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…
AG King doing too little to recover money, officials say
A current member of the State Investment Council joined two outgoing members Tuesday to accuse Attorney General Gary King of not doing enough recover public money lost to failed or possibly fraudulent investments.
“Our attorney general has done nothing. The NewYork attorney general has done more to help us than our AG,” State Land Commissioner Patrick Lyons told a meeting of the State Investment Council on Tuesday. Lyons was speaking of New York Attorney General Andrew Cuomo.
King responded Tuesday afternoon in a strongly worded statement that accused the SIC of trying to shift the “spotlight” from itself and its past investment mistakes.
“We understand that the SIC members made some monumentally poor investment decisions and that they are now looking for places to spread the blame,” King said in a statement to The Independent. “Rather than grousing about what a terrible job others have done to lose the state’s money in the first place, I am concentrating on doing my job, which is to get it back.”
King went on to say his office was “aggressively pursuing civil and criminal avenues regarding state investments.” He declined to go into specifics, adding “we can not ethically discuss our investigations with them or anyone.”
Lyons wasn’t the only one to take King on Tuesday. Peter Frank and Andrew Davis, both of whom sat on the State Investment Council until earlier this month, said they were perplexed by what they perceived as King’s inaction.
“This is remarkable. …I, for one, don’t understand it (the lack of action),” Davis said.
Added Frank: “We have seen no action by the Attorney General. We don’t know why.”
It was unclear Tuesday the amount of public money that could be subject to recovery or the specific investments to which Lyons, Davis and Frank were referring. One estimate by a whistle blower and former investment officer at the Educational Retirement Board has pegged the loss of public money lost due to potential fraud at more than $280 million.
The accusations of inaction in recovering money are just one additional angle in the growing scrutiny around the State Investment Council. The agency has attracted scrutiny from both the U.S. Attorney’s Office and the federal Securities and Exchange Commission.
The scrutiny exploded into the open last fall when the state’s former investment adviser, Saul Meyer, pleaded guilty to securities fraud in New York. He also admitted that on numerous occasions, contrary to his fiduciary duty to the state, his company had “recommended proposed investments that were pushed on him by politically-connected individuals in New Mexico.” Meyer went on to say in that statement he knew “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.”
Former State Investment Officer Gary Bland , who helped hire Meyer, resigned days after Meyer’s guilty plea and admission.
Meyer hasn’t named names of those individuals exerting pressure, but one man – Marc Correra – has attracted attention. Correra, the son of Anthony Correra, a friend and fundraiser for Gov. Bill Richardson, shared in $22 million of third-party placement fees in several investment deals involving the State Investment Council and the Educational Retirement Board.
No one in law enforcement has accused Correra of wrongdoing and his attorneys have said he worked hard for the money.
The State Investment Council has sent letters to private equity funds that paid Marc Correra for help in getting the State Investment Council to invest in them, according to the Albuquerque Journal.
The SIC letters to the firms said that New Mexico is entitled to millions of dollars in “suspect” fees paid to third party agents who “may have attempted to corrupt the state’s investment process,” the Journal reported.
King said that Cuomo in New York had the tools and resources to aggressively go after potential financial fraud.
“For the last two years I have asked the Legislature for similar tools and resources and for two years I have been turned down,” King said in the statement. “But we are still doing our best with what we do have, and doing a pretty good job of it.”
New York also has a powerful anti-fraud weapon that New Mexico and many other states don’t have — the Martin Act. The law gives broad powers to the New York Attorney General to combat financial fraud. Former New York AG and governor Eliot Spitzer used that statute effectively to go after Enron following its collapse.
Cuomo has used the same law to win guilty pleas in his investigation of pay-to-play allegations involving that state’s Comptroller Office.
King said in his statement despite its lack of similar weapons had “recovered approximately $81 million for our New Mexico clients from corporations that fraudulently invested our money.”