Judge: State-Paid Lawyer for Bland ‘Absurd’

This is one of those good news, bad news columns. First, a walk on the sunny side of the street.

A judge in Santa Fe decided this week that taxpayers don’t have to pay to defend former State Investment Officer Gary Bland in a lawsuit brought against him by the State Investment Council, for which Bland used to work.

The lawsuit against Bland and 17 others alleges the SIC and taxpayers were the victims of a pay-to-play scheme in the making of SIC investments during the administration of former Gov. Bill Richardson.

Bland wanted a state-provided attorney, citing a law that requires a taxpayer-funded defense in a case where a public employee was acting within the scope of his duty. But the administration of Gov. Susana Martinez said last year that it wouldn’t pay for attorneys for Bland and another Richardson appointee, Guy Riordan, in the SIC lawsuit. The Martinez administration argued it wasn’t the intent of state law to provide a taxpayer-funded defense in a case in which someone was being sued by the state.

Bland is accused of breach of fiduciary duty and unjust enrichment, and the SIC is seeking to recover damages. He noted, correctly, that the state law on legal representation for public employees doesn’t include an exception for lawsuits brought by the state.

But state District Judge Sarah Singleton sided with the Martinez administration at a hearing Monday. She said:

“It would be absurd to provide that the state has to not only defend the former employee when the state’s seeking to recover money from that employee, but also would have to pay the judgment that the state obtained and then would have to then turn around and sue that same former employee (for the amount of the judgment) and have to provide a defense. … We would be going on ad infinitum. And that, to me, is an absurd result.”

Bland has been serving as his own attorney in the SIC lawsuit. He has also countersued the SIC and others, alleging false allegations against him have ruined him professionally and financially. He denies wrongdoing and portrays himself as a scapegoat in the state investment scandal under Richardson.

The scandal centers on millions of dollars in once-secret fees paid to political insiders, including Riordan, and others by investment firms that landed business with the SIC and the Educational Retirement Board.

The SIC manages the state’s two largest trust funds, and the ERB is the pension fund for teachers and other education workers. The agencies have billions of dollars in investments.

After nearly seven years in the job, Bland resigned as state investment officer in October 2009 in the face of a no-confidence vote by the SIC. An internal agency investigation reportedly found that he knew more about the payment of fees by investment firms than he previously disclosed.

The U.S. Justice Department and the federal Securities and Exchange Commission have subpoenaed records related to SIC investments, but no one has been charged with a crime. Richardson has repeatedly denied wrongdoing.

Unlike Bland, Riordan hasn’t challenged the state’s refusal to pay for an attorney for him in the SIC lawsuit, but Singleton’s ruling effectively applies to him, also.

Riordan was a major campaign contributor to Richardson and was appointed by the governor to serve as chairman of the state Game Commission. He was later 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. Riordan has denied Montoya’s allegations.

Bills paid

Taxpayers are still paying some legal bills for Bland and Riordan.

The Risk Management Division has paid to defend Bland in two so-called whistle-blower lawsuits brought by a former investment officer at the Educational Retirement Board and a related open-records lawsuit.

Riordan is a defendant in one of the whistle-blower lawsuits and is being provided a taxpayer-funded defense.

So far, the legal bills total more than $351,000 for Bland and nearly $68,000 for Riordan.

I told you there would be bad news in this column.

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