SANTA FE, N.M. (AP) — The former controller of a New Mexico financing agency couldn't fully explain his actions even as he stood in front of a judge Thursday to plead guilty to forgery and securities fraud for faking a financial audit that went to bond investors earlier this year.
Greg Campbell, who was in charge of the accounting operations of the New Mexico Finance Authority for five years before leaving in June, offered a murky explanation for why he falsified the agency's financial statements to make it appear they had been audited. However, he made clear he didn't pocket any money by faking the financial documents.
"I could say it was a time pressure," Campbell told the judge. "I just don't know why I honestly did it, because I know I wasn't going to benefit from it. I did want to make sure that we got our bond sale done."
The financial statements and audit report were necessary for the authority to issue nearly $23 million in bonds in March. The authority uses bond proceeds to provide low-cost financing for capital improvements by cities, counties, schools and other New Mexico governments.
After listening to Campbell, District Judge Stephen Pfeffer placed the 52-year-old father of three on probation for five years. Campbell's guilty pleas to three felonies could have sent him to prison for six years, but he may end up with a clean record.
If Campbell stays out of trouble and meets the conditions of his probation, the court could dismiss the charges — meaning he wouldn't be considered a convicted felon, an important consideration as he looks for a job.
Prosecutors didn't oppose probation for Campbell, saying he had fully cooperated with investigators and didn't try to hide his actions
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.
The authority has been forced to scale back its lending and can't issue new bonds while awaiting the completion of an independent audit of its finances. That's hurt ordinary citizens, according to the state's top securities regulator who brought the charges against Campbell.
"This particular action by Mr. Campbell has delayed tens of millions of dollars in loans to municipalities, counties and state entities at a time when they really needed it. When the economic recovery has been slow in this state, these dollars could be helping us speed that recovery. So the damage has been clear," Daniel Tanaka, director of the state's Securities Division, said after the court hearing.
His agency's investigation is complete and no other charges are planned against other individuals. A grand jury declined in September to indict the authority's former chief operating officer, who was Campbell's supervisor.
Tanaka said his agency will soon issue a report detailing how a breakdown of the authority's management and oversight allowed the fake audit to go undetected for months and be distributed to investors.
Campbell's pleas came as a legislative committee released an outside consultant's report recommending changes at the authority.
Having only one employee — the controller — responsible for completing the audit was a poor management practice that "significantly contributed to the creation of the fake audit," according to Hewitt EnnisKnupp, a national consulting firm. Its report said an "increased workload for staff, significant employee turnover, including a position within the accounting department, and vacant CFO position all could have contributed to the delegation of the audit completion to the controller."
Former CEO Rick May told lawmakers that Campbell had misled him about the preparation of the audit but acknowledged the agency was understaffed during his tenure. May was fired by the authority's governing board in September, about a year after joining the agency.
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