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SIC approves $5.65 million ‘pay-to-play’ settlement

SANTA FE – The New Mexico State Investment Council voted Tuesday to approve its second-largest settlement under long-running “pay-to-play” litigation, increasing the total amount recouped by the state to more than $49 million.

The SIC will get $5.65 million under the settlement – one of two approved Tuesday by the Investment Council – and in exchange has agreed to drop any current and future legal claims against Shoreline Inc., an umbrella group representing a now-defunct hedge fund management firm.

The settlement also puts to rest the state’s legal claims against Clark Hunt, the chairman of the board and CEO of the Kansas City Chiefs football team, who was a partner in the firm that managed investments in other hedge funds.

Like several other settlements, the agreement with Shoreline hinges on payments made more than a decade ago to Marc Correra, a politically connected placement agent who made millions during former Gov. Bill Richardson’s administration.

The other settlement approved Tuesday was with Hunt’s business partner, Barrett Wissman, who agreed to pay $15,000 to the SIC and cooperate with the Investment Council’s legal efforts. Both settlements were approved in open session – under a revised 2015 transparency policy – with little discussion.

The settlement with Shoreline was approved by a 9-0 vote, while the settlement with Wissman was ratified 8-1, with State Treasurer Tim Eichenberg casting the dissenting vote.

HFV Asset Management LP, the now-defunct firm whose interests are represented by Shoreline, got a $300 million investment from the SIC in 2005 after agreeing to pay a “finder’s fee” to Correra. The SIC argued in court documents that the investment unperformed industry benchmarks, but the defendants have contended they actually made money for the state.

The settlement was reached after several rounds of court mediation and bars the parties from making any disparaging remarks about each other.

“This is not some quick thing we were trying to resolve,” Evan Land, the State Investment Office’s general counsel, told council members Tuesday.

The SIC filed a lawsuit against more than a dozen individuals in 2011, claiming the state lost hundreds of millions of dollars through pay-to-play and politically motivated investments made during Richardson’s administration.

Richardson has maintained since the scandal broke in 2009 that he was unaware of the pay-to-play activities and at one point said he was “betrayed” by his friends.

In all, the SIC has now entered nearly two dozen settlements with financial firms and investment consultants as part of its litigation. The largest of those, a $24 million settlement between the SIC and Chicago-based Vanderbilt Capital, was approved last year by a state district judge after being challenged.

The SIC’s lawsuit against the remaining defendants is scheduled to go to trial next year in state District Court in Santa Fe.

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