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Wednesday, June 03, 2009
Investment Chief Faces $577,000 Tax Lien
By Thomas J. Cole
Journal Staff Writer
The man in charge of investing $11 billion of your money has problems with the tax man.
Records show that the Internal Revenue Service has filed a $577,305 tax lien against State Investment Officer Gary Bland and his wife for unpaid income taxes which Bland disputes.
From Boeing to Santa Fe
Gary Bland worked 28 years for Boeing Co. before leaving the company in 2001.
In his last position with Boeing, Bland oversaw investment policy for the company's trusts for its employee benefits plans, worth more than $62 billion.
He served as a first lieutenant with the Army in the Vietnam War, earning a Bronze Star.
Bland, who will turn 66 next week, is a dapper man with white hair and a well-creased face that reflect his mileage. His manner is often blunt, at times erudite. He's a history buff.
A horsemen, Bland wears cowboy boots with his suits. He and his wife and daughter are volunteers with Challenge New Mexico, which provides therapeutic and recreational horseback riding for disabled children.
He has at times tangled with state lawmakers.
Several years ago, Bland quietly fought off an attempt by an influential lawmaker to steer an investment to a friend.
He also came under fire from some lawmakers for his criticism of the state Region III Housing Authority and its politically connected former executive director after the authority defaulted in 2006 on $5 million in bonds sold to Bland's office.
- Thomas J. Cole
Also, a California court has entered a judgment of $42,594 against Bland in a lawsuit brought by the Bank of Stockton for unpaid debt.
A lawyer for the bank said Bland's state wages have been garnisheed to satisfy the judgment, but Bland said that was untrue and that he has made a series of payments.
As state investment officer, Bland is responsible for investments of the state's two largest permanent, or trust, funds. Those funds totaled $11 billion at the end of April.
Gov. Bill Richardson appointed Bland shortly after Richardson took office in January 2003 and reappointed him after the governor's re-election in 2006. The IRS lien and court judgment were filed in 2005.
Before coming to New Mexico, Bland worked for Boeing Co. in Seattle as vice president for trust investments. He earns $301,000 a year as state investment officer, making him Richardson's top-paid appointee.
Asked about the IRS lien and court judgment for the unpaid bank debt, Bland said in a written statement:
"The IRS lien you are inquiring about is an ongoing dispute between myself and the IRS regarding the taxability of the retirement package I was awarded for my decades of service at the Boeing Corporation."
He also said, "The commercial loan issue with the Bank of Stockton involved a failed investment in a personal business venture."
Bland said the IRS dispute was disclosed to state lawmakers before the Senate's unanimous vote in 2008 to confirm him to a second four-year term as state investment officer.
"My tax attorneys are working to resolve this situation as soon as practicable," he said.
The IRS lien is almost entirely for income taxes assessed in 2003.
Charles Wollmann, a spokesman for Bland's office, said the lien relates to whether stock options are taxable and interpretation of tax code.
"Complicated disputes like this one do take time to resolve," Wollmann said.
The IRS lien against Bland and his wife, Susan, was filed with the Santa Fe County Clerk's Office.
After being entered in California, the judgment in the Bank of Stockton case was filed with state District Court in Santa Fe in 2005 and the next year with the County Clerk's Office.
Arthur Small II, an attorney who represented Bank of Stockton in the suit against Bland, said the case was filed because of a breach of a promissory note.
Small said Bland never disputed he owed the bank money and has been a "straight shooter" and "pleasant to talk to."
"If he had the money, I think he would have paid from Day One," the lawyer said.
Small said Bland is within a few hundred dollars of satisfying the judgment, which includes money due on the note, interest and the bank's attorney's fees.
In addition to serving as state investment officer, Bland is a Richardson appointee to the Educational Retirement Board, which manages the pension fund for teachers and other school employees.
He has spearheaded Richardson's efforts to invest more in New Mexico companies and to help back motion pictures filmed here. Also, he has moved to more aggressively invest the permanent funds in such vehicles as private company equity, real estate and hedge funds.
"Despite one of the worst financial meltdowns in history, the trust has seen positive investment returns of nearly $3 billion since Gary's arrival in 2003, while distributing more than $4 billion to New Mexico schools and other beneficiaries," Richardson spokesman Gilbert Gallegos said.
The permanent funds had a value of $9.4 billion when Bland was appointed, and their peak value under his tenure was $15.6 billion in the fall of 2007, according to Bland's office.
Bland has seen plenty of controversy in recent months.
He is a defendant in a lawsuit alleging that $90 million in now-worthless state investments were made with a Chicago firm for political reasons involving Richardson. Bland has denied the allegation.
Bland also has close relationships with Anthony Correra, a major Richardson campaign contributor, and Correra's son, Marc, a securities broker/dealer in Santa Fe.
Recently disclosed documents show that Marc Correra has shared in more than $16 million in fees for helping money managers win investment business with Bland's office and the Educational Retirement Board.
Bland has said that he was unaware of the extent of the work by Marc Correra on state investments and that Correra didn't benefit from any favorable treatment from his office.
After Richardson's election in 2002, Anthony Correra served on the governor's search committee for a new state investment officer.
Some individuals and companies from other states that have done business with Bland's office and with the Educational Retirement Board have been implicated in a kickback scheme involving government pension funds in New York.
No charges have been brought in connection with investments here, but federal authorities have interviewed employees and subpoenaed records from Bland's office and the Educational Retirement Board.
Bland has accused the Journal and others of "spreading slime." He has described the attacks on some in public life in New Mexico as McCarthyism.
Sen. John Arthur Smith, a Deming Democrat and vice chairman of the Legislative Finance Committee, has said it is time that Richardson "cleaned house," but there have been no public calls for Bland to resign.
Gallegos, the Richardson spokesman, didn't respond when asked about the governor's confidence in Bland going forward and any plans for replacing him.
Richardson is chairman of the State Investment Council, which directs the work of Bland's office, and Gallegos said the governor and council "have taken decisive steps to require complete transparency in their investment process, while cooperating fully with the investigation of a former investment adviser." That adviser is Aldus Equity Partners, whose founding partner has been indicted in New York.
UpFront is a daily front-page opinion column. Thom Cole can be reached in Santa Fe at (505) 992-6280 or at email@example.com