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SANTA FE, N.M. (AP) — The former controller of the New Mexico Finance Authority has been indicted on securities fraud and forgery charges tied to the falsification of the agency's financial audit, but a grand jury declined to bring charges against another authority executive who was arrested in August.
The Regulation and Licensing Department on Friday announced the indictment of Greg Campbell, who left the agency in June. As controller, he headed the authority's accounting operations.
The department said a grand jury in Santa Fe on Thursday declined to indict the authority's chief operating officer, John Duff. He has been on leave without pay since his arrest in August as an alleged accessory to securities fraud and for allegedly conspiring to engage in a pattern of racketeering.
Securities regulators said at the time of the arrests that Campbell and Duff had violated state securities law by misrepresenting NMFA's financial statements to ratings agencies and investors that buy the agency's bonds.
Because of the grand jury's decision, however, the State Securities Division has dropped its case against Duff and will not pursue criminal charges against him, said department spokesman S. U. Mahesh.
The Finance Authority provides low-cost financing for capital projects by cities, counties, schools and other New Mexico governmental organizations. The fake audit scandal has prompted a management shake-up of the authority and calls by legislators for stronger oversight. The authority operates independently from any state agency and functions like a bank for governmental infrastructure.
Campbell was indicted on four counts of forgery alleging he faked the audit and provided it to various officials. He faces eight counts of securities fraud alleging he misrepresented NMFA's audit and financial statements, which were made available to investors who purchased the authority's bonds earlier this year.
"This should send a message to everyone doing business in New Mexico, including those in public service, that you will not get away with misleading investors and publishing fake financial statements," J. Dee Dennis Jr., the department's superintendent, said in a statement.
No arraignment date was announced for Campbell, who remained free on bond that was posted after his arrest. Campbell's attorney, a state public defender, was out of the office and did not immediately return a call seeking comment.
Duff's attorney did not immediately respond to telephone and email messages seeking comment.
Duff has worked for the finance authority since 2005, starting as its chief investment officer. As chief operating officer, he supervised the accounting operations that Campbell headed as controller. Campbell also went to work for the authority in 2005 to perform accounting work and became controller in December 2007.
A forensic audit of the authority is under way to determine if any money is missing, how the audit was falsified and why it wasn't caught until July after the state auditor's office raised questions why the authority's 2011 audit was months late in being submitted.
Campbell, in statements to the news media, has acknowledged that he faked the financial statements earlier this year but has said he didn't steal any money.
Follow Barry Massey on Twitter at https://twitter.com/bmasseyAP