.

Which would mean Diane Denish would become, in the coming weeks, the first woman to be governor of New Mexico.

But Richardson dropped another bomb on New Mexico politics on Sunday when he withdrew his nomination to be commerce secretary.

So now we’re at another point where we don’t know a lot. Barack Obama, Richardson and Denish have all publicly hinted that, if the investigation into allegations of pay-to-play in Richardson’s administration clears him of any wrongdoing, he might still join Obama in Washington and Denish might still become governor.

On the flip side, there’s the possibility that Richardson or members of his administration could be indicted, and Denish — and the Democratic Party in general — could lose favor in the eyes of the public at a time when the GOP will make a strong push to win the governor’s race in 2010 so it can have a say in redistricting in the next decade.

In addition, people close to Richardson and Obama are sparring about whether the governor was entirely forthcoming about the investigation during the vetting process, and there are questions about whether Richardson’s relationship with Obama is already tainted, regardless of whether the probe clears him. So Richardson may or may not be leaving the state before his term ends in 2010, regardless of the outcome of the investigation.

Many members of Richardson’s administration have already left in anticipation of his departure. Denish has assembled a massive transition team that includes paid staff and volunteers from all over the state. Politicos have been lining up to ask Denish to appoint them to replace her as lieutenant governor.

That’s all on hold.

A serious investigation

What’s clear is that the investigation is serious. The Washington Post is reporting that “the governor’s top aides — and even Richardson’s actions” are under scrutiny, and that “some evidence raises concern about the propriety of the Richardson administration’s interactions with a donor.”

What started as an FBI probe is now a full-fledged grand jury investigation into whether there is any connection between the state’s awarding of a lucrative contract to a California company and sizeable contributions the company made to political action committees formed by Richardson. CDR Financial earned almost $1.5 million advising the state on interest-rate swaps and other business related to $1.6 billion in bonds appropriated for a massive transportation project.

Meanwhile, in 2003 and 2004, CDR Financial gave $75,000 to Richardson’s political action committee Si Se Puede!, and the company’s head, David Rubin, gave $25,000 to Moving America Forward, another Richardson PAC.

Richardson has been dogged by pay-to-play allegations throughout his tenure as governor, and many members of the New Mexico media reacted somewhat nonchalantly when word of this investigation first leaked in August. But it’s quite serious. Richardson has appeared tired, worried and distracted for months, with good reason.

Despite his public statement that he’s confident the probe will clear him and his administration, Richardson’s future is uncertain. And that means the state’s political scene is too.

From Political Punch:

Sources tell ABC News that officials on the Obama Transition Team feel that before he was formally offered the job of commerce secretary, New Mexico Gov. Bill Richardson was not forthcoming with them about the federal investigation that is looking into whether the governor steered a state contract towards a major financial contributor.

The Obama officials say the FBI would not be able to give Richardson a “clean political bill of health” leading up to the Senate confirmations of Richardson.

The Richardson camp says the governor was forthcoming, with sources close to the governor noting that there had been reports about the controversy in local media such as the Albuquerque Journal as far back as August 2008. The governor discussed the investigation with the Obama team, they say, and believes that he and his administration have done nothing wrong.

This seems to reinforce the idea that Richardson’s withdrawal was not Richardson’s idea — rather, it was the idea of someone in Obama’s staff. Though ABC News reports, “President-elect Obama did not ask Richardson to withdraw his name from consideration, sources from both camps say, but the fact that the confirmation seemed untenable in the short term was apparent to everyone involved.”

ABC News also reports that Richardson made his decision Saturday, though he did not tell Lt. Gov. Diane Denish about the decision until Sunday morning.

“He was hopeful that he would be cleared by now,” Richardson’s spokesman Gilbert Gallegos said of the governor’s hope that a federal investigation would clear him in time for the confirmation process.

The governor informed the Obama transition team of the investigation prior to his being nominated last month as the president-elect’s commerce secretary, according to news reports Sunday.

Gallegos said he did not know what evidence had led the governor to think his name would be cleared in time for the confirmation hearings, or how long it would take federal prosecutors to complete the investigation. But Gallegos made clear that the governor feels he has nothing to fear from the inquiry because “the governor did nothing wrong. And he’s confident that the facts will bear that out.”

Federal prosecutors have been looking into the awarding of a lucrative state contract to a California company that made big contributions to political action committees formed by Richardson.

But there is no indication that the probe will end soon. In fact, the federal grand jury asked to review evidence in the case during 2008 has been released from its duty, meaning a new grand jury empaneled this year must take up the case all over again, including witness testimony. And that could mean a drawn-out inquiry. Federal grand juries, which prosecutors use to determine if there is enough probable cause to issue indictments, are empaneled for only a year in New Mexico.

Meanwhile, the Associated Press was reporting on Sunday that Richardson had given”assurances” before he was nominated that “he would come out fine in the investigation and the president-elect had no reason to doubt it.”

The AP continued in its report:

But as the grand jury continued to pursue the case, it became clear that confirmation hearings would have to be delayed for six weeks or even longer until the investigation was complete, said the adviser, speaking on condition of anonymity about the discussions because they were private.

Aides to both men insisted that Richardson made the decision to withdraw and was not pushed out by Obama. But one Democrat involved in discussions over the matter said transition officials became increasingly nervous during the last couple of weeks that the investigation was a bigger problem than Richardson had originally indicated.

Prior to Sunday, Richardson’s name had not been directly linked into the investigation into how CDR Financial Inc. — the California company at the center of the inquiry — won a contract related to the massive transportation-funding plan Richardson dubbed GRIP — or Governor Richardson’s Investment Partnership — in 2004.

But previous stories have reported that the probe centers on whether staffers in Richardson’s office influenced the hiring of CDR to work with the New Mexico Finance Authority.

According to previous reports, “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.”

Meanwhile, in 2003 and 2004, CDR Financial gave $75,000 to Richardson’s political action committee Si Se Puede!, and the company’s head, David Rubin, gave $25,000 to Moving America Forward, another Richardson PAC.