Investment Scandal Far From Over

It’s now been three years since the state investment scandal began to unfold in the administration of Gov. Bill Richardson. It likely will be many more years before it’s behind us.

The scandal centers on millions of dollars in once-secret fees paid to political insiders by investment firms in exchange for help in getting business with the State Investment Council and the Educational Retirement Board.

The goal here is to tell you where we are and what we’ve learned over the past three years.

Today, it seems everybody is suing everybody. There are dozens of parties to lawsuits.

A former pension fund officer turned whistle-blower, the State Investment Council and the Educational Retirement Board are suing to recover alleged damages to taxpayers.

So far, the State Investment Council has collected nearly $400,000 in settlements related to the fee payments.

Richardson appointees Gary Bland, the former state investment officer, and Bruce Malott, the former chairman of the Educational Retirement Board, are both defendants and plaintiffs. Their lawsuits allege they were wrongly caught up in the scandal.

The State Investment Council has now spent about $5.3 million on legal fees and other costs associated with its internal investigation and its response to federal subpoenas for documents and a records request from the office of Attorney General Gary King.

With one exception, all the major players, including Richardson, have denied wrongdoing.

That exception is Saul Meyer, a former adviser to the State Investment Council and the Educational Retirement Board, who has said he recommended investments pushed by politically connected people, knowing that they or their associates would benefit financially or politically.

The FBI began investigating almost immediately after the fees paid to political insiders became public in documents released by the State Investment Council and the Educational Retirement Board.

The Justice Department hasn’t brought any criminal charges but also won’t talk about the status of the case.

The Securities and Exchange Commission recently notified Bland, Malott and Anthony Correra, a Richardson campaign donor and former adviser to the governor, that its staff didn’t intend to ask the commission to take regulatory action against those three.

Sordid tale

The scandal began in April 2009 when we learned that Marc Correra, the son of Anthony Correra, and other political insiders shared in millions of dollars in fees paid by investment firms.

Here’s what more we’ve learned since then:

♦ Marc Correra shared in a total of about $22 million in fees paid by companies that did business with the State Investment Council and the Educational Retirement Board.

Correra and his wife put their home in the Santa Fe foothills on the market for just a shade under $1.9 million and moved to Paris with $8 million in the summer of 2009.

A series of investments with a firm that paid Correra more than $5.5 million resulted in losses to the state of close to $300 million.

♦ Bland, who as state investment officer oversaw management of billions of dollars, frequently consulted with Anthony Correra on investment matters.

Anthony Correra advised Richardson on hiring Bland and was given temporary workspace at the State Investment Office after Bland took over the agency.

Bland gave Anthony Correra one of two seats on the board of an Albuquerque company. The State Investment Council was assigned the seats because of its investment in the company.

♦ Anthony Correra and Richardson co-hosted a fundraiser in Albuquerque in 2008 for Barack Obama with a goal of raising $1.5 million.

Correra also served as a director on a Richardson political foundation.

Before coming to New Mexico, he agreed in 1990 to a settlement with the SEC to give up nearly $500,000 in profits from an alleged insider trading scheme and to surrender his broker/dealer license for at least four years. The scheme reportedly occurred while Correra was working in New York.

♦ Malott resigned as chairman of the Educational Retirement Board after being confronted by Journal investigative reporter Mike Gallagher about a $350,000 loan from Anthony Correra.

♦ Dave Contarino, former chief of staff and ex-campaign manager for Richardson, and his wife were in private business with Marc Correra and his wife.

♦ Others who had made campaign contributions to Richardson, a Democrat, or had close ties to the Democratic Party also shared in millions in fees paid by investment firms that got business with the state.

One of those was Richardson appointee Guy Riordan, who later was banned for life from the securities industry and ordered to pay nearly $2 million in penalties and interest.

The Securities and Exchange Commission took the action after former state Treasurer Michael Montoya said Riordan had bribed him for investment business. Montoya pleaded guilty to a corruption charge in 2005.

♦ Meyer, the former adviser to the State Investment Council and the Educational Retirement Board, pleaded guilty in New York in a kickback scheme involving a government pension fund in that state.

As part of the guilty plea, Meyer said in court that he had made false representations and concealed information while advising the New Mexico agencies.

Meyer also has said he took a $10,000 cash bribe from Anthony Correra. He said in a secretly recorded meeting that Marc and Anthony Correra “run the governor.”

♦ Richardson, who as governor chaired the State Investment Council, rarely attended council meetings and said he left decisions to the council, which he controlled through appointments.

The fees paid to Marc Correra and others on state investment deals would have been disclosed years earlier if the State Investment Council had adopted a proposed transparency policy.

The council allegedly didn’t adopt the policy at the request of Richardson’s office and because of “concerns of making sensitive items public.”

♦ At least five people who have been convicted in the kickback scheme in the New York pension fund case also were involved in state investments in New Mexico.

♦ At least seven firms that were involved in New York investments and agreed to return money as a result of the kickback scheme there also handled New Mexico investments.

UpFront is a daily front-page news and opinion column. Comment directly to Thom Cole at tcole@abqjournal.com or 505-992-6280 in Santa Fe. Go to www.abqjournal.com/letters/new to submit a letter to the editor.
— This article appeared on page A1 of the Albuquerque Journal