Wednesday, December 23, 2009
New U.S. Subpoenas for Gov.'s Office?
By Mike Gallagher / Journal Investigative Reporter
Gov. Bill Richardson's office won't say whether it has received subpoenas from a federal grand jury or the Securities and Exchange Commission regarding state investment business.
Federal investigators have been probing how investments were made by the State Investment Council and the Educational Retirement Board since last spring when it became public that the son of a key Richardson friend and supporter had shared in more than $22 million in fees for helping companies get state business.
After those disclosures, a partner in the company paid to advise both the Investment Council and ERB pleaded guilty to pension-related scandal charges in New York. As part of his plea deal, Saul Meyer of Dallas-based Aldus Eduity Advisers also said he directed investment business in New Mexico to the benefit of "politically connected" individuals.
Meyer has agreed to cooperate with investigators in New Mexico.
On Dec. 10, the Journal submitted the following question to Richardson's deputy chief of staff, Gilbert Gallegos:
"Has the governor or the Governor's Office received subpoenas from the Securities and Exchange Commission and/or the federal grand jury concerning State Investment Council matters? If so, when were they served? If so, can we have copies under IPRA (the Inspection of Public Records Act)?"
Gallegos responded by saying the request had been forwarded to the records custodian in the Governor's Office. The custodian responded on Dec. 15 that the request was being processed under IPRA.
On Friday, the custodian sent the following response:
"Any responsive records the Governor's Office may have received would be exempt from disclosure. Such documents would relate to a matter that is or will be before a federal grand jury. This office will not release records of this nature pursuant to the federal rules governing grand juries."
The letter went on to say, "There are also countervailing public policy considerations that warrant denial of your request as well, including but not limited to this Office's effort to cooperate and not unduly interfere with any federal grand jury investigation(s)."
Federal rules say members of the grand jury, court employees, prosecutors and agents who are sworn to the grand jury have a secrecy obligation.
However, the manual for U.S. attorneys says witnesses generally "cannot be put under any obligation of secrecy and attempts to impose such an obligation generally have been struck down by the courts."
The state's response to requests to inspect grand jury subpoenas has been inconsistent.
In November, the State Investment Council, in response to an IPRA request from the Journal and other media outlets, released copies of the federal grand jury subpoena for records concerning investments made with the state's billion-dollar trust funds.
The SIC, which Richardson chairs, also released a Securities and Exchange Commission subpoena requiring former State Investment Officer Gary Bland to testify before regulators.
The SEC subpoena, asked specifically for communications among Bland, Anthony Correra and Santa Fe broker Marc Correra.
A former securities broker from New York who surrendered his license in an insider trading scheme, Anthony Correra is a close friend and associate of the governor. He is Marc Correra's father and was a member of the governor's transition team responsible for Bland's hiring as state investment officer.
Marc Correra shared in more than $22 million in so-called third-party placement fees paid by companies that won business deals from the Investment Council and ERB.
Bland resigned in October in the face of a no-confidence vote. Richardson, defending Bland to the end, thanked him for his service, and attendees said Bland was on hand for the governor's recent Christmas party at the Governor's Mansion in Santa Fe.
The Journal made the public records request in an attempt to confirm information from state officials not connected to law enforcement who said the Governor's Office had received subpoenas from the grand jury and federal regulators in recent weeks.
Sarah Welsh, executive director of the New Mexico Foundation for Open Government, said her organization takes the position that the subpoenas are public record.
"Barring some unusual request for secrecy from the federal government, when a subpoena arrives at a state agency it becomes a state record and therefore subject to disclosure under IPRA," Welsh said.
In seeking the release of federal grand jury subpoenas from the State Investment Council and Educational Retirement Board, the Journal pointed out that non-law-enforcement "witnesses" are not covered by grand jury secrecy rules.
For that matter, the Governor's Office last year released to a national media outlet a federal grand jury subpoena concerning an investigation involving a California firm hired as an adviser to the state on a highway bond program. That probe ended without indictments but with a letter from the federal prosecutor saying it should not be interpreted as an exoneration "of any party's conduct" and that the state procurement process had been corrupted.
The ongoing federal investigation into New Mexico investment practices grew out of a probe by the New York Attorney General's Office into a complex pay-to-play scandal involving large Wall Street firms and third-party placement agents.
In June, the Educational Retirement Board, which Bland was appointed to by Richardson, released a federal grand jury subpoena for records from that agency.
The subpoena on New Mexico educators' pension fund sought a wide range of documents concerning its investments and relationship to Aldus Equity.
Both the SIC and ERB initially refused to release the subpoenas on grounds repeated by Richardson's office in its latest response to the Journal.
In another public records dispute, Richardson's office recently declined to release the names and positions of 59 exempt state employees laid off as a result of budget cuts.
In that case, however, it said the denial was because there were no documents responsive to requests for a list of laid-off employees.