N. Mexico figure in scandal donated to Rendell

HARRISBURG - The Democratic donor at the center of a federal pay-to-play probe in New Mexico contributed heavily to Gov. Rendell's campaigns and made $600,000 from a lucrative no-bid contract with a state agency.

David Rubin's company, CDR Financial Products, also was linked to the City Hall corruption scandal - winning one city deal just after furnishing $14,000 worth of Super Bowl tickets to powerbroker Ronald A. White.

The new details about the Beverly Hills, Calif., company, which specializes in the complex business of swap derivatives, came two days after New Mexico Gov. Bill Richardson withdrew his name as President-elect Barack Obama's nominee for commerce secretary.

According to reports, a grand jury in Albuquerque is looking at how CDR was awarded $1.5 million in work by the New Mexico Finance Authority in 2004. The company got the work after donating $100,000 to Richardson and his efforts to register Hispanic and American Indian voters.

Richardson has said he will ultimately be cleared.

A company spokesman said the firm won deals in Pennsylvania and elsewhere through its expertise in finance, not campaign donations and other ties to political figures.

The company "disclosed and made no secret of its contributions," said spokesman Allan Ripp.

On Monday, the American Spectator, quoting unnamed federal law enforcement officials, reported on its Web site that investigators were looking into CDR's ties to Rendell and other Democrats in Pennsylvania, Illinois, California and Florida.

Rendell was on vacation in Arizona yesterday and could not be reached for comment. His press secretary, Chuck Ardo, downplayed Rendell's relationship with Rubin and said the administration was unaware of any investigation involving the governor.

"All the media is speculating about an investigation," Ardo said. "We have not heard a word from any investigative authority."

Rubin contributed $40,000 to Rendell's gubernatorial bids from 2001 to 2005, state records show. Rubin also donated to Rendell during his time as mayor - $2,500 in 1991 and $10,000 in 1999.

Ardo said the governor came to know Rubin better in 2000 when Rendell served as Democratic National Committee chairman. Rubin was a major Democratic donor, said Ardo, "so it is logical that the governor asked Mr. Rubin for financial support once he decided to run for governor."

As he was preparing to take office in January 2003, Rendell appointed Rubin to his transition team to help with issues facing the Revenue Department.

Rendell and Rubin share another connection: The company's lobbyist in Pennsylvania is Alan Kessler, a longtime top fund-raiser for Rendell.

Kessler has been a registered lobbyist for CDR for about three years. Citing client confidentiality, he declined yesterday to discuss details. "Unfortunately, my engagement with the company has not been able to effectively increase its involvement with state agencies," he said.

By the time it hired Kessler, the company already had one major client in Pennsylvania government.

In 2003, the company became the "swap adviser" for the Housing Finance Agency (PHFA), which helps arrange funding for first-time home buyers. In this contract, like others, CDR was paid for advice on whether the agency was getting a good deal from derivatives attached to its bond transactions.

At the time, the PHFA believed CDR was one of only two firms qualified to do the work, and hired it without putting the job out to bid, the agency's chief executive officer, Brian Hudson, said yesterday.

From 2003 until 2007, CDR was paid a percentage of each of the 16 bonds the agency floated, for a total of $554,000.

In 2007, the agency began paying a flat annual fee of $45,000, and it now says it will bid it out in March.

On several bond deals, CDR noticed that banks were attempting to impose higher fees than market conditions called for. That information allowed the agency to renegotiate terms, said Hudson.

"In terms of fees, they must have saved us $2 million to $3 million in additional interest costs," he said.

Hudson, who approved the deal initially hiring CDR, said Rendell played no role in that decision.

Attempts to reach Rubin for comment yesterday were unsuccessful. In a "note to clients and friends" on the company's Web site, Rubin denied doing anything improper.

"For the record, CDR has never practiced pay-for-play on any playing field where we do business," he wrote.

In 2004, CDR, once known as Chambers, Dunhill Rubin & Co., found itself in the much the same situation - in the middle of a federal investigation. Federal prosecutors used the company as part of its of effort to show how White, the bond lawyer and fund-raiser for Mayor John F. Street, plied City Treasurer Corey Kemp with gifts to win deals for clients.

White died in 2004. Kemp was convicted in 2005 and sentenced to 10 years in prison for taking bribes to steer business to White and his friends.

CDR retained White as a $5,000-a-month consultant in April 2001; Rubin donated $15,000 to Street's campaigns, and $5,000 to one of White's political action committees.

The company also gave White four tickets to the 2003 Super Bowl, paying $3,500 each, and four tickets to a United States-Puerto Rico basketball game in New York.

In February 2003 - just after he and White used two of those Super Bowl tickets - Kemp told White that the city's finance director had agreed to "move fast-forward" on a swap agreement, and asked for White's advice on how much to charge CDR.

A month later, CDR was hired to provide advice on handling swap deals for $150,000 per year. It continued in that role until last year, when it was replaced with another firm, according to the City Controller's Office and the city finance director.

In May 2003, Kemp asked White to remind him what he was supposed to say to Rubin. "I need you to let him know that there ain't nothing happening without talking to me," White replied, according to the federal indictment.

With help from White and Kemp, the company got $265,000 in fees from two Philadelphia bond deals in 2002. The company has continued to handle deals for the city since; information about those fees was not immediately available. The company was not accused of wrongdoing.

Other evidence in the trial showed that CDR executives, to satisfy White, were willing to secretly funnel money to the presidential campaign of the Rev. Al Sharpton.

In conversations recorded by the FBI, White told Z. Stephen Wolmark, the company's managing director, that the contribution had nothing to do with whether Sharpton could be president but with Sharpton's ability to help them get deals in New York.

"Business is business," Wolmark said.

Rubin called 20 minutes later and told White that his name could not be linked to a contribution to Sharpton. White suggested that Rubin instead give the money to two political action committees; Rubin later donated $5,000 to one. The PAC later made two $1,000 donations to Sharpton.

In an interview yesterday, Sharpton noted that prosecutors publicly cleared him of having anything to do with any improper contributions from White or anyone else in the case.

The conversations happened "not only without my knowledge, but without the knowledge of anyone in my campaign," Sharpton said.

William Capone, spokesman for the Pennsylvania Turnpike Commission, said the company did "some minimal work" for the agency in a 2006 bond deal. The company was paid about $40,000 in the deal, he said.