Bonds. Big Bonds.

It's officially a nonprofit, but the company Governor Napolitano picked to handle millions in student loans is making big bucks for one of its original founders

And there's another Web link out there that Cantelme can't take down: According to a listing with the Arizona Hispanic Chamber of Commerce, his for-profit marketing firm, Grupo N, is using AHELA's Tempe suite as an office.

Cantelme did not return a follow-up call for comment on Monday, so it's unclear what the arrangement between Grupo N and AHELA is. But though Grupo N lists a different address on its Web site, it's obvious that it's not working there. The suite is empty, with exposed electrical wires and construction ladders visible from the doorway.

IRS spokesman Bill Brunson declined comment because the matter involves a specific company.

Fred Harper


Arizona Higher Education Loan Authority, Pat Cantelme, Billy Shields and Tax-free bonds

Cantelme defends AHELA's actions in every case. "This is what's crazy: We receive no compensation and no benefit for doing this. There's nothing we can harvest from this. There is no benefit down the road for us as individuals."

And, he insists, if anyone else wants a piece of the student loan bond money, it's there for the taking.

"There's nothing we could do to stop it," he says.

But history — very recent history — suggests otherwise. Just ask state Senator Dean Martin.

The Phoenix Republican, who was elected state treasurer last week, sponsored a bill in 2005 to reform some of the rules governing industrial development authorities. Those groups — like the one in Maricopa County — compete in a lottery for the tax-exempt bonds that aren't earmarked for student loans. They use the bonds to finance things like hospitals and affordable housing.

Martin says that, in many other states, industrial development authorities have the right to sell bonds for student loans. (Both Cantelme and L'Ecuyer dispute this, and New Times could not find any evidence to support Martin's claim. The lobbyist pushing the bill for Maricopa County's development authority, Kevin DeMenna, did not return calls for comment.)

One part of Martin's bill would have opened the student loan market to development authorities. He thought he had everyone on board: The bill sailed through both the House and Senate with virtually no opposition. No one testified against it, and the only no vote came from Senator Karen Johnson, who hardly has Governor Napolitano's ear.

But Napolitano — to Martin's shock — vetoed the bill. The reason, she wrote in her veto letter in May 2005, was that the student loan system worked just fine as it was.

Never mind that the longtime nonprofit had recently left the state — and that its replacement, Cantelme's group, had yet to issue any reports or audits.

Martin says that supporters of the bill talked to Napolitano's staff. They were told that Shields — a Napolitano ally, a major political player in the Valley, and AHELA's secretary/treasurer — had requested the veto.

L'Ecuyer denies this. "[S]taff had a concern with the provision" about student loans, she wrote an e-mail. "Again, this was an issue identified by staff; AHELA did not raise it."

But in an interview with New Times last Thursday, Cantelme was not bashful about the role he and Shields played. (Shields did not return calls for comment.)

Industrial development authorities, Cantelme insists, should not be in the loan business. He plans to stop them if they try again.

"If a nonprofit wanted to get into this, we'd be fine with that," he says. "But if it's an industrial development authority, we'd ask her to veto it again."

Indeed, earlier this year, Martin introduced legislation with all the same changes for industrial development authorities — except the student loan provision, which he omitted. The governor signed it into law.

Martin says he thinks AHELA deserves serious scrutiny.

He believes there should have been a request for proposals where other nonprofits could have competed for the bonds — or perhaps a situation where several nonprofits get a piece of the work.

Based on the governor's veto, Martin is fairly sure she will not be receptive.

"Frankly, I thought maybe we could change the governor and not have to worry about a fight over this," says Martin. "But now you're talking about having to go out and make this happen with the same governor who let it happen in the first place.

"This will be a war."

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