Greg Campbell, the former controller of the embattled New Mexico Finance Authority, and John Duff, its current chief operating officer, were arrested, each on several counts of fraud and racketeering.

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Here's the lowdown, in a presser from the NM Regulation & Licensing Dept. (The photo accompanying this post is of Daniel Tanaka, the RLD's Securities Division director.)

Gregory M. Campbell, the former controller for NMFA, has been charged with eight counts of securities fraud, four counts of forgery and one count each of racketeering and conspiracy to commit racketeering, according to a criminal complaint filed by the Securities Division of the New Mexico Regulation and Licensing Department. John Duff, the current chief operating officer for NMFA, has been charged as an accessory on eight counts of securities fraud and racketeering. Duff, who was the immediate supervisor of Campbell, also has been charged with allegedly conspiring to engage in a pattern of racketeering activity by fraudulently misrepresenting the financial statements of the NMFA to ratings agencies, investors, bond buyers, and the State of New Mexico, according to the criminal complaint. “The action of these two individuals has risked the credit rating of New Mexico. We want to send a clear and strong message to the Wall Street, rating agencies, bond purchasers and investors that we will get to the bottom of this as quickly as possible to once again restore their confidence in our state,” said J. Dee Dennis Jr., Superintendent of the State Regulation and Licensing Department.

Last week, the RLD's Securities Division obtained a warrant to search NMFA offices; read the search warrant affidavit along with the criminal complaint (be warned: it's long) below.

Daniel S Tanaka, the Securities Division director, says in the press release that the investigation is ongoing. According to a criminal complaint filed in First Judicial District Court, Campbell admitted to forging NMFA's 2011 audit report. The complaint goes on to allege that Campbell--with Duff's permission--"misrepresented approximately $40 million in the financial statements for NMFA for 2010 and 2011," according to the press release.

More from the press release:

"These two corporate officials had strong accounting backgrounds yet they cooked the books to make their financial statements looks stronger than they actually were,"  Tanaka alleged. "Accurate disclosure of the true financial condition of a company is crucial to ensure that all investors have the information they are entitled to by law," said Tanaka.
 
Campbell and Duff were booked into Santa Fe County Jail and are subject to a $20,000 cash or surety bond. A date for an arraignment at the First Judicial District Court in Santa Fe has not yet been set.

Affidavit for the warrant and criminal complaint: