SANTA FE, N.M. (AP) — A former state budget director was named Friday to serve as interim CEO of the New Mexico Finance Authority as it copes with fallout from a forged audit that's led to fraud arrests and investigations by securities regulators and the Legislature.

The authority's governing board picked John Gasparich as the agency's top manager. His salary has not yet been determined.

Gasparich will run the authority for the next six months until a permanent CEO is found.

Brett Woods, deputy secretary of Energy, Minerals and Natural Resources, has been serving as acting CEO since last week, when the board placed CEO Rick May on indefinite leave as he continues to receive his annual $150,000 salary.

That move came after authority Chief Operating Officer John Duff and former controller Greg Campbell were arrested for investigation of fraud and other charges involving fake financial statements.

Campbell has acknowledged that he falsified financial statement to make them appear as if they had been audited and has said he didn't steal any money.

It's a violation of state law to distribute false or misrepresented financial statements to potential investors. Duff has been placed on leave without pay.

A special audit is getting under way to determine if any finance authority money is missing. State Auditor Hector Balderas is contracting with the accounting firm of PricewaterhouseCoopers, and the board agreed Friday to provide up to $1.25 million for the special audit and a review determining how the fake audit happened.

Balderas said he expected an initial report from the firm in October "that will be the who, what, where, when and why in terms of immediate deficiencies or violations of law."

The Legislature also plans an independent review of the authority, which will include recommendations on whether changes should be made in its operations.

Board members said Gasparich's experience in state government and with the Legislature would help the authority rebound from the audit scandal and deal with expected proposals from lawmakers for changing oversight of the entity that now operates independently from any governmental agency and functions like a bank.

The authority was created by the Legislature in 1992, and Gasparich said it has grown beyond its early focus of making low-cost loans to local governments for projects ranging from sewer and water systems to the purchase of fire trucks.

The authority can issue bonds and it arranged financing for a road improvement and transportation program that included creation of the Rail Runner commuter rail system during former Gov. Bill Richardson's administration.

"In the intervening years, it's much bigger than it used to be. I don't know if that's necessarily a bad thing," Gasparich said of the evolution of the authority.

Gasparich was deputy secretary of the Department of Finance and Administration under former Gov. Gary Johnson from 1995 to 1998, when he retired. Gasparich started working in state government in 1972 as a budget analyst and has held a wide range of jobs, including budget director for former Govs. Garrey Carruthers and Toney Anaya.

Since retiring, Gasparich has worked as a consultant and part-time as a fiscal analyst for Republicans in the state Senate.

Gov. Susana Martinez appointed Gasparich last year to the state Board of Finance, but he plans to resign that position.

Besides the management shake-up, there also was a reshuffling of board member duties since the fake audit was disclosed last month.

Finance and Administration Secretary Tom Clifford has taken over as chairman of the board's audit committee, replacing Lonnie Marquez, New Mexico Tech vice president of administration and finance.

The AP had reported that Marquez had the lowest attendance record at board meetings of any member since the start of the Martinez administration last year. He has declined to answer questions from the AP about the board's oversight performance or whether he read the audit before the fraud was revealed.


Follow Barry Massey on Twitter at