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Adviser's billing on state bond issues is probed


WASHINGTON -- Maryland Attorney General J. Joseph Curran Jr. is probing whether public money was used to pay a financial adviser twice for the same bond work.

"There is potentially a double payment," Deputy Attorney General Norman Parker said.

CGMS Inc. was paid once under a contract with the Maryland Community Development Administration that provided for a fee of more than $200,000 yearly for financial advice, said an official in the attorney general's office. The firm also received payments for work on specific bond issues of the agency, which occurred about three times a year on average, the official said.

CGMS Inc. denied it was paid twice for the same work. While the firm received two different forms of payment, one from a government agency and another from the managing underwriter, the payments were for separate work the firm performed and were proper, said Thomas P. Caine, the firm's principal.

"We haven't done anything wrong or unethical," Mr. Caine told the Bond Buyer, a trade publication. "I hope when they finish their investigation, they will find this is [a] misunderstanding."

Similarly, James Wiggins, a spokesman for Merrill Lynch & Co., the senior managing underwriter on the bond issues involved, said there was no double payment to CGMS for the same work. Mr. Wiggins confirmed that underwriters paid CGMS for work on specific bond sales.

[The work] was performed by the financial adviser, who was paid for that by the underwriters, who were subsequently" reimbursed by the Maryland housing agency, he said.

Under a contract with the Community Development Administration and other state agencies that ended June 30, CGMS provided financial adviser work on almost $4 billion of bonds that CDA issued, CGMS said.

In state records, CGMS' corporate mailing address is listed in Dundalk.

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