Albuquerque Journal (Albuquerque, NM)

Auditor Delivered Warning.

Byline: Carolyn Appelman And Sharon Hendrix Journal Staff Writers

July '99 Report Urged Stop to Trading Activities

What and when did Sandoval County officials know about the county's $1.5 million market value losses on its $8 million investment portfolio?

County officials have said in public meetings that they didn't know about the problems with the portfolio until December 1999.

However, State Auditor Domingo Martinez in a July 1999 special audit report warned officials about the county's questionable investment practices and told them to cease "illegal trading activities."

For almost a year, county officials have been trying to recoup losses in its bond portfolio after bond rates declined.

In December the loss in the value of the portfolio, the bulk of which was in zero coupon stripped Treasury bonds, came to light publicly in a county Board of Finance meeting. The board is made up of county commissioners.

The losses were incurred because of interest rate increases, which generally affect the bond market negatively. The Fed increased rates three times in 1999.

County's lawsuit

The county is suing Everen Securities of Houston, alleging broker Royce O. …

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