The Man Obama Double-Crossed

The president’s staffing nightmares began with Bill Richardson, the erstwhile Commerce nominee, who has told confidants that he was promised the secretary of State job. Now, with looming investigations and sinking polls, Richardson may be lucky to hang on as governor of New Mexico.

Just over a year ago, Bill Richardson was a credible, if dark horse, Democratic presidential candidate and possible Barack Obama vice-presidential running mate. Five months ago, he was stunned when he did not become Obama's secretary of State; several people close to him say he thought he had been promised it. Then, in a humiliating and historically ironic slight to the man who had helped Obama win the Iowa caucuses and then the primary election, Obama passed over Richardson for State in favor of their mutual nemesis, Hillary Clinton. Still reeling from what he considered a double cross—Richardson told confidants he had been promised secretary of State—he gamely accepted the consolation prize, secretary of Commerce. But even that was to elude him. In early January, amid revelations that a federal grand jury was investigating a pay-to-play scheme involving a California-based financial company and Richardson’s political action committee, Richardson withdrew his nomination.

Richardson is now the lamest of lame ducks; his in-state approval ratings have plummeted to his all-time low of 41 percent.

In the span of a few short months, Richardson has gone from a luminous star in America’s political galaxy to a powerless pariah in the twilight zone. The second-term governor of New Mexico, whose term does not expire until 2011, is now plagued by the aura of scandal and is the lamest of lame ducks. Fending off a plethora of accusations, Richardson has watched his in-state approval ratings plummet to his all-time low of 41 percent. His political clout with the state legislature is severely weakened, and party leaders are discreetly lobbying for his resignation so that Democratic Lieutenant Governor Diane Denish can ascend as planned. “His popularity has really declined in the state,” says Democrat Timothy Jennings, the state senate’s president pro tempore.

Dubbed GRIPGate—for Governor Richardson’s Investment Partnership, which he formed to fund public-transportation projects—the pay-to-play probe is part of a larger national investigation of bid rigging in the municipal-bond market. The federal grand jury seated in Albuquerque has subpoenaed correspondence and political contribution records from Richardson’s office dating back to 2002, including records from the Democratic Governors Association during the period of 2005 to 2006, when Richardson served as its chairman. That subpoena focuses particularly on the records of two of Richardson’s top aides, as well as correspondence with two Colorado men: Chris Romer and Michael Stratton. Romer, a Colorado state senator and the son of former Colorado Gov. Roy Romer Jr., was the lead executive for JPMorgan Chase, which was the senior underwriter on $1 billion in bonds sold by the state to pay for Richardson’s GRIP transportation projects. Stratton, who was the senior political adviser to Richardson’s presidential campaign, owns a Denver-based consulting firm that was hired by JPMorgan to lobby the Richardson administration.

At the heart of the investigation are charges that CDR Financial Products paid contributions into Richardson’s political coffers in exchange for state contracts, as well as kickbacks to the financial advisory firms that submitted questionable “low” bids for bond-underwriting services. Federal investigators are looking at how CDR “came to be selected as the ‘swap adviser’” for Richardson’s GRIP, according to the New York Times.

While the CDR pay-to-play case is a serious problem facing Richardson, prompting the governor to hire an Albuquerque criminal-defense attorney, it is but one of several investigations dogging the governor in what local reporters refer to as Richardson’s perfect storm. In January, Frank Foy, the former chief investment officer of New Mexico’s Education Retirement Board, filed a “whistleblower” civil lawsuit. He claims he was pressured by the Richardson administration to invest with a Chicago-based company called Vanderbilt Capital Advisors after Vanderbilt contributed to Richardson’s presidential campaign. That investment, according to Foy, resulted in a $90 million loss for the state. Co-defendants in the case include JPMorgan Chase and several other financial-services firms. “The bottom line is the fix was in,” said Foy’s attorney.

Some Richardson-bashing borders on the bizarre. While the pay-to-play gossip was swirling in the state capital, a Stanford-educated attorney named Ronald D. Tym took out an expensive display ad in the Santa Fe New Mexican promoting his self-published novel, Committed. A roman-a-clef about his experience practicing law in New Mexico, the book jacket described the tale of a middle-aged attorney involved in a “series of disastrous events involving unscrupulous law partners and corrupt politicians.” Set in New Mexico, “it presents a story of corruption and intrigue uniquely New Mexican, including a ‘Pay To Play’ governor and his senior staff who expect campaign contributions for every lucrative state contract awarded and who make unending use of the state's opulently appointed jet as the governor traverses the country in pursuit of his higher political aspirations for the presidency.” With the publication of the newspaper ad, the book sales on spiked for several days.

Also in January, in an attempt to “dispel any kind of rumors,” as Santa Fe Police Chief Eric Johnson put it, detectives finally interviewed Richardson in connection with the investigation of a fatal hit-and-run that happened in downtown Santa Fe the day before Thanksgiving. Driving the black BMW was a Santa Fe lawyer who was accompanied by Richardson’s State Police security officer. Sometime around 3 a.m., as the two were leaving a nightclub, the car hit and killed a popular Santa Fe disc jockey before fleeing the scene with its headlights turned off. At least one witness reported seeing a third person in the vehicle, and since Richardson had been in the company of the two men earlier that night at the Rio Chama Bar, rumors quickly spread through the small city that the governor was the mysterious “third person.” Police reported that Richardson cooperated fully during his interview and told the New Mexican that “by all accounts, there was nothing to indicate he is tied to this case.”

