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          Front Page  news  state

More N.M. Links To New York Scandal

By Mike Gallagher
Copyright © 2010 Albuquerque Journal
Journal Investigative Reporter

          The former head of the New York state pension fund pleaded guilty Thursday to a corruption charge in an investment scandal that reaches from Albany to Santa Fe.
        Alan G. Hevesi, who served as New York State comptroller from January 2003 through December 2006, admitted directing $250 million in state investments to Markstone Capital Partners, a private equity fund managed by Elliot Broidy, and receiving nearly $1 million in gifts, campaign contributions and phony consulting contract for a close associate.
        Both Broidy and Hevesi's son, Dan Hevesi, did business with the New Mexico State Investment Council.
        In 2004, the SIC in New Mexico committed to invest $20 million in Broidy's Markstone equity fund. In 2006, Dan Hevesi was paid a $250,000 placement fee for an SIC investment in another equity fund.
        Broidy was charged and pleaded guilty in the New York investigation last year to a felony charge of rewarding official misconduct.
        On Thursday, the elder Hevesi also admitted to trying to help Broidy by encouraging other pension funds to invest in Markstone.
        The three-year-old New York investigation has targeted Hevesi's paid political adviser and strategist, Henry "Hank" Morris, who faces an indictment charging more than 90 counts of corrupting the state pension fund investments. Morris has pleaded not guilty.
        On Thursday, Hevesi admitted he was aware that Morris arranged for Broidy to enter a $380,000 sham consulting agreement with a lobbyist friend of Morris's who was also a political supporter of Hevesi's.
        While the New York investigation focuses on the state pension fund, a federal investigation in New Mexico has focused on the state Investment Council and Educational Retirement Board.
        There is overlap between scandals in the two states, and New York Attorney General Andrew Cuomo has referred to the use of placement agents as having a major role in a national "matrix of corruption."
        In legal documents, Cuomo's office has claimed that state pension and investment funds are easy targets to manipulate for politically connected placement agents, who were paid something akin to finder's fees for helping companies land state investment business.
        One of the junctions of that matrix is the now-defunct Aldus Equity Partners of Dallas, which advised the New York pension fund and both the Educational Retirement Board and the State Investment Council in New Mexico.
        In New York, Aldus Equity was paying Morris 35 percent of its fees for managing a fund on behalf of the New York pension fund.
        Morris was listed as a placement agent on at least two state Investment Council investments recommended by Aldus in New Mexico.
        Aldus Equity was fired from its New Mexico advisory positions — for which it was paid $1.5 million a year — more than 18 months ago when the scandal's New Mexico connections became public.
        The company's founding partner, Saul Meyer, has pleaded guilty to a felony charge in the New York scandal and said during his plea that his company made recommendations on New Mexico investments "that were pushed on me by politically connected individuals in New Mexico."
        He also said he knew these "politically connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico."
        Bloomberg financial news reported that a record obtained from Cuomo's office showed that Dan Hevesi thanked Meyer "for NM."
        According to his plea, Meyer is cooperating with the investigations in New York and New Mexico.
        A few weeks after Meyer's guilty plea, New Mexico State Investment Officer Gary Bland resigned when an investment council subcommittee sought a vote of no confidence against him — although he left with the public support of the governor, who thanked him for his service.
        The federal investigation in New Mexico has focused on the role of former Santa Fe broker Marc Correra as a placement agent who shared in $22 million in fees paid by financial firms receiving state investments.
        Correra is the son of Anthony Correra, a close friend and political adviser to Gov. Bill Richardson, who chairs the state Investment Council. In Journal interviews, staff members at the ERB and SIC said they were not aware of Correra's role as a placement agent.
        Bland, however, confirmed in an interview that he was aware Correra was in the placement agent business.
        Bland and Anthony Correra were close — Bland said they talked almost daily about the markets — and Anthony Correra was on the Richardson transition team that recommended Bland's hiring. For a time, he had a desk in the state Investment Council offices.
        In more recent developments, ERB Chairman Bruce Malott resigned in September just hours after he confirmed to the Journal that he had borrowed $350,000 from Anthony Correra in 2006.
        Malott said that he never told Richardson about the loan and that he didn't know the younger Correra was getting fees for state investments, including those made by the teachers pension fund.

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