Reuters: Regulatory News: New Mexico Finance Authority probed for fraudulent reporting

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New Mexico Finance Authority probed for fraudulent reporting Jul 17th 2012, 20:24 SAN FRANCISCO, July 17 | Tue Jul 17, 2012 4:24pm EDT SAN FRANCISCO, July 17 (Reuters) - The New Mexico Finance Authority, which issues debt to help local governments with public works, is under investigation for alleged fraudulent financial reporting, the state's securities regulator said on Tuesday. The probe is centered on an allegedly false audit of the authority's financial reports. "A preliminary review by our investigative team confirms that the 2011 audit report circulated to investors was in fact a forgery," said Daniel Tanaka, director of the state's Securities Division. "The 2011 audit is still incomplete to this day." The State Auditor's office is also involved in the probe, which began on July 13. The office said in June it designated the authority for a special audit after finding a "fraudulent audit report had been produced to create the appearance that NMFA received an independent audit for fiscal year 2011." The authority, created in 1992 to assist local governments with infrastructure projects, said in a statement that its board determined former authority controller Gregory Campbell "misrepresented to senior management the status of the audit and provided financial statements for use with third parties that he falsely represented as 'audited' by NMFA's outside auditing firm." Campbell, who left the authority last month, could not be reached for comment. The auditing firm, Clifton Gunderson, was not immediately available for comment. Law firm Steptoe & Johnson will conduct a review of the matter and KPMG will audit NMFA's financial results. Moody's Investors Service on Friday put the authority's Public Project Revolving Fund Aa1 Senior Lien and Aa2 Subordinate Lien ratings under review for downgrade, a move affecting $1.26 billion in outstanding total debt. The action followed a July 12 statement by the authority that said it had withdrawn its 2011 audit after finding it was not completed properly. Moody's said that was a key factor in placing the ratings under review. "As a result, the financial results have been presented erroneously as 'audited' since earlier this year," the authority's statement said. Last week NMFA delayed a bond sale that had been initially planned for July 26. The Series 2012B Senior Lien Public Project Revolving Fund Revenue Bonds has been postponed until after an audit of NMFA financial results is completed. (Reporting by Jim Christie; Editing by Tiziana Barghini and Phil Berlowitz) Link this Share this Digg this Email Reprints

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