Still, the pile-on continues. “Every time you turn on the TV or open a newspaper, you see ‘Richardson’ and ‘scandal,’” University of New Mexico Professor Gabriel Sanchez told Andy Barr at Joining former Illinois Gov. Rod Blagojevich as the butt of jokes, Richardson has been lampooned by late-night comedians. In one particularly brutal parody David Letterman placed Richardson in a Taco Bell commercial and mimicked his withdrawal as Commerce secretary: “I’ve been doing some stuff that may be too illegal to be in the Cabinet but just about right to keep me as governor of New Mexico.”

How did it come to this? Until weeks ago, the 61-year-old New Mexico governor was the most prominent figure of Hispanic origin in either national political party. Called “our Great Hispanic Hope” by Latino backers, Richardson represents the fastest growing bloc of minority voters in the nation. But like all tragic stories, his fall is inseparable from his rise.

Bilingual son of an aristocratic Mexican mother and American businessman father, Richardson was raised in a rarefied world of affluence and entitlement that continued after his parents’ divorce. Shuttled between his mother’s palatial villas in Cuernavaca and Mexico City and his Citibank executive father’s elite world of Pasadena, educated at American boarding schools and groomed by Mexican tutors, Richardson embodied a new bicultural hybrid in American politics. Searching for a congressional district, he settled on northern New Mexico where, in 1982, he was elected in the newly created 3rd district. One of the most diverse districts in the country, comprised of nearly equal parts Anglo, Hispanic, and Native American, he thought it the perfect place to launch a political career. “I have an Anglo surname, I speak Spanish, and I look Indian,” he used to joke. Even at the beginning, many veteran New Mexico journalists found the blatant carpetbagging offensive and gave him the moniker, “Peso Bill.”

Boyish and affable, his popularity soared and his congressional seat was secure as he climbed steadily in the Hispanic Caucus and House leadership. President Bill Clinton named him UN Ambassador and then Energy secretary, and Richardson’s uncanny ability to mediate dicey foreign dilemmas earned him five nominations for the Nobel Peace Prize. At the end of the Clinton presidency, Richardson returned to New Mexico and won a landslide victory for governor in 2002 and was re-elected by an even larger margin in 2006. Now, just two years into his term, the once-potent politico is powerless. His clout is “diminished,” according to New Mexico political columnist Steve Terrell. “He hasn’t been flexing any muscle.” With the state legislature in full force, the governor’s ineffectiveness is sadly apparent. “He was more involved with the legislature last year when he was campaigning full-time for president in Iowa,” said Terrell.

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Richardson forces contend the pay-to-play investigations are politically motivated and raise two equally implausible and sinister specters, seeing the hands of either Republican dirty trickster Karl Rove or even a vindictive Hillary Clinton exacting vengeance for Richardson’s endorsement of Obama. “Innocent citizens, the community and justice suffer irreparable harm when politics is the driving force behind a prosecution,” wrote state Democratic Party Chairman Brian Colón in a recent op-ed published in the Albuquerque Journal. Both theories seem absurd on their face, though the holdover vendetta from the Bush administration has the most legs, considering the history of New Mexico’s US Attorney’s office. David Iglesias, the Bush-appointed federal prosecutor, was one of eight US attorneys fired by the Justice Department following the 2006 midterm elections. Iglesias claimed he had been wrongfully dismissed for his failure to prosecute New Mexico Democrats.

Among the flaws in this conspiracy theory is the fact that the current US Attorney, Greg Fouratt, is a career prosecutor initially hired by Chief US District Judge Martha Vasquez (a Bill Clinton appointee) who was put in place by a panel of New Mexico federal judges in January 2008. Placing blame on Hillary Clinton is even more far-fetched, implying that the new secretary of State has the inclination and obsession—not to mention wherewithal—to influence the criminal probe of a political rival.

In any case, attempts to blame either the GOP or Clinton are patent efforts to deflect attention from the predicament in which the governor finds himself. Likewise, the belief floated by Richardson supporters that Attorney General Eric Holder will replace US Attorney Fouratt and intervene to stop the federal grand jury investigation seems delusional. If indeed Chris Romer is now cooperating with federal prosecutors, as has been reported, or if the recently convicted former state senate leader Manny Aragon is “singing” in exchange for a reduced sentence, then Richardson’s problems may be very serious.

“It should have come as no surprise that a man whose privileged youth was spent in his mother’s native Mexico City would govern like Mexico’s infamous Institutional Revolutionary Party,” John Dendahl recently wrote in the New Mexico Independent, describing what he called Richardson’s “PRI-style ruthlessness.” Former chairman of the Republican Party of New Mexico and Richardson’s rival in the 2006 gubernatorial race, Dendahl cited the supposedly endemic corruption in the Richardson administration as his reason for moving to Colorado, despite family ties in Santa Fe dating back 130 years.

Brian Colón, longtime Richardson supporter and treasurer for Richardson’s Moving America Forward Foundation, which has raised $1.7 million during Richardson’s tenure as governor, remains one of the few outspoken defenders of the stricken giant. Most of the governor’s once-ubiquitous and expansive cohorts and allies have fallen, like the governor himself, uncharacteristically silent.

Presidential contender Richardson described his 30 years of public service as “fighting for those who don’t have a voice.” For the man whose credo is “it's about doing what's right, no matter where, or for whom,” the tailspin from national limelight to political disgrace carries a sad poignancy for the people of New Mexico.

Sally Denton is a writer based in Santa Fe and author of six books, including The Money and the Power: The Making of Las Vegas and Its Hold on America and the forthcoming The Pink Lady: The Many Lives of Helen Gahagan Douglas (Bloomsbury Press).