Who Is David Rubin & CDR & Why Should Obama Be Very Afraid? Part IV


It is entirely possible that when it comes to David Rubin and CDR, Barack Obama should be afraid, be very afraid.  Curt at Flopping Aces asks just about the same question I’m asking:  What did David Rubin want of Barack Obama?

I am more and more convinced the entire dumping and denigration of Bill Richardson by Obama and his minions of hope and change is the usual smoke and mirrors to protect the tawdry reputation of The One (elect).

David Rubin of CDR is a HUGE Democratic big money player. His is a name to remember.  He could soon implicate Barack Obama – or not.

If you read through this material, it is possible Big Bill is as innocent as any other Democrat.  If so, what does The One (elect) fear?

From Bloomberg:

“…David Rubin, whose firm, CDR Financial Products, is entangled in investigations by the Internal Revenue Service, used to call his company Chambers, Dunhill, Rubin & Co. He says he picked those names because he liked the sound of them together. Chambers and Dunhill didn’t exist.

CDR has provided advice on more than $158 billion in transactions since it was founded in 1986, Rubin, 45, says. CDR specializes in helping municipalities invest the proceeds of municipal bond sales and arranging derivatives, often complex transactions whose value varies with the price of underlying securities or indexes.

CDR, which has advised local governments on more than $17 billion of derivatives since 2003, is being investigated by the IRS for possibly profiting from deals at the expense of U.S. taxpayers. According to IRS letters obtained from the cities of Atlanta and Fargo, North Dakota, and an internal memo from the state of Wisconsin, CDR may have colluded with Bank of America Corp., Bear Stearns Cos. and other companies to make improper fees by selling municipalities unneeded contracts or mispricing investment deals….

Frank Hoadley, Wisconsin’s director of capital finance, determined in 1995 that the state should have been paid more–from $191,000 to $937,000, based on investment yields on the escrow ranging from 0.3 percent to 6.5 percent. “It appears the contract has been obtained through fraud or deception on the part of Lehman and/or Chambers, Dunhill & Rubin and/or Dain Bosworth,” Hoadley wrote on Sept. 6, 1995.

Hoadley convinced Lehman Brothers to cancel the contract, and the state returned the $119,000, documents show. CDR got a $150,000 brokerage fee from Lehman for seeking bids for investing bond proceeds. Lehman spokesman Randy Whitestone declined to comment. RBC spokesman Kevin Foster declined to comment. Rubin says the dispute over the Wisconsin contract happened because a key term in the bid request wasn’t included in the final contract. He declined to discuss Hoadley’s fraud allegations. In Florida, North Dakota and Wisconsin, CDR had agreements public officials weren’t aware of, allowing CDR to make additional profits….

Rubin donated $15,000 to Street’s election committee from December 2000 to June 2003, the records show. In addition, CDR gave White three tickets to the 2003 Super Bowl game in San Diego and also provided a limousine ride to the stadium. White brought Philadelphia Treasurer Corey Kemp to the event.

White also asked Rubin to donate money to the 2004 presidential campaign of Reverend Al Sharpton. Public disclosure of a contribution to Sharpton “would destroy me personally,” Rubin said, according to telephone transcripts from the Philadelphia trial. White suggested sending the money to White’s federal political action committee. On April 4, 2003, Rubin donated $5,000 to the PAC. The same day, the PAC wrote a $1,000 check to Sharpton.

Philadelphia paid CDR $150,000 for advice on derivatives, while banks paid CDR at least $515,000 from profits they earned on transactions with the city, documents show.

Rubin says CDR’s hiring of White was “standard practice,”…

New Mexico is another place that’s been lucrative for CDR. In October 2003, Rubin gave $25,000 to Moving America Forward Inc., a PAC formed by Governor Bill Richardson. Seven months later, CDR gave $75,000 to ¡Si Se Puede! Boston 2004 Inc., Spanish for Yes, We Can, another Richardson PAC. That PAC was formed to help pay expenses for his campaign staff at the 2004 Democratic National Convention in Boston.

Between the timing of those contributions, CDR made $951,566 advising the New Mexico Finance Authority on $420 million of interest rate swaps. Jon Goldstein, a spokesman for Richardson, says the governor had no role in CDR’s selection.

