DALLAS - One of the Southwest's most prominent political consultants and a member of the Arizona Board of Regents pitched business for underwriter UBS AG while also heading one of New Mexico Gov. Bill Richardson's fundraising committees.

Fred Duval, founder of Phoenix-based Duval & Associates, was working for UBS in 10 states, including New Mexico in 2004, according to records of the Municipal Securities Rulemaking Board. At the same time, Internal Revenue Service records show, DuVal was also a director of ¡Si Se Puede! a committee Richardson formed to cover Democratic National Convention expenses.

UBS landed the role of senior manager of the New Mexico Finance Authority's record $1.1 billion issue in April 2004. The NMFA, which issues state debt, has confirmed that it is cooperating with a federal grand jury in Albuquerque is investigating possible "pay-to-play" implications on the deal.

Duval did not respond to phone calls and an e-mail requesting comment, but told Bloomberg News that he didn't play a role in landing the New Mexico bond deals for UBS, which has since exited the muni bond business, and has not been contacted by investigators.

"The [underwriting] team, they had a history in New Mexico and were known to everybody," DuVal told Bloomberg. "I was not called upon to get involved."

As information about DuVal's lobbying relationship came to light, Christopher Taylor, head of the Municipal Securities Rulemaking Board until 2007, said the role of unregulated swap advisers and the practice of awarding business to campaign contributors requires a major overhaul in how municipal underwriting is regulated.

"The problems appear to me too extensive to rely on a patchwork approach," he said. "You have to change the structure."

Taylor said he is calling for an end to negotiated deals like the New Mexico transaction. Instead, he said bonds should be sold in a national auction model similar to sales of Treasuries.

"I'm fairly emphatic about it," Taylor said of his calls for reform. "The corruption of politics seems to be running fairly rampant."

Duval, a former Clinton administration protocol officer, was appointed to the Arizona Board of Regents by Democratic Gov. Janet Napolitano in 2006. Napolitano is President-elect Barack Obama's nominee as Secretary of Homeland Security. Duval, a 2002 candidate for Congress, has donated widely to Democratic candidates and causes.

The New Mexico investigation has already derailed Richardson's nomination to head the Commerce Department in the Obama administration.

The 2004 bonds were for a program known as GRIP, or Governor Richardson's Investment Partnership, the state's first involving interest rate swaps. The swap adviser CDR Financial Products Inc. earned $1.5 million on the deal after the company and its founder David Rubin donated $120,000 to Richardson's political committees, including $75,000 to Si Se Puede.

Rubin has denied that there was any kind of quid pro quo for his campaign contributions and said he has donated money to Democratic candidates and causes for years.

A federal grand jury in Albuquerque is investigating possible "pay-to-play" implications on the deal, which is part of a larger, nationwide investigation of potential bid-rigging and influence peddling through political contributions by players in the muni market.

JPMorgan Chase, a co-manager on the 2004 deal, was represented by Michael Stratton, president of Denver-based political consulting firm Stratton & Associates. Stratton also represented CDR, according to MSRB records. At the time, the board had no rule against the hiring of lobbyists by underwriters. That ban was put into effect in 2005. As an unregulated swap adviser, CDR does not fall under MSRB supervision.

JPMorgan's lead banker on the deals was Chris Romer, 49, whose father, Roy Romer, was Democratic governor of Colorado from 1987 until 1999 and later superintendent of the Los Angeles School District. Chris Romer is now a state senator in the Colorado General Assembly. He did not return calls requesting comment.

JPMorgan in August 2008 told regulators about an investigation being conducted by the U.S. attorney for New Mexico involving the municipal securities business, according to Romer's brokerage records with the Financial Industry Regulatory Authority.

While no one has been charged with any wrongdoing in the bond deals, Richardson said he withdrew his name from consideration as Obama's secretary of commerce because the investigation had not been resolved.

"The deal handled by the New Mexico Finance Authority with CDR was thoroughly scrutinized through a rigorous procurement process," Richardson said in announcing his withdrawal. "I have always fully expected that my administration would be cleared of any wrongdoing and it would be clear that nothing improper took place."

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