The New Mexico Finance Authority, which has loaned billions of dollars to government agencies for capital projects, lied about the status of its 2011 financial reports and provided investors with fraudulent documents, State Auditor Hector Balderas said Thursday.
Balderas said he’s demanding a special audit of the Finance Authority and referring his findings to law enforcement for further investigation.
The bogus financial reports were discovered by state auditors questioning why the Finance Authority’s 2011 audit – due last December – was months late, according to Balderas’ office.
Auditors then discovered that the Finance Authority had presented investors with 2011 financial reports they portrayed as audited, although no audit was done by the agency’s independent auditor, Clifton Gunderson LLP.
The Finance Authority said Thursday that its erroneous financial documents were the fault of its former financial controller, who left the agency in early June.
The Finance Authority reported $1.8 billion in net assets in 2010, with an annual operating budget of $127.8 million, according to the Office of the State Auditor.
Balderas said in a statement that he was “moving aggressively to determine the full extent of this fraud perpetrated against New Mexico’s taxpayers.
“I’m extremely concerned that a report was fraudulently created in order to misrepresent the Authority’s financial condition to agencies, investors and the public.”
The Finance Authority is required to provide current audited financial statements to investors buying the municipal bonds that provide cash for some of the Finance Authority-approved capital projects.
After the fraudulent documents were discovered, the Finance Authority withdrew the 2011 financial statements it had presented to investors as “audited.”
The Finance Authority “promptly investigated and determined that NMFA’s former controller, who left his position in early June 2012 before the issue was discovered, had misrepresented to senior management the status of the audit and provided financial statements for use with third parties that he falsely represented as ‘audited,’ ” the authority said in a news release.
The Finance Authority said it has hired auditor KPMG to conduct a detailed investigation into its financial records to determine whether any money was stolen.
Finance Authority Director Richard May said in the prepared statement: “This matter is deeply concerning but it will have no effect on NMFA’s ability to meet its financial obligations. NMFA remains financially strong and has ample resources to meet all scheduled bond payments and other expenses.”
Reached by phone Thursday, May referred comment to the authority’s prepared statements.
The government lender is directed by a 12-member board, which includes four Cabinet secretaries and six other members appointed by the governor.
Gov. Susana Martinez is “deeply concerned” about the reported fraud, Martinez spokesman Scott Darnell said.
“She’s calling on NMFA to work closely with the state auditor and law enforcement to ensure that no stone is left unturned in determining what happened and in preparing a special audit that accurately reflects the financial position of the Finance Authority,” Darnell said in an email.
— This article appeared on page A1 of the Albuquerque Journal