The fees New Mexico paid CDR were more than double the $400,000 that New York City paid to its derivatives adviser, Investment Management Advisory Group Inc., in 2004. That year, New York City executed $900 million of the contracts.

Rubin says CDR’s fees for the New Mexico swaps were the same received by First Southwest Co. of Dallas, the co- adviser for the deal.

The IRS is investigating the relationship between Bank of America and CDR in a $453 million sewer bond deal for the city of Atlanta in 1999. …Bank of America had entered a side deal with CDR, the IRS found. Under the arrangement, CDR paid Bank of America $200,000. In return, CDR was paid 0.075 percent of the amount in the investment account, which would be drawn down over time to pay for the project. …Rubin says the IRS may not have pure motives. He says the IRS may be using shakedown and blackmail tactics while not understanding the transactions. .. To date, CDR has received less than $200,000 from Bank of America, Rubin says.

Sherman Golden, an Atlanta lawyer who partnered with CDR, says the advising firm knows what it’s doing. “They’re smart,” Golden says. “They’re very smart. They just walk close to the line.”…”

In other words, David Rubin and Bill Richardson were simply practicing business as usual for Democrats.  There’s more from Bloomberg:

“…One of New Mexico Governor Bill Richardson’s senior political advisers lobbied the state on behalf of JPMorgan Chase & Co., …

JPMorgan paid Michael Stratton, president of Denver-based Stratton & Associates, $269,000 in 2003 and 2004 to help win public finance business relating to “state, county, and local government and corporate entities” in New Mexico, according to records filed with the Municipal Securities Rulemaking Board. Stratton’s firm gave $2,000 to Richardson’s first gubernatorial bid in 2002, and Stratton advised the governor on his 2008 presidential campaign, according to New Mexico records and the firm’s Web site.

On Dec. 15, Bloomberg News reported that the grand jury in Albuquerque was meeting to review how the company, Beverly Hills, California-based CDR Financial Products Inc., received almost $1.5 million in fees from the New Mexico Finance Authority. CDR contributed $100,000 to Richardson-affiliated groups. New York-based JPMorgan, the second-largest U.S. bank by assets, helped underwrite the bonds sold by the authority.

Stratton, 54, worked over the past two decades for Democrats who included former President Bill Clinton, former Massachusetts governor and presidential candidate Michael Dukakis and former Colorado Governor Roy Romer, according to the Stratton & Associates Web site.

Stratton also was a so-called “bundler” for Richardson’s presidential run…

When Richardson, 61, led the Democratic Governors Association in 2005 and 2006, Stratton’s firm was paid at least $160,000 for political consulting, according to U.S. Internal Revenue Service records. He also was a senior political adviser on Richardson’s presidential bid, which ended last January after fourth-place showings in the Iowa caucus and the New Hampshire primary, according to Richardson’s campaign Web site.

JPMorgan’s lead banker on the deals was Chris Romer, 49, whose father was governor of Colorado from 1987 until 1999. On Aug. 21, JPMorgan 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.

No one has been charged with wrongdoing
. Stratton declined to comment on the investigation, as did Tasha Pelio, a spokeswoman for JPMorgan in New York. Gilbert Gallegos, a spokesman for the governor, didn’t return calls seeking comment.

Influencing Hiring

The Federal Bureau of Investigation asked current and former officials from the state agency whether any of the at least 30 people in the governor’s office influenced CDR’s hiring, said people familiar with the matter, who declined to be identified because grand jury proceedings are secret. The grand jury is examining the authority’s hiring of CDR, an adviser on interest-rate swaps and escrow accounts related to bond sales, the people said.

“I acted properly and my administration acted appropriately,” Richardson told reporters in Santa Fe yesterday. “A fair and impartial review of the facts will bear that out.”

CDR President David Rubin, in a statement yesterday, said his company underwent “a rigorous vetting process” and “has never practiced pay-for-play on any playing field where we do business.”

Royal Bank of Canada, UBS AG, George K. Baum & Co. and First Southwest Co. also donated to Richardson’s political committees before or after receiving bond work from the New Mexico Finance Authority, which arranges financing for government agencies throughout the state.

Kevin Foster, a spokesman for Royal Bank of Canada, said the company complies with all political giving rules and has “no reason to believe we are the subject of any investigation.” First Southwest Chief Executive Officer Hill Feinberg said in a statement the firm has not been targeted for any wrongdoing and has been advised that it “is not a subject or a target of the investigation.”

Jonathan Baum, George K. Baum’s chief executive officer, declined to comment. Doug Morris, a spokesman for UBS, declined to comment.

Romer, who joined JPMorgan in 2002, said he cooperated with investigators looking into transactions involving the New Mexico Finance Authority and the University of New Mexico. The New York office of the Justice Department’s antitrust division subpoenaed documents from the university concerning bond sales arranged by the bank in 2002 and 2003, records obtained from the university show….

“I voluntarily participated in an interview with federal investigators regarding their investigations of the New Mexico Finance Authority and University of New Mexico,” Romer said.

CDR’s Rubin and three other employees of the firm donated $6,000 to Smart Government Inc., a Denver political organization overseen by Thomas Romer, Chris Romer’s brother….

JPMorgan employed Stratton’s firm in New Mexico from the first quarter of 2003 through mid-2004, when the bank stopped using political consultants before a ban on the practice by the industry regulator, Municipal Securities Rulemaking Board records show.

JPMorgan was the senior underwriter on $1 billion of the $1.6 billion of bonds sold by the New Mexico Finance Authority to pay for Richardson’s transportation projects.

JPMorgan was also among the five banks that sold the authority interest-rate swaps tied to the bonds. The other institutions were Goldman Sachs Group Inc., Lehman Brothers Holdings Inc., UBS and the Royal Bank of Canada.

CDR advised the authority on the purchase of the swaps…”

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9 thoughts on “Who Is David Rubin & CDR & Why Should Obama Be Very Afraid? Part IV

  1. That reads like a really bad movie! It’s amazing how everyone has every little finger in everyone’s pie. I can see why Richardson had to step down, but now, how does this lead to Barack because Rubin is a player. He likes to get close to the politicians he supports, that’s for sure.

  2. Wow. Good job digging below the surface. I think this whole scandal will blow over because the press and the average person are so unfamiliar with the financial instruments involved, the public’s eyes “glaze over.”
    Give us a juicy stained dress and we got a scandal. Some guy bribes politicians and makes fees on a swap? Not so interesting.

  3. Just a sample:
    CDR and the Democrats

    The withdrawal of Bill Richardson recently made the headlines. In his case CDR gave money to Si SE Puede, a PAC formed to help pay Richardson’s expenses at the 2004 Democratic Convention. In exchange its argued that CDR received favorable treatment in regards to bids to do business for GRIP (Govenor Richardson’s Investment program) , bid rigging in short.

    Another aspect of pay for play, and one more likely to land a politician in jail is CDR’s tactic of finding friends, fundraisers and associates of elected Democrats, and hiring them as “Consultants”. In New Mexico it was Richardson friend Mike Stratton who was hired by CDR. On a side note the Director of Si Se Puede Fred Duval was hired by UBS ,a Swiss bank, as a consultant. UBS was also one of several banks that ended up receiving a cut of the GRIP pie. The collusion of CDR, elected Democrat, and consultants that occurred in New Mexico is similar to other CDR linked scandals. In Philadelphia it was Ron White (now deceased) who received money and super bowl tickets from the company and was hired as a consultant. He was also an associate and fundraiser for Philly Mayor Sharpe. In Pennsylvania as a whole it was Alan Kessler who was the chief lobbyist for CDR and a top fundraiser for Ed Rendell. The most egregious example would be Mayor Larry Langford of Birmingham Alabama, who is accused in a 101 count indictment of using his friend William Blount and lobbyist Albert LaPierre to funnel money, jewelry, cloths, and watches into his hands in exchange for government favors while he was President of the Jefferson County Commission. Jefferson County, which includes Birmingham is on the precipice of the greatest municipal bankruptcy in history. There are also questions of CDR’s actions in Atlanta and several of municipalities and CDR is currently being sued by over 20 school districts and cities in addition to the criminal investigations.


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