greed-imageSANTA FE — Angry legislators publicly thrashed the state’s investments officers Tuesday, in particular demanding to know why no one had noticed the millions of dollars in finders’ fees that were paid to a politically connected individual involved in certain state investments.

Marc Correra — the son of an associate of Gov. Bill Richardson — shared in up to $16 million in finders’ fees as a third-party marketer on dozens of state investment deals involving the State Investment Council and the Educational Retirement Board, state records show.

The line of defense adopted by Richardson administration officials — finders’ fees are legal and weren’t of concern as long as the state’s investments were making money — didn’t find a welcome audience Tuesday.

In fact, the level of incredulity among state lawmakers appeared to rise with each re-statement of the same basic thought uttered by state officials — we didn’t know because we didn’t think it was important.

“Until recently a review of a fund was about quality of the investment. Placement agents was not the first thing on the list,” said Bob Jacksha, chief investment officer for the Educational Retirement Board.

Added State Investment Officer Gary Bland: “Until this issue arose in New York, none of us was concerned. We had no reason to be concerned.”

A criminal probe in New York has uncovered questionable practices in New Mexico and exposed the sometimes-blurry line between influence peddling and the legitimate service third-party marketers perform for money managers.

Among the allegations: the founder of New Mexico’s former financial adviser, Aldus Equity, helped the son of the New York state comptroller, Alan Hevesi, win a lucrative contract in New Mexico for a firm he was representing in return for Aldus’ increased business in New York, according to a criminal complaint. At the time, the comptroller’s son, Dan Hevesi, was acting as a third-party marketer in New Mexico. Aldus’ founder, Saul Meyer, was charged in the New York criminal probe.

It was in the context of criminal charges filed in another state that state lawmakers asked repeated questions about the deals that involved Correra and the millions of dollars he had shared in as a third-party marketer. Although he was involved in dozens of deals, Correra was not involved in the Hevesi deal, state records show.

How does it strike you that one individual got more than $10 million in placement fees, state Rep. Brian Egolf, D-Santa Fe, asked, referring to Correra.

“It just seems incomprehensible to me especially when you see one name repeated over and over again. It just seems very fishy to me,” Egolf said.

Bland demurred from offering an opinion, saying he didn’t know how much Correra had made because oftentimes several individuals can share in fees.

Jacksha, on the other hand, said he was greatly troubled at seeing the same name over and over again.

“Definitely with what we’ve seeing the New York situation, it raises concerns for us,” he said.

Aldus Equity’s role as the state’s investment adviser also surfaced during Tuesday’s hearing, particularly related to how Aldus had met its obligation to vet investments deals to guard New Mexico against making unsafe investments and doing business with bad actors.

In one case, the state of New Mexico had invested in a firm that then poured that money into an investment managed by Bernie Madoff, officials said. Madoff’s portfolio collapsed late last year when it was revealed that he had been running a decades-old Ponzi scheme in which Madoff paid off older investors with money from newer investors.

“Aldus didn’t do due diligence on either of those,” Rep. Donald Bratton, R-Hobbs, asked Bland.

“No sir,” Bland said.

Many of the questions from lawmakers seemed to be directed at Bland, who as the state investment officer has been on the hot seat of late.

At one point Tuesday, Bland grew visibly angry with state lawmakers’ questions and the “insinuations that we have done something illegal.” He then launched into a passionate defense of third-party marketers and said that the investments the third-party marketers had brought to his attention had helped New Mexico because they had money for the state.

“Judging by private equity funds against the indexes, perhaps third-party marketers should have brought more in, because it’s kicking butt,” Bland said. “I am becoming increasingly intolerant. The performance has been exceptional.”

The state investment officer’s ostensible nonchalance left some lawmakers visibly frustrated.

“It seems that we are asking through the back door things that should have been asked in the front door,” Sen. John Arthur Smith, D-Deming, said. “It’s a little bothersome that that didn’t happen.”

Rep. Luciano “Lucky” Varela, D-Santa Fe, meanwhile, ventured a theory as to why no one noticed the huge fees, some of which topped $1 million per deal, a theory that acknowledged the human condition.

“The driving force for this was greed,” Varela said, referring to the high returns risky investments were making the state. “We were in such good times we wanted to share in it.”