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Thursday, June 25, 2009

Investment Firm Faulted for Losses

By Susan Montoya Bryan
Journal Staff Writer
       An attorney for a New Mexico teachers union said Wednesday that two state investment agencies would not have lost tens of millions of dollars in the Bernard Madoff scandal had a Texas-based investment firm done its job.
    The National Education Association - New Mexico has sued Austin Capital Management on behalf of the state Educational Retirement Board and the State Investment Council, claiming the firm violated its fiduciary duty and was negligent.
    The retirement board and investment council lost as much as $25 million in public money due to Austin Capital's actions, according to the National Education Association's legal team.
    "We feel very strongly that Austin Capital Management didn't do their homework on Bernie Madoff and that's why the losses occurred," said John Wertheim, an Albuquerque attorney who represents NEA. "The facts are pretty simple. There were a number of red flags."
    A spokeswoman for Austin Capital said Wednesday that the firm was aware of the lawsuit and was preparing a written statement.
    The investment firm, which is part of financial services company KeyCorp's asset management division, has been named in similar lawsuits filed across the country, all alleging the company failed to invest prudently.
    Wertheim said the New Mexico lawsuit makes a direct connection between Austin Capital and Madoff, who faces up to 150 years in prison for swindling tens of billions of investors dollars in one of history's biggest frauds.
    The lawsuit, brought under the New Mexico Fraud Against Taxpayers Act, seeks up to three times the damages the State Investment Council and Educational Retirement Board lost through the Madoff scam. The state has since ended its relationship with Austin Capital.
    The NEA lawsuit is the second to be filed in New Mexico that names Austin Capital as a defendant with regard to Madoff investment losses.

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