Editorial: Keep pushing civil suits to recoup SIC, ERB $$

It isn’t hundreds of millions of dollars, but $24 million is a significant chunk of change.

The Chicago investment firm of Vanderbilt Capital Advisors has agreed to pay $20 million to the State Investment Council and $4.25 million to the Educational Retirement Board to settle a lawsuit to recoup losses from the pay-to-play scandal of the Richardson administration. The SIC estimates it lost $100 million on investments in Vanderbilt, and the ERB — the state’s teacher pension fund — lost $40 million.

The settlements came in a lawsuit by former ERB Chief Investment Officer Frank Foy, who sued Vanderbilt and others via the state’s Fraud Against Taxpayer’s Act, which allows citizens with the approval of the Attorney General’s Office to file the lawsuits on behalf of taxpayers. Other lawsuits brought by the SIC and ERB are pending.

The SIC didn’t sue Vanderbilt or other financial firms. This settlement was reached before lawyers needed to walk through the courthouse door. However in 2011 it did sue more than a dozen individuals alleging the state lost hundreds of millions of dollars through politically motivated investments.

The SIC lawsuit claims firms like Vanderbilt paid Marc Correra, the son of former Richardson confidant Anthony Correra, and other so-called placement agents finders fees to help them get a piece of the state’s investment action. The Correras and former State Investment Officer Gary Bland are among the defendants. All have denied wrongdoing. Richardson has said he was unaware marketing fees were paid to the younger Correra.

While the U.S. Attorney’s Office in New Mexico and the state Attorney General’s Office never filed criminal charges, aggressive prosecution by the U.S. Securities and Exchange Commission and New York Attorney General Andrew Cuomo in a similar corruption scandal in New York involving some of the same players has caught some big fish. Barring a turnaround here, however, it appears there may be no criminal consequences to those who snookered New Mexico officials into politically driven investments that yielded staggering losses.

That would leave civil court as the primary hope for recovering more of taxpayers’ money. The SIC says it will pursue claims against “fund managers like Vanderbilt that the NMSIC believes received investments in exchange for political favors …”

It should aggressively do that.

Just making Marc Correra and Gary Bland testify under oath would be some small satisfaction. Putting more money back into the ERB and SIC kitties would be even better.

This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.