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An amended lawsuit filed Thursday makes specific allegations that former Gov. Bill Richardson’s office was involved in directing state investments to and through politically connected brokers.
Richardson is not named as a defendant, but the complaint makes allegations linking him and his office to politically connected third-party marketers who collected significant fees off of state business and made contributions to Richardson campaigns and political committees.
The new lawsuit was filed by the State Investment Council in Santa Fe District Court on Thursday afternoon, at the same time the SIC moved to dismiss an earlier lawsuit in federal court.
The SIC is seeking unspecified monetary damages from former state officials, financial advisers and placement agents for breaching their fiduciary duties to the $15 billion state permanent funds.
The complaint recounts the widely reported roles of former State Investment Officer Gary Bland; investment adviser Saul Meyer, head of Aldus Equity of Dallas; and Richardson political supporter and confidante Anthony Correra and his son Marc Correra.
But it also outlines a web of politically connected placement agents from around the country in the allegations of pay to play for more than $1 billion in State Investment Council investments.
Third party marketers were essentially paid something akin to finder’s fees by companies that won state investment business. Marc Correra shared in more than $22 million in such fees.
“This is not the last amended complaint we will file,” said SIC spokesman Charles Wollmann. “This is a first salvo.”
The lawsuit alleges that former Democratic National Committee CEO and finance chairman Marvin Rosen approached “senior members of Governor Richardson’s staff” while representing several firms seeking State Investment Council investments.
That approach led Anthony Correra to instruct Bland and Meyer to make investments for which Rosen stood to receive payments, the lawsuit alleges.
Rosen allegedly shared fees in one SIC investment with Marc Correra.
In another deal, according to the lawsuit, the SIC initially declined to invest in Optima Fund Limited, but Bland subsequently approved the deal after Optima hired Rosen’s firm.
The lawsuit alleges that Rosen actively attempted to conceal the placement agent fees he received.
Richardson spokesman Gilbert Gallegos said in a statement, “After a thorough investigation of state investments, a federal grand jury has not found any wrong-doing by the Governor’s Office.
“When Gov. Richardson learned of the practice of investment institutions paying large fees to third-party marketers, he convinced the SIC to end the practice. These latest accusations are unfounded, and inaccurate and are politically motivated.”
Other allegations made in the lawsuit:
♦ An unlicensed placement agent and California political consultant, Julio Ramirez, had a relationship with Richardson and arranged a meeting with the governor and his staff to discuss a Richardson political action committee, Moving America Forward. Ramirez, who made contributions to the committee and Richardson’s campaign, is alleged to have facilitated the appointment of Aldus Equity as an adviser to the SIC and received more than $2 million in fees from firms Aldus recommended.
♦ Texas investment manager Alfred Jackson served as an officer of Richardson’s political committee Si Se Puede and helped facilitate the State Investment Council’s hiring of Aldus Equity. He received more than $3.4 million in placement fees from firms securing SIC investments on Aldus’ advice.
♦ A California firm paid a $100,000 fee to former Michigan Congressman Milton Robert Carr, who had forwarded information about Elliot Broidy and his company, Markstone, to a member of Richardson’s staff.
The lawsuit describes Carr as a “close friend and supporter” of Richardson and alleges “political pressure was brought to bear on (Gary) Bland to invest in Markstone.
♦ The SIC hired another financial adviser, Fort Washington Capital Partners LLC, in 2004 only after the firm agreed to pay a percentage of its fees from the SIC to another Richardson insider, Guy Riordan, former chairman of the state Game Commission. Riordan, according to the lawsuit, did no work for his share of the fees.
Riordan said that “everything was above board and disclosed.” He added that the allegations are “absolutely false.”
The broad outlines of the lawsuit are similar to allegations made in two lawsuits filed by former Chief Investment Officer for the Educational Retirement Board, Frank Foy, more than two years ago.
Foy’s attorney has criticized the SIC for pursuing its own lawsuits instead of supporting Foy’s. There are various legal motions in those lawsuits to dismiss Foy’s claims.
Attorney General Gary King’s office and the Connecticut law firm of Day Pitney LLP are representing the SIC in the case.