Monday, November 2, 2009

Smiley in Bloomberg has a story this morning featuring Vincent "Smiley" Gallegos -- who currently is facing state charges alleging misuse of bond money when he was director of a state affordable housing program -- and CDR Financial Products, whose president and founder was indicted last week on unrelated charges in New York federal court.

Gallegos, then the executive director of Region III Housing Authority New Mexico Inc., sold bonds in February 2003 with the help of Los Angeles-based CDR Financial Products Inc. and its founder, David Rubin.

“At the time the authority issued the bonds, there was ample evidence that the program would not be successful,” the IRS wrote in March 2007 after investigating the transaction. “A prudent person would not have taken the same actions.”

Two months later, federal tax authorities revoked the bonds’ tax exemption. The IRS found that one of the agency’s banks, Paris-based Societe Generale SA, would earn as much as $1.5 million on a program for low-income and first-time homebuyers that lent only about $2.6 million. Tax authorities also found that CDR was collecting more than $50,000 a year from Societe Generale in fees not disclosed in public bond documents.

Gallegos, 56, and Rubin, 47, are under criminal indictments as the result of separate investigations unrelated to that debt.

Bloomberg quotes Gallegos' lawyer Paul Kennedy saying no jury will convict his client. The story also notes "Gallegos didn’t open the door of his home in Albuquerque when a reporter knocked, nor did he answer his mobile phone."