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Thursday, November 25, 2010
Governor Fought Federal Subpoena
By Mike Gallagher
Journal Investigative Reporter
Gov. Bill Richardson and the State Investment Council have fought to withhold thousands of documents from a federal grand jury investigating how the state invested more than $1 billion.
The SIC has paid an out-of-state law firm almost $5 million to review documents and respond to subpoenas from a federal grand jury and the Securities and Exchange Commission.
The firm reportedly turned over more than 1.4 million pages of documents to investigators and regulators.
But the fight over other documents was revealed at a Legislative Finance Committee meeting in Santa Fe last week where State Investment Officer Steve Moise confirmed that the U.S. Attorney's Office has asked a federal court to order Richardson and the SIC to turn over additional documents.
In response to a question from LFC Chairman Rep. Luciano "Lucky" Varela, D-Santa Fe, Moise said the issue is whether the documents are protected from disclosure by executive privilege and/or attorney-client privilege.
State officials familiar with the response to the subpoena said Richardson's executive privilege assertion involves several thousand pages of documents.
No one in Richardson's office could be reached for comment. However, The Associated Press reported that the Governor's Office would not comment. The AP broke the story on the Moise disclosure to lawmakers on Wednesday.
A spokesman for the U.S. Attorney's Office said it wouldn't confirm or deny any grand jury investigation.
Challenges to federal grand jury proceedings are conducted under seal and in closed proceedings. They can be made public after the grand jury ends its investigation either by issuing indictments or not charging anyone.
This is at least the second time Richardson has fought a federal grand jury over subpoenaed documents and witnesses appearing before it.
Earlier this year, two heavily redacted U.S. 10th Circuit Court of Appeals decisions were released. They had to do with a separate grand jury investigation that didn't return any indictments in an investigation of Richardson and his application to be U.S. secretary of commerce.
In the latest fight, state records obtained by the Journal show the State Investment Council earlier this year claimed various legal privileges — attorney-client and attorney work product — when it refused to turn over 4,700 documents in response to federal grand jury subpoenas.
The federal grand jury in New Mexico began issuing subpoenas for state investment records and communications about those investments in the spring of 2009, after a New York investigation of pension investments led to criminal and civil charges there.
The Journal previously reported that a number of major figures involved in New York did investment business with New Mexico.
They included an advisory firm tied to the New York scandal, Aldus Equity of Dallas, which was being paid $1.7 million to advise the New Mexico State Investment Council and the Educational Retirement Board.
Saul Meyer, the founding partner of Aldus Equity, pleaded guilty last year to a felony charge of paying a politically connected middle-man in exchange for New York state pension fund investment business.
Meyer, who agreed in his plea deal to cooperate with investigators in New Mexico, admitted making investment recommendations here that were pushed on him by "politically connected" individuals who would benefit.
Records obtained by the Journal show the SIC documents the state was fighting not to turn over to the grand jury as late as July included e-mails from Meyer to employees of the State Investment Council concerning various investments the council had under review between 2004 and 2009.
Meyer also was copied on numerous e-mails by staff members reviewing the investments. Other e-mails often included other Aldus representatives on the receiving end.
Other e-mails listed in the privilege log obtained by the Journal include responses to requests for inspection of public records and press releases from Richardson's office after the connection between the New York scandal and New Mexico was reported.
State officials on Wednesday declined to say whether the documents had since been turned over to federal investigators.
The SIC fired Aldus in April 2009, after the staff determined that third-party placement agents were receiving huge fees for helping financial firms get state investments.
These agents included former Santa Fe broker Marc Correra, who shared in more than $22 million in fees paid by firms getting investments from the SIC and teacher pension fund.
Correra's father, Anthony Correra, was a close friend to Richardson and major political fundraiser for his state and presidential campaigns.