The man at the center of the fake audit controversy swirling around the New Mexico Finance Authority has made his first public statements.  He directly contradicts NMFA management while insisting he acted in good faith.  He acknowledges no responsibility for committing any forgery, and limits his actions to failing to inform his superiors that the documents he assembled were merely a “draft audit.”

His interview with KOB-TV’s Peter St. Cyr only adds more layers to the mystery of how an agency responsible for managing billions of dollars of public money provided a forged audit to investors in a scandal that threatens to cost New Mexico taxpayers dearly.  The state’s debt is facing a downgrade by Moody’s and Standard and Poor’s.   Investors may file suit for any damages they suffer as a consequence of what State Auditor Hector Balderas is calling a “fraud.”

Greg Campbell, second from left, in 2005 NMFA staff photo on balcony of agency’s Santa Fe office

New Mexico Watchdog has studied the full transcript of Campbell’s interview (link).  The much briefer broadcast version glanced over the more substantive issues raised in St. Cyr’s questioning on Campbell’s doorstep.  The Securities Division of the New Mexico Regulation and Licensing Department will not confirm information that Mr. Campbell has been interviewed by investigators over the weekend.  A call to the State Auditor’s spokesperson seeking the same confirmation has not yet been returned.

Contradicting NMFA Management

St. Cyr asked Campbell, “Have you talked to them at all, and what are you telling them?” [referring to the NMFA]

Campbell denied talking to NMFA about this matter.  This directly contradicts statements by Rick May, chief executive officer of the NMFA.  He has stated that Campbell told the NMFA that the 2011 audit, which turns out to have been a forgery, was not only filed with the State Auditor, but also approved by the Auditor’s office.

Barry Massey of the Associated Press reported on July 17, 2012:

Finance Authority Richard May said the former controller, Greg Campbell, had assured authority officials earlier this year that financial statements had been audited and submitted to the State Auditor’s Office, as required by state law. The Auditor’s Office had alerted the authority that an annually required audit had not been filed, but May said the controller told authority officials the state auditor had made a mistake.

In its own press release, NMFA stated that Campbell had affirmatively “misrepresented to senior management the status of the audit.”

As we previously reported, according to Antonio Corrales, public information officer for the State Auditor, when the Auditor’s office placed NMFA on its “at risk” for failing to submit a 2011 audit, the Auditor’s office was told by NMFA management that they had questioned the employee responsible for this task and been assured that the audit had in fact been both submitted and approved by the Auditor’s office.

A “Draft” Versus a Forgery

Campbell limits his actions to putting together a “draft” of the 20011 audit and failing to inform the NMFA’s audit committee that it was only a draft.  He affirmatively acknowledges misrepresenting the draft as “a final report.”  He admits “assembling” the “papers” that went into the report.  But he avoids commenting on the fact that the documents purporting to be auditor’s opinions on the 2011 financial statements were altered by copying the same pages from the 2010 audit and changing the date to “2011.”  The forged 2011 audit also reports a December 10, 2011 exit conference between NMFA management and members of the NMFA board and the auditor–a meeting that never occurred. See our report:  The Cheap Forgery That May Cost New Mexico Millions.

The 2010 audit was performed by the Clifton Gunderson accounting firm.  The Albuquerque Journal has reported that the firm was paid by someone in the NMFA $130,000 for the 2011 audit even though they never performed the work represented as theirs in the 2011 forgery.

The most Mr. Campbell will say about the forgeries of the auditor’s opinion letters is:  “I believe the audit opinion wasn’t actually an audit opinion. It was, um, the signature on there wasn’t actually a signature.”

More Confusion Added to the Mystery

Campbell says he gave the “papers” he assembled to the NMFA’s audit committee, representing it to be a “final report.”  At some point the forged “final report” was posted on NMFA’s website as the 2011 audit approved by the State Auditor and also provided to investors and credit rating agencies.  Mr. Campbell sheds no light on those events.

If he merely assembled the financial data, but had nothing to do with forging the auditor’s opinions, then the question remains whether someone else completed that stage of fabricating the 2011 audit.  Campbell suggests he never touched the pages of the fake 2011 audit purporting to be the auditor’s opinions and findings.  Here is the relevant exchange with St. Cyr:

Q: THE AUDITORS ARE SAYING IT’S NOT THEIR WORK PRODUCT AT ALL.

A: The financial statements are always the work product of the entity being audited.  So, it’s just the opinion and any findings on there that would be their work product.

Q:  DID YOU PUT THOSE COPIES, THE FAKE FINDINGS…OR THE FAKE SIGNATURE ON THE REPORT?

A:  No! Those are the signatures that were on the letters… on the forms that we had.

So, from whom did he obtain the forged auditor’s letters that went into the fake 2011 audit?  Of is he refusing to admit that he himself was the forger?

As for the numbers on the financial statements contained within the fake audit, Campbell insists those are “actual numbers” and “nothing is missing.”  He maintains that a real audit will confirm the numbers in the fake audit.  But, as trial lawyers would ask a jury, if he lied about the “draft” audit being a “final report,” what else is he lying about?

We will have to await the results of the investigations being conducted by the New Mexico Securities Division and the State Auditor to have that question answered.