In Latest Pay-to-Play Investment Scandal, New Mexico Files Lawsuits

(May 11, 2011) — The $15.4 billion New Mexico State Investment Council (SIC) has filed two lawsuits in federal and state courts against former investment chief Gary Bland and a number of other people involved in alleged pay-to-play schemes. 

The state claims that the individuals named in the case were involved in steering investments to political supporters of former Gov. Bill Richardson.

In the suits filed Friday, May 6, the fund claims breach of fiduciary duties in connection with schemes involving purported placement agents and third-party marketers, who allegedly garnered rewards from marketing investments to the council between 2003 and 2009. The suits seek compensation for millions of dollars and recovery of ill-gotten gains acquired by the defendants at the expense of the New Mexico Permanent Funds. Furthermore, the lawsuits allege that Richardson’s political fund raiser and self-appointed consultant, Anthony Correra, played the role of “de facto gatekeeper” in recommending state investments.

Bland denied the allegations, calling them “absurd,” the Associated Press reported.

“The State Investment Council takes this action today in hopes of recovering millions of dollars improperly taken from the citizens of New Mexico by those who violated their professional duties and the public trust, and their cronies who participated in and profited from such breaches of duty,” State Investment Officer Steve Moise said in a statement. “Quite simply, this is the right thing to do.”

Governor Susana Martinez, chair of the State Investment Council, added in the release by the New Mexico fund: “As we wait for justice in the criminal courts, we must aggressively pursue legal action of our own. These efforts must continue until all responsible parties are held accountable for the abuses that occurred here in New Mexico.”

To avoid apparent conflicts of interest, the Governor asserted in a statement that investment managers who entered into payment arrangements with third party placement agents to obtain SIC investment business should approach the Attorney General’s Office voluntarily and fully disclose the details of those arrangements “before the Attorney General knocks on their doors.”