WASHINGTON - Justice Department officials, a spokesman for New Mexico Gov. Bill Richardson, and representatives of President-elect Barack Obama yesterday declined to comment on reports that a federal grand jury in Albuquerque is investigating whether swap adviser CDR Financial Products Inc. made payments to political action committees run by Richardson in exchange for state municipal derivatives business.

The grand jury probe involving contributions to PACs of Richardson, Obama's nominee to head the Commerce Department, was first reported by Bloomberg News and comes amid a federal investigation of alleged bid-rigging, price-fixing, and other practices in the municipal market that violate antitrust laws.

The probe has been ongoing since at least the fall of 2006 and involves dozens of banks, investment banks, advisory firms, and individuals.

In New Mexico, the grand jury is focusing on the $1.5 million in fees CDR received from the New Mexico Finance Authority in 2004 after the firm and its president, David Rubin, contributed about $100,000 to PACs run by Richardson.

"The department doesn't talk about these kinds of investigations, even whether they exist or not," said Norman Cairns, a spokesman for Gregory J. Fouratt, the U.S. attorney for New Mexico.

CDR was swap adviser on derivatives issued in conjunction with a $1.6 billion bond transaction that was sold in two phases. First Southwest Co. was a financial adviser for the bond deal.

The first phase, a $1.1 billion transportation revenue bond portion sold in April 2004, was the largest offering ever sold in that state and won The Bond Buyer's honorable mention for Southwest Regional Deal of the Year. The deal, which helped finance an ambitious transportation program, was dubbed Governor Richardson's Investment Partnership, or GRIP.

Richardson yesterday was aboard the inaugural run of the Rail Runner Express commuter train that runs from Bernalillo County, which includes Albuquerque, to the capital of Santa Fe.

Rail Runner was part of the GRIP bond program and was frequently criticized by lawmakers for its cost overruns. A spokesman traveling with the governor declined to comment on the allegations.

The New Mexico Finance Authority, which jointly issued the bonds with the New Mexico Department of Transportation, declined to comment. Officials referred to a press release dated Aug. 29 - but not publicly available on the NMFA Web site - that said the authority "is cooperating fully with federal authorities in their investigation of CDR."

"At this time, NMFA believes its resources are best applied in fulfilling its agreement to cooperate with federal authorities," the statement said. "The NMFA will make no further comment pending the completion of this investigation as it does not want to compromise or impede the investigation in any manner."

The grand jury comes after the Federal Bureau of Investigation raided CDR's Beverly Hills, Calif.-headquarters in November 2006, along with the offices of two other investment advisory firms - Investment Management Advisory Group Inc. in Pottstown, Pa., and Sound Capital Management Inc. in Eden Prairie, Minn.

Bloomberg reported that in October 2003, CDR president David Rubin gave $25,000 to Moving America Forward Inc., a political action committee formed by Richardson. Seven months later, CDR, known then as Chambers, Dunhill, Rubin & Co., gave $75,000 to ¡Si Se Puede! Boston 2004 Inc., formed to help pay expenses at the 2004 Democratic National Convention in Boston and that was chaired by Richardson.

Though the GRIP bonds were authorized during the 2003 legislative session and structured by First Southwest during the beginning of 2004, CDR was not added as a swap adviser until sometime in the spring, a source said yesterday.

CDR spokesman Allan Ripp declined to comment on the news of a grand jury but said the firm went through the normal request for proposal process on the transaction, splitting advisory fees with First Southwest, which declined to comment. Obama's representatives would not return calls or e-mails.

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