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Adviser: Insiders Called The Shots

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Copyright © 2012 Albuquerque Journal

New Mexico’s investment adviser was making recommendations on where the state should put more than a billion dollars of its nest egg, based on lists provided by Richardson administration insiders, according to transcripts of a secretly tape-recorded meeting.

Partners in Aldus Equity Advisors secretly recorded a September 2006 management meeting during which founding partner Saul Meyer explained how things work in New Mexico – where the company was paid $1.5 million a year to advise the State Investment Council and Educational Retirement Board.

More Details
Saul Meyer told his partners that the Correras provided him a list of firms Aldus had to recommend for state investments.
SAUL: “I’m going to pull the list that the Correras gave me … Ready for this? … Fun, man, fun. …”
A partner points out that one of the investments on the list isn’t a very good fund.
SAUL: “I wish we wouldn’t have to do it, but that’s the deal. I don’t think we have a choice on that one.”
Meyer later adds, “And we agree we are going to be doing a couple of funds that aren’t good funds.”
Partners talk about concerns that the investment recommendations are the same for the SIC and ERB.  And Meyer makes it clear that Foy and his boss, ERB Executive Director Evalynne Hunnemuller, were obstacles who needed to be removed.
RICHARD (Ellman, Aldus partner): Yeah, and plus, I got to be honest. I’m a little concerned about having everything mirror SIC.
SAUL: That’s right, we’ve got to pull some of those (funds) away. …
MARCELLUS (Taylor, Aldus partner): Every one of those except for two is in SIC.
SAUL: But you know, that’s another good reason, what we’re going to have to do is, at the beginning, until Evalynne and Frank are fired, we’re going to have to do new funds, or do just a couple of them.

“To think that Anthony (Correra) and Marc (Correra) don’t have a stranglehold over this thing is crazy,” Meyer told his partners in the Dallas meeting. “Because the Governor runs this sh*t and they run the Governor.”

Anthony Correra was a close political and economic adviser to Gov. Bill Richardson and helped select Gary Bland as State Investment Officer. Marc Correra shared in more than $22 million in finder’s fees paid by companies that received the state investments.

The state now claims in lawsuits that it lost millions through bad investments.

Portions of the transcripts of the meeting were filed in state District Court in Santa Fe late Friday by attorney Victor Marshall on behalf of Frank Foy, the former chief investment officer for the ERB.

Foy has civil lawsuits pending against Meyer, Aldus, Marc and Anthony Correra and others alleging widespread corruption in the way state investments were handled.

“This evidence gives a big boost to our case,” Foy said after Friday’s court filing. “When I was at the ERB, the whole thing smelled fishy, but I had no idea it was this rotten.”

Meyer told the partners, who recorded the discussion in hopes of building a case to have him fired, that the Correras provided him a list of firms Aldus had to recommend for state investments.

“Ready for this?” Meyer asks. “Fun, man, fun.”

One of the partners points out that one of the investments on the list isn’t a very good fund.

“I wish we wouldn’t have to do it, but that’s the deal,” Meyer explains. “I don’t think we have a choice on that one.”

He later adds, “And we agree we are going to be doing a couple of funds that aren’t good funds.”

According to the transcript attached to Friday’s court filing, Meyer said Anthony and Marc Correra – to a large degree – controlled both ends of the investment process for the SIC investments in private equity firms that buy and sell privately held companies.

The Correras would tell Aldus which funds to recommend and then Anthony would tell Bland which funds to put state money in.

Bland, who earned more than $300,000 a year as state investment officer before resigning in 2009 in the face of a no confidence vote, has admitted that he and Anthony Correra talked about investments almost daily, and Correra had a desk in the State Investment Council office.

Bland’s attorney, Ira Robinson, said, “I would not believe the word of a convicted briber like Saul Meyer, and there is certainly no evidence that he bribed Gary Bland.”

Robinson said Anthony Correra had no influence over Bland and that Bland would be exonerated in all the lawsuits and investigations.

Meyer was asked about Bland during the meeting in Dallas.

Another partner jumped in with the explanation that “He listens to Marc, … or Anthony. He does what Anthony says.”

Aldus partner Richard Ellman asks who would start the discussion about a $25 million investment in a particular company.

Meyer responded, “Anthony … Sometimes the Governor, who gets cute and goes around him to a trustee … Now none of this leaves this room … The Governor has no involvement officially, or unofficially. Okay?”

Jason Bowles, Anthony Correra’s attorney, said he had no comment about the transcript.

Richardson did not respond to emails sent to his spokesmen.

A former aide said Richardson was traveling out of the country and was unavailable for comment.

Guilty plea

Almost three years to the day after the Aldus meeting, Meyer pleaded guilty to one state felony fraud charge in New York for paying kickbacks in exchange for business with the New York state pension fund.

As part of that agreement, he also agreed to assist authorities in New Mexico in their investigation. A federal grand jury and the U.S. Attorney’s Office collected evidence in the case, but the status of any federal investigation is unknown.

State Attorney General Gary King appears to have limited his involvement to civil lawsuits, including trying to take over portions of the cases Foy filed under the state’s Fraud Against Taxpayers law.

In his New York guilty plea, Meyer did not name names, but he admitted, “I ensured that Aldus recommended certain proposed investments that were pushed on me by politically-connected individuals in New Mexico.

“I did this knowing that these politically-connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico.”

His sentence has been delayed several times since his plea and is now scheduled for March.

Obstacles

The tape was made a month before Aldus was hired to advise the ERB.

And Meyer makes it clear to his partners on tape that Foy and his boss, ERB Executive Director Evalynne Hunnemuller, were obstacles who needed to be removed.

Hunnemuller was fired in December of 2006. Foy was demoted, at his request, to deputy chief investment officer before Aldus was hired. That meant he was no longer a political appointee and therefore in a protected job.

Foy alleges in his lawsuit that he advised against the ERB having the same or similar investments as the State Investment Council.

Meyer and his partners discussed that issue during the meeting.

One of the partners mentions that all but two of the Correra-suggested ERB investments mirrored State Investment Council investments recommended by Aldus.

Meyer responds, “… until Evalynne and Frank are fired, we’re going to have to do new funds, or do just a couple of them.”

Then ERB chairman Bruce Malott, reappointed to the ERB by Richardson and the former governor’s campaign treasurer, led the charge to remove Hunnemuller and was an outspoken critic of Foy.

Malott resigned after the Journal disclosed that Anthony Correra had loaned him $350,000 in the summer of 2006.

The loan has since been repaid, and Malott has sued Anthony and Marc Correra among others, claiming he was unaware Marc Correra was receiving fees from firms receiving ERB investments. He has also provided the Journal a polygraph examination and report showing he answered truthfully when he said he didn’t know about the fees paid to Correra.

Anthony Correra also loaned money to Richardson’s chief of staff and presidential campaign manager Dave Contarino and his wife to start a business in Las Cruces.

Foy’s quest

After he left the ERB, Foy filed a Fraud Against Taxpayers lawsuit in 2009 alleging widespread corruption in the way state investments were handled at the State Investment Council and the teachers pension fund.

For five years, the partners at Dallas-based Aldus Equity Advisers helped direct billions of dollars in state investments to secretive financial firms promising big returns for the state.

Aldus advised the SIC from 2004 until 2009 and the teachers pension fund from late 2006 until the spring of 2009.

In the spring of 2009, the Journal disclosed Meyer and Aldus were involved in criminal and regulatory actions taken in New York for his part in a pay-to-play scheme involving investments by the New York State pension fund.

Richardson then ordered Aldus suspended and its contracts were terminated later.

The former governor has said he was unaware of the payments like those made to Marc Correra but has not publicly criticized either of the Correras.

In New Mexico, the scandal has led to five civil lawsuits, a regulatory investigation by the Securities and Exchange Commission, and a federal criminal investigation.

Nothing public has been revealed as to the results of the SEC and U.S. Attorney’s investigation, although the state spent millions of dollars gathering and computerizing documents to respond to federal subpoenas.
— This article appeared on page A1 of the Albuquerque Journal

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