A New Investment Scandal Lawsuit

Some might call it Foy II.

Donna J. Hill, a records clerk at New Mexico State University is suing past and present state officials and a couple of controversial financial firms in a class action suit to recapture money lost in questionable investments by the state Education Retirement Board.

Hill's suit seeks to win back money for 95,000 beneficiaries of the state educators’ pension fund.

It's similar to the whistleblower suit filed last year by former ERB investment officer Frank Foy, who claimed the ERB lost millions in investments made because of political pressure from Gov. Bill Richardson’s administration. In fact a lawyer for one of the defendants referred to the new suit as a “ copycat lawsuit.”

Among those named in the suit are ERB chairman Bruce Malott, former state Investment Officer Gary Bland, state Education Secretary Veronica Garcia, and former acting state treasurer Doug Brown.

The companies named in the suit are Aldus Equity, a Dallas company which served as the investment adviser to the ERB and State Investment Council for several years until being implicated in a pay-to-play scheme in New York and Vanderbilt Capital Advisors, a Chicago firm that is the center of the Foy lawsuit.

Also listed as defendants are “John Doe #1,” who is described as a former chief of staff and campaign manager for Richardson‘s presidential run, and “John Doe #2,” who is described as “a Santa Fe broker,” the son of a Richardson friend and political contributor and the husband of Richardson’s former international protocol officer.

Sound familiar? These descriptions match former Richardson chief of staff Dave Contarino and broker Marc Correra respectively. Both have been named in the Foy lawsuit.

Like “John Doe #2,” Correra made millions in finders fees for ERB investments. Between his fees for the ERB transactions and those by the State Investment Council, Correra shared in some $22 million. Correra’s lawyer has denied wrongdoing.

Asked why the suit doesn’t come out and name either Contarino or Correra, Cuneo replied, “Without confirming or denying identities, we recognize these are sