I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
State lawmakers ask about law firm helping State Investment Council
Since June 2009, a San Francisco law firm has racked up $3.5 million in attorneys’ fees for advising and cataloging documents for a state agency at the center of two federal probes, state lawmakers learned Monday.
The cost outraged some New Mexico state lawmakers who listened to the presentation. As did the perception that the State Investment Council is investigating itself through the Paul Hastings law firm. Some legislators suggested Monday that the SIC should give the law firm its walking papers.
“It looks better to the public if we hand this off to an independent bunch,” said. Sen. John Ryan, R-Albuquerque.
The SIC is at the center of two federal probes, one criminal, the other financial, and has come under great scrutiny.
The SIC, which hired the firm, could decide as early as Tuesday whether to keep Hastings on or to stop its contract, although it seems likely that the SIC will continue with Hastings, officials said.
The Hastings firm knows the inner workings of the SIC after helping respond to federal prosecutors’ questions.
“They know a lot,” said State Land Commissioner Pat Lyons, who sits on the State Investment Council.
Hastings is familiar with SIC’s practices and has discovered important evidence turned over to federal prosecutors.
“Who are we going to turn it [the investigation] over to?” Lyons asked state lawmakers.
The avid interest in Hastings’ fees is an offshoot of a much larger scandal that has gripped the state’s two investment agencies since last year.
New Mexico’s former investment adviser, Saul Meyer, who pleaded guilty to securities fraud in New York, said he advised the SIC and Educational Retirement Board to invest in deals that weren’t good for the state. Meyer said he recommended the deals because they were being pushed by politically connected individuals here in New Mexico.
Who those individuals are is unknown. But Meyer’s statement has placed a spotlight on the SIC’s inner workings.
Right now the SIC has capped what the Hastings law firm can earn at $5.8 million, said SIC spokesman Charles Wollman. At this point the firm has billed about $4.5 million, with $3.5 million coming since June, soon after the agency started getting subpoenas from federal prosecutors, Wollman said.
The size of the Paul Hastings’ invoice is not the only thing that has fueled lawmakers’ anger. A whistleblower has accused the firm of helping the State Investment Council to stonewall his requests for information.
Frank Foy, a former investment officer at the Educational Retirement Board, has sought information from the State Investment Council as part of a lawsuit to recoup hundreds of millions of dollars in taxpayer money lost through what he says was fraud.
Foy and his attorney, Victor Marshall, say Hastings has helped the State Investment Council keep information from being made public.
SIC staff, and a member of the State Investment Council itself, on Monday said the Paul Hastings firm wasn’t stonewalling Foy, or his attorney, Victor Marshall. And, in fact, the firm has been of great help.
The Hastings firm was the outfit that helped lead to the ouster of former State Investment Officer Gary Bland, officials said. The law firm produced information on SIC’s practices under Bland that prompted a coalition of SIC members to urge a no-confidence vote in Bland, officials said. Bland resigned in October before that no-confidence vote was taken.
The Hastings firm is also responding to subpoenas and other requests from the U.S. Attorney’s Office, which is leading the criminal probe, as well as from the U.S. Securities and Exchange Commission, which is conducting its own investigation.
Lyons, the state land commissioner who sits on the State Investment Council, said that while he opposed getting rid of the Hastings firm, he favored placing a firm deadline on them.
Perhaps give them six months to finish up and then turn over what it had found to the SIC, Lyons suggested.
That way the SIC could then turn over what the law firm had found to the New Mexico Attorney General’s Office so it could decide whether to prosecute anyone. The Attorney General’s office also would go after money the state lost to fraud, Lyons said.