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Tuesday, July 29, 2008

Securities Industry Ban Looms for Riordan

By Mike Gallagher
Copyright © 2008 Albuquerque Journal
Journal Investigative Reporter
          Political insider Guy Riordan should be banned from the securities industry for life for paying bribes to former state Treasurer Michael Montoya, a Securities and Exchange Commission administrative law judge ruled Monday.
        Judge Brenda P. Murray also ordered Riordan to pay more than $2.2 million to a fund to help repay the state Treasurer's Office for losses suffered as a result of doing business with Riordan.
        Riordan claimed he was the victim of a political witch hunt that targeted Democrats, including Gov. Bill Richardson. Riordan was a major contributor to Richardson campaigns, and the two attended social and sporting events together.
        Murray appeared to reject that defense, and her decision carried strong words about Riordan's conduct, including "outrageous" and "deceitful."
        Riordan's attorney, Robert Gorence, had strong words about the ruling.
        "Montoya was a self-admitted, dope-using, public-trust-abusing thief," he said. "While Mr. Riordan has had a life of public service, Montoya's a felon. Mr. Riordan has never been charged with as much as jaywalking."
        Richardson appointed Riordan to the state Game and Fish Commission but fired him when Montoya testified at former state Treasurer Robert Vigil's trial about receiving bribes from Riordan and others. At one point, Montoya testified that Riordan gave him cash in restaurant bathrooms.
        The governor donated Riordan's $44,000 campaign contributions to charity.
        Gorence said his client and his co-counsel, Timothy Padilla, "were shocked in the extreme by this proposed order."
        Murray's ruling is subject to approval by the Securities and Exchange Commission before it becomes final.
        Riordan retired from the securities business last year but vowed to fight the administrative charges.
        Murray, the SEC's chief administrative law judge, heard four days of testimony last December on a complaint filed by the commission's Enforcement Division. Her ruling quotes extensively from FBI reports and the testimony of FBI Special Agent Marcus McCaskill and government expert witnesses. Assistant U.S. Attorney Jonathon Gerson said the SEC case was an outgrowth of the investigation of the state Treasurer's Office in which Montoya pleaded guilty in a kickback scheme and turned prosecution witness.
        Riordan was never charged with any crime.
        Gorence said, "I guess the message if you don't roll and make up stories about people targeted by this administration, then they will do you in."
        Murray ruled that the "outrageous, extensive, serious and protracted nature of Riordan's conduct" supported her determination that Riordan should be banned from the securities industry for life.
        That Riordan did not acknowledge any wrongdoing and his financial success led her to conclude that there is "a high likelihood" he would commit future violations if allowed to continue working in the securities industry.
        "The record established that public investors, the citizens of New Mexico, suffered financial harm from Riordan's illegal conduct in that the state did not receive the best price on the agency securities it purchased and sold," Murray wrote in her decision.
        Murray ordered Riordan to pay the $2.2 million in penalties into a fund that would benefit the New Mexico state Treasurer's Office, which was harmed by Riordan's actions.
        She ordered Riordan to pay a fine of $500,000; pay back commissions of more than $1 million; and pay $699,000 in interest on the commissions.
        Murray ruled that the monetary penalties were appropriate because "Riordan's illegal conduct of giving kickbacks to a state official was outrageous, fraudulent, deceitful conduct that was in deliberate disregard of law, regulations and standards of appropriate business conduct."
        Murray found Montoya to be a credible witness when he testified that he found it easy to rig bids to give business to the brokers who paid him in cash.
        Montoya, who was sentenced to 40 months in federal prison after pleading guilty to extortion, testified that he directed bond transactions to Riordan in exchange for cash payments. He testified that the practice began shortly after he took office in 1994 and continued through his eight years in office.
        During last December's hearing, Riordan repeatedly denied ever bribing Montoya. He had previously taken Fifth Amendment during earlier sworn testimony.
        The only evidence that kickbacks did not occur, according to Murray, was Riordan's denial. Murray ruled that Riordan was not credible.
        She found evidence that Riordan paid kickbacks on most of the 103 transactions he had with the Treasurer's Office over eight years was "persuasive."