The New Mexico Foundation for Open Government and the New Mexico Press Association appeared as friends of the court in a long-standing dispute between former Educational Retirement Board Chief Investment Officer Frank Foy and the State Investment Council. Foy filed two Fraud Against Taxpayers lawsuits in 2008 and 2009 alleging widespread corruption and fraud in the way the teachers retirement fund and the State Investment Council invested state funds.
Foy and his attorney, Victor Marshall, have continually clashed with the SIC since those civil lawsuits were filed.
In the separate civil lawsuits, the SIC claimed the state lost millions of dollars in the investment of the state’s $20 billion permanent funds through corruption and/or breaches in the fiduciary duty of those involved.
The SIC subcommittee began settling cases more than three years ago in lawsuits seeking to recover losses incurred after politically connected placement agents helped direct hundreds of millions of dollars in state investments to financial firms that paid them undisclosed finder fees for their services.
Around $30 million in settlements have been reached, and the money sits in an escrow account as the appeals work through the courts.
At the heart of all the lawsuits was the involvement of Marc Correra, who shared in more than $22 million in finders fees from financial firms, and his father, Anthony Correra, who was a fundraiser and unofficial adviser to then-Gov. Bill Richardson.
Both Correras are named defendants in the lawsuits filed by Foy and the SIC.
Santa Fe District Judge Sarah Singelton approved the settlements despite protests from Marshall.
The court also heard arguments from Marshall that the settlements should be thrown out on other legal grounds and whether Marshall’s client had standing to intervene in the SIC lawsuits.
Daniel Yohalem, attorney for NMFOG and the Press Association, told the three-judge appellate panel that the State Investment Council violated a fundamental principle of open government by creating a subcommittee with less than a quorum of members to make decisions in settling cases to get around the requirements of the state’s Open Meetings Act.
The subcommittee violated that act by failing to advertise its meetings, not making a public agenda and voting to approve settlements in secret, Yohalem said.
Three years after the first settlement was approved in secret, the full State Investment Council voted in public to approve the settlements, but that only came after NMFOG and the Press Association objected to the settlements.
The judges expressed skepticism that a public vote three years after the violation of the Open Meetings Act would cure any violation of the state law as argued by the SIC.
The attorney for the SIC, Kenneth Ritt, told the judges that only the attorney general had the authority to settle the cases, not the State Investment Council, and that there was never any intent to keep the settlements secret because they had to be filed in open court.
Appeals Court Judge Michael Bustamante said Ritt’s argument was an after-the-fact “rationalization for what happened.”
A short time later Bustamante added, “That argument is really bad for transparency in government.”