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 person 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.  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 revolves 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 article was published late Tuesday night.

The Bloomberg report threatens to increase the level of suspicion 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 article was published shortly after 10 p.m. New Mexico time on Tuesday.

Last August Contarino told The New Mexico Independent, sister site to TWI, 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 [the contract in question] 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, finance chairman for Richardson’s presidential campaign, and a former ambassador to Spain, was was quoted by Bloomberg 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 was one of several reports that put Richardson and President-elect Barack Obama under increased scrutiny.

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 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 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.

Trip Jennings is a reporter for the New Mexico Independent, one of TWI’s sister sites. Since August, Jennings has been covering the federal investigation in New Mexico that led to Gov. Bill Richardson’s decision to withdraw his name for the commerce secretary position.

Flickr: Obama-Biden Transition Project

SANTA FE, N.M. — Gov. Bill Richardson, the first casualty of President-elect Barack Obama’s transition and New Mexico’s high-flying chief executive, walked a familiar path Monday when he gave New Mexico media little notice for a hastily called press conference.

Barely 24 hours earlier Richardson had stirred up Washington’s formidable population of Blackberry users with his withdrawal as President-elect Barack Obama’s commerce secretary-designate because of a federal investigation involving state contracts. The local reporters gathered around Richardson’s favorite venue for parlaying with the press — the big table in the fourth-floor cabinet room of the State Capitol in Santa Fe – expected a revelation or, at the least, a bit of news.

Illustration by: Matt Mahurin

The backslapping, sometimes feisty chief executive instead served up a heap of warmed-up, day-old news. Without a hint of irony, Richardson, 61, read a statement similar to the one he gave Sunday. Then he refused to answer many of the questions put to him.

Though strange to an outsider, Richardson’s performance came as no surprise to local media. For outlets that have covered this scandal since August know that the governor’s style has been to remain tight-lipped even when faced with direct questions. Richardson had managed to stay quiet and fly under the radar as news of the investigation spread. Taking a look at how Richardson handled himself throughout the months leading up to his resignation helps explain why, nationally, there was so much confusion and surprise at the news.

Most news readers in New Mexico know the story — for months federal prosecutors were looking into the awarding of a lucrative state contract to a California company, CDR Financial, that made big contributions to political action committees formed by Richardson. Specifically, prosecutors are looking for any connection between the work CDR Financial Products won in 2004 and the large political contributions that were given to two PACs started by Richardson. The investigation reportedly centers on whether staffers in Richardson’s office influenced the hiring of CDR.

One PAC, Si Se Puede! Boston 2004, was formed to pay for the governor and his staff to attend the Democratic National Convention in Boston in 2004. The other, Moving America Forward, was formed to register Latino and Native American voters in the run-up to the 2004 presidential election.

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.

According to numerous reports, in 2004 CDR made $1.48 million advising a small state agency on interest-rate swaps and restructuring escrow funds for the state’s special $1.6 billion transportation program known as GRIP, short for Governor Richardson’s Investment Partnership.

Richardson has rarely commented on the investigation and walked out on a news conference last month as reporters attempted to ask him questions about the inquiry. It’s been only now, with his withdrawal, that he has begun to speak, but then only to deny any wrongdoing on the part of the administration.

“I have always fully expected that my administration would be cleared of any wrongdoing and it would be clear that nothing improper took place,” Richardson said Monday.

Richardson also explained Monday that he had held on to the hope of winning a cabinet post until Sunday in the misplaced hope that his administration would be cleared in time for the confirmation process before the U.S. Senate and that he had “underestimated” how long the federal inquiry would take.

That plan appears to make some sense because federal grand juries in New Mexico are usually impaneled for a year, meaning a new grand jury impaneled this year may have to take up the case all over again, including witness testimony, although the term for a grand jury can be extended.

And for the record, Richardson has hired Peter Schoenburg, a prominent white-collar crime attorney in New Mexico.

Questions About Vetting

The citing of the federal investigation for Richardson’s withdrawal raises questions about the vetting done by the Obama transition team, and whether indeed Richardson pulled the plug as he has said.

Obama’s people have said Richardson told them about the investigation before his nomination last month and gave them assurances that he would come out fine. The scandal received little attention nationally and Richardson was surviving a potentially embarrassing situation just fine.

But as the investigation progressed, and no resolution occurred, it became clear that the clean bill of health that Richardson wanted wouldn’t come in time for the confirmation process. According to some reports, that made Obama’s team nervous and concerned that the investigation was a bigger problem than indicated.

University of New Mexico political scientist Lonna Atkeson, who has followed Richardson’s career for years, told the New Mexico Independent, sister site to The Washington Independent, on Sunday that it didn’t sound like Richardson’s style to bow out.

“Richardson’s the type to say, let’s let things run their course,” Atkeson said. “So I think there had to be pressure from the Obama team.”

In light of the scandal involving Gov. Rod Blagojevich in Illinois, the federal investigation in New Mexico would not be a welcome headline.

Richardson’s Reputation

While the governor expects his administration to pass prosecutorial muster, Richardson’s withdrawal from the Commerce Dept. post has once again raised questions about how business is done in the state.

New Mexico, in fact, has endured a series of scandals involving public officials. Over the past three years, two former state treasurers, a state deputy insurance superintendent and a former president of the state senate all have pleaded guilty to or been convicted on corruption charges.

Meanwhile, people have whispered about pay-to-play as a way of doing business in New Mexico. And steadily those whisperings have included the Richardson administration.

Not unlike the current scandal plaguing Richardson, at the time the governor and his spokespeople said he had done nothing wrong and flew under the radar of the national press.

There have been stories about how executives for companies with state business, including the Rail Runner commuter train, have given large sums to his state and federal campaigns. Then there have been the questions of Richardson’s use of corporate jets while he was a candidate. In some cases, the jets used by Richardson came from companies that do business with the state — a practice that is legal but that raised eyebrows.

And there was the case of the California developers who own land near the town of Belen, south of Albuquerque.

Jim Foster of then RS Investments, now Coast Range, contributed $75,000 to Richardson’s re-election campaign in 2005. The firm’s officials met with administration officials in early 2005 to talk about an exchange on Interstate 25, which runs north-south through New Mexico. And the $75,000 contribution came about a month later.

Foster donated use of his personal jet to the governor for two campaign trips to California that same year.

Since then the governor has been helpful in setting aside money for it. The administration earmarked $4 million in state money for the highway interchange in 2007.

What’s Next for New Mexico

The news of Richardson’s diminished status, and the shadow hanging over his administration, has taken some of the shine off the governor’s reputation while also costing New Mexico a bit of self-respect.

“It really is quite a disappointment,” said University of New Mexico political scientist Christine Sierra in an interview with the New Mexico Independent. “Richardson has been the leading political figure in New Mexico to vault onto the national stage. And he has brought a lot of attention to our state.”

“Regardless whether the allegations or the concerns are valid or not, this is damaging enough to really show poorly on the state,” Sierra added.

It is unclear what effects the inquiry and the perception of taint, fair or unfair, combined with Richardson’s rather exit off the main stage, will have on his future.

As prominent New Mexico pollster Brian Sanderoff said, “It’s really depends on whether the grand jury takes any action against any member of his administration,’ Sanderoff said. “We’ll have to wait and see” — a sentiment Richardson seemed to express Monday when he said “I have faith in the criminal justice process, and we must allow it to run its course.”

Trip Jennings is a reporter for the New Mexico Independent, TWI’s sister site. Jennings has been covering the ongoing federal investigation that led to Gov. Bill Richardson’s withdrawing his name for commerce secretary consideration since August.