Richardson administration is stonewalling us, whistleblower says

New Mexico state lawmakers wanted to know Thursday why thousands of documents requested by a whistleblower haven’t been turned over by two agencies he says engaged in corrupt investment practices.

The Judiciary Committee decided Thursday to send a letter asking the State Investment Council (SIC) and Educational Retirement Board (ERB) to explain “why did you refuse to produce those documents,” the committee chairman, Sen. Cisco McSorley, D-Albuquerque, said.

The correspondence was proposed by GOP Sen. John Ryan, but was supported by many of the committee’s members.

Ryan’s proposal followed appearances by ERB former investment officer Frank Foy and his attorney, Victor Marshall. Foy hopes to recover hundreds of millions of dollars in taxpayer money. It was lost because of bad investments. Foy has sued several dozen defendants, including the SIC and ERB, members of each agency’s board and financial institutions that participated in the deals that went sour.

“They have stonewalled us, they have stalled, they have prevaricated. One has to ask why?” Foy said of the Richardson administration at Thursday’s hearing. “This administration is using taxpayer money to cover up the bribery and kickbacks as long as they can. The days of this administration are numbered.”

A spokesman for the State Investment Council said Thursday his agency isn’t stonewalling Foy. It is prioritizing responsibilities and right now the priority is responding to federal investigators, said Charles Wollman of the State Investment Council.

“We are honoring their requests,” Wollman said of Foy and Marshall. “Two weeks ago we gave him 75,000 documents. We are sympathetic to his frustration.”

The U.S. Department of Justice is investigating whether criminal wrongdoing occurred at the SIC. Meanwhile, the federal Securities and Exchange Commission is conducting its own probe.

“Some of the documents that we provide to federal authorities are not public,” Wollman said. “So we can’t turn over every document we give to the federal authorities.”

Wollman said his agency “would look forward to going before them (state lawmakers) to help them understand the complexities involved. What lawmakers hears is one side of the story and there is more to it.”

The SIC and ERB find themselves at the center of an investment scandal that has included pay-to-play allegations in the Richardson administration.

And more and more state lawmakers are sounding restive enough to make one wonder if they’re up to challenging the Richardson administration. On Thursday, some state lawmakers asked if the Legislature had subpoena power and suggested adding the authority if it doesn’t.

The Legislative Finance Committee, effectively the Legislature’s budget arm, has subpoena power, but no other legislative bodies do, McSorley said.

Rep. Joseph Cervantes, D-Las Cruces, a former House Judiciary Committee Chairman, said that should change.

“As legislative bodies we should be bringing in witnesses, we should be putting them under oath, we should swearing and taking testimony,” Cervantes said. “I think that would make us a much more effective Legislature.”

He said the investment scandal was one such situation where a more vigorous Legislature was called for.

Foy and his attorney, Victor Marshall, told lawmakers repeatedly Thursday that the Richardson administration had stonewalled them because some of the documents demanded, including e-mails, were a “smoking gun.”

The e-mails show the state’s former state investment officer, Gary Bland, putting “the arm on investment firms to hire Marc Correra,” Marshall said. “We don’t know that for sure.”

Bland is a former state investment officer who resigned in October to avoid a no-confidence vote by the State Investment Council.

Marc Correra, meanwhile, shared in $22 million in third-party marketing fees on dozens of investment deals by the SIC and ERB. Correra is the son of Anthony Correra, a friend and fundraiser for Richardson.

The no-confidence vote on Bland followed a guilty plea in New York by the state’s former investment adviser.

Saul Meyer of Aldus Equity pleaded guilty to securities fraud in an ongoing investment investigation. Meyer admitted recommending “proposed investments pushed on him by politically-connected individuals in New Mexico, knowing that 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.”

State Land Commissioner Pat Lyons, a member of the State Investment Council, has said publicly that a law firm working for the State Investment Council discovered that Bland was soliciting third-party marketers.

No one has named those politically connected individuals, but the names of the two Correras has kept surfacing.

“We think Gary Bland would have gone back in February” had those e-mails been made public, Marshall said.

Several times state lawmakers evinced anger during Thursday’s hearing at the situation New Mexico finds itself in, especially as it relates to losses in taxpayer money.

The SIC and Educational Retirement Board have lost nearly $290 million from eight investment deals that were arranged in party by Marc Correra and involved a Chicago firm, Foy and Marshall told lawmakers Thursday.

The $290 million figure is a result of Marshall’s own accounting, the attorney said. It dwarfs the $90 million in taxpayer money originally disclosed as lost last year because of a deal involving Chicago-based Vanderbilt Financial Trust and Correra.

All eight deals had Marc Correra as a third-party marketer, the equivalent of a matchmaker who brings together an institutional investor like a state with a fund manager, Marshall said.