SIC sues Kansas City Chiefs owner in pay-to-play scandal - Albuquerque Journal

SIC sues Kansas City Chiefs owner in pay-to-play scandal

Copyright © 2017 Albuquerque Journal

Clark Hunt

Clark Hunt, chairman of the board and CEO of the Kansas City Chiefs football team, is accused in a State Investment Council lawsuit of agreeing to a kickback arrangement with then-Gov. Bill Richardson insiders Anthony and Marc Correra in return for their steering state investment money to a hedge fund in which Hunt was a partner.

The lawsuit, filed earlier this month in state District Court in Santa Fe, names Hunt individually, HFV Asset Management LP and a number of “John Doe” defendants. It is the latest development in the pay-to-play scandal that rocked the Richardson administration.

The Correras were political gatekeepers to the State Investment Council investments and were paid millions of dollars in “finder’s fees” by companies that landed state business.

Richardson has maintained since the scandal broke in 2009 that he was unaware of what the Correras and then-State Investment Officer Gary Bland were doing and at one point said he was “betrayed” by his friends.

The new lawsuit alleges Anthony Correra helped Richardson maintain a “lavish lifestyle” that, among other things, included paying for expensive travel, meals, hotels, events and vacations costing hundreds of thousands of dollars.

Anthony Correra

“When fund managers approached Richardson seeking alternative investments from the SIC, Richardson referred them to Anthony Correra,” the lawsuit says.

Clark Hunt, co-owner of the Kansas City Chiefs, is the son of team founder Lamar Hunt and was a partner in HFV, which managed investments in other hedge funds.

Hunt’s local attorney, Benjamin Silva Jr., did not respond to a request for comment on the lawsuit.

Meeting in ABQ

The SIC lawsuit alleges Hunt met personally with Anthony and Marc Correra late one night in Albuquerque after Hunt flew to the city.

Marc Correra

At the meeting, according to the lawsuit, the Correras explained that by virtue of the elder Correra’s personal relationship with Richardson and Investment Officer Bland, they could “enable” Hunt’s firm to receive a substantial investment.

The meeting was arranged by Hunt’s business partner Barrett Wissman on the advice of Saul Meyer, the State Investment Council’s adviser on equity investments, according to the lawsuit. Meyer later admitted in a New York case that he directed New Mexico investments to certain companies for political reasons.

At the time, more than 80 firms were seeking investments from the SIC – which manages billions of dollars in state money – and only a few hedge funds were chosen.

The State Investment Council had put out a request for proposals nationwide, and HFV Management, then known as Arbitex, had already responded when it entered the finder’s fee arrangement, according to the lawsuit.

In May 2005, the SIC awarded HFV Management $300 million for investments in two hedge funds it manages, three times as much as any other hedge fund managers received, according to court filings.

Bland made the investment without seeking the approval of the council and ignored the advice of the council’s adviser on hedge fund investments – a different position from Meyer’s – which didn’t recommend HFV as a firm that should get state investments.

Of the two hedge funds HFV managed, one lost $13 million, while Hunt and his partners were paid millions of dollars in management fees, the state claims in the lawsuit.

The lawsuit alleges Hunt agreed to pay Marc Correra 25 percent of the fees HFV received from the State Investment Council.

Those payments and the agreement with the Correras were disguised by using an agreement that named Cabrerra Capital Markets LLC, a Chicago-based broker-dealer, as the recipient of the fees under the fee-sharing deal.

Cabrerra had an agreement to pass on 90 percent of the fees it received from HFV to Marc Correra.

The SIC is seeking compensatory and punitive damages, but the lawsuit doesn’t set a specific amount of damages.

New York case

Several players in a New York scheme, in which firms seeking investments from the New York State Pension fund paid “gatekeepers” there for investment business, were also active in New Mexico.

Saul Meyer

Wissman pleaded guilty to a felony charge in the New York scandal for making payments to the main gatekeeper there for state investments in HFV.

Meyer also pleaded guilty to charges in the New York case and admitted wrongdoing in connection with New Mexico investments.

No criminal charges were ever brought in the New Mexico scandal.

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