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Monday, July 26, 2010
Dem Fundraiser Helped Get State Investments
By Mike Gallagher
Copyright © 2010 Albuquerque Journal
Journal Investigative Reporter
State officials apparently were misled about the extent of Democratic Party fundraiser Hassan Nemazee's involvement in getting an agreement for his financial management firm to handle more than $200 million in New Mexico investments.
Nemazee, recently sentenced to 12 years in federal prison for bank fraud in New York, told prosecutors and FBI agents from New Mexico that he initiated contacts with state officials here to secure an agreement for Carret Asset Management to manage a State Investment Council stock portfolio.
The April briefing is described in a sentencing memo filed in federal court in New York in connection with the bank fraud case.
The document describes the New Mexico investigation as ongoing and said it "concerns whether fraud or other criminal activity influenced or corrupted investments made by the State of New Mexico during the years 2004 through 2009."
After Nemazee's arrest last August, State Investment Council staffers visited Carret Asset Management in New York and were told Nemazee was a silent partner with no involvement in day-to-day operations.
But according to the sentencing memorandum, "It was clear that the defendant (Nemazee) was the person who had the most contact at the initiation of the relationship between the asset manager (Carret) and the New Mexico entities and could provide insight into how the business relationship was formed and furthered."
State Investment Council spokesman Charles Wollmann said that's not the same story told to SIC staffers.
"The information in the sentencing memo would certainly indicate that Carret was less than truthful with SIC staff during follow-up we performed after the initial (bank fraud) allegations were made against Mr. Nemazee," Wollman said.
Then-State Investment Officer Gary Bland hired Carret in 2007 — two months after Nemazee and Gov. Bill Richardson appeared together at an event in New York.
Carret's fees were based on a percentage of the amount the firm managed, and the company earned $1.8 million between July 2007 and December 2009.
In May, the newly constituted SIC voted to terminate four investment managers, including Carret.
"The primary reason discussed by the council was investment performance, though other issues were also cited," Wollmann said.
Major fundraiser
Nemazee has been a fundraiser for the National Democratic Party for years and recommended former Democratic National Committee Chairman Terry McAuliffe for a job as an adviser at Carret.
McAuliffe headed Hillary Clinton's 2008 presidential campaign, and Nemazee was a national finance chairman in her bid for the Democratic nomination.
That was the subject of some joking between Richardson and Nemazee when Nemazee introduced the governor as a speaker at the Asia Society in New York in April 2007.
Nemazee described Richardson as "great friend" and a man "who has worn more different hats on behalf of public service in this country than almost any other person I know."
Richardson countered during his remarks that Nemazee was a "leading fundraiser in the country for a lot of Democrats, but one in particular, which is not me, and that's all right." Nemazee was Hillary Clinton's chief fundraiser at the time.
But Nemazee also contributed $5,000 to Richardson's 2006 gubernatorial campaign, and he and his wife were contributors to Richardson's 2008 presidential campaign.
Nemazee's partner in Carret also contributed to Richardson's gubernatorial and presidential campaigns.
N.M. probe
Nemazee was indicted last September for defrauding three banks of more than $290 million in loans over an 11-year period through various schemes, including the use of phony collateral.
The memorandum is light on details about what Nemazee told New Mexico investigators but concludes that he was "thorough, truthful and cooperative" and that details he provided were consistent with "known information."
Nemazee provided details of the procedure by which the asset manager acquired the contract to manage New Mexico funds, according to the memo, along with the "names of people with whom he talked as well as the nature of those conversations."
The focus of the federal investigation in New Mexico has been on private equity firms that paid fees to third-party marketers such as former Santa Fe broker Marc Correra, who shared in $22 million in fees.
Marc Correra is the son of Anthony Correra, a former political supporter and friend of Richardson's.
The Nemazee sentencing memo said the New Mexico investigation, in part, "seeks to determine whether payments made to individuals who served as advisers or third-party placement agents occurred, not as a result of the normal course of business, but rather as the result of criminal activity."
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