More probes follow agency audit fraud

SANTA FE (KRQE) - Board members of the embattled New Mexico Finance Authority held an emergency meeting Monday afternoon to address next steps in the case of an alleged fraudulent audit.

NMFA Chief Executive Officer Richard May clashed with several board members about whether the agency should have hired its own independent firm to investigate the matter.

May announced Thursday the NMFA hired Steptoe & Johnson LLP to look into a fake financial audit for fiscal year 2011 that was circulated to creditors and investors on Wall Street. On Monday, May said paying for the investigation could cost up to $750,000. The NMFA also hired KPMG to produce a legitimate audit for the year.

The NMFA works as the state's lending arm to secure low-cost financing for several public projects, including the Spaceport, the Rail Runner and the Big-I construction. Last week, NMFA officials and State Auditor Hector Balderas revealed the annual audit for 2011 was forged, and officials blame the former controller, Greg Campbell, who has not been located since news broke.

"We took this former employee, who was a highly respected individual, at the gentleman's word," said May.

A national credit agency put the NMFA on a watch list for a possible downgrade following the news, which would make it more expensive to pay for future projects.

May declined to comment on oversight issues and how the employee was able to produce a fake audit.

According to documents that have now been withdrawn, some board members, including Vice Chair William Fulginiti, were at a meeting last December when the employee presented the audit.

On Monday, board members questioned whether the NMFA should have hired outside investigators to probe the matter. Balderas said board members should instead focus on putting together a new financial audit.

"We're very concerned that a fraudulent report is being used to harm investors and taxpayers, and so every day that passes that they don't submit a fiscal audit to us is a day that a taxpayer can continually be harmed," said Balderas.

Balderas claims there are tens of millions of dollars unaccounted for. May said he doesn't know if money is actually missing or if these are just serious accounting mistakes.