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NMFA Prepares to Issue Loans

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SANTA FE — The New Mexico Finance Authority is moving on from a fraudulent audit scandal, as the agency’s board has removed temporary limits on the size of certain public loans.

Interim NMFA Chief Executive John Gasparich said Wednesday that the agency is accepting loan applications for large-scale projects. Those proposals could then be brought before the NMFA board in March.

After it was discovered last year that the Finance Authority’s 2011 audit was faked, the agency’s board decided to limit infrastructure loans to no more than $5 million per project.

In part, that was because the audit scandal’s fallout had caused the Finance Authority, which functions like a bank for local governments, to delay loans to cities and postpone a $40 million bond sale scheduled for last year.

With the 2011 audit nearly completed by an Albuquerque auditor and the agency’s 2012 audit scheduled to be finished in March, Gasparich said, the Finance Authority will be able to resume normal operations.

Bonds to fund any newly approved loans will probably be issued in April or May, he added.

“Once we get to that point of issuing bonds, we will be fully functioning,” Gasparich said.

Two national credit rating agencies have kept a close eye on the audit scandal, initially placing the NMFA’s bond ratings on review for possible downgrade.

However, neither credit rating agency has taken such action on the NMFA’s bond ratings, and Gasparich said he does not sense the negative publicity has had a chilling effect on potential loan applicants.

“I do think there is some pent-up demand,” he said.

The Finance Authority’s former controller, Greg Campbell, was accused of forging the original 2011 audit.

Campbell pleaded guilty in November 2012 of three felony counts — two counts of forgery and one count of securities fraud — and was sentenced to five years of probation.

The NMFA board also fired former Chief Executive Rick May, in the scandal’s aftermath. The authority’s chief operating officer, John Duff, lost his job as well.

However, a special report issued last month by state Auditor Hector Balderas found no embezzlement or theft in connection with the falsified audit.
— This article appeared on page C3 of the Albuquerque Journal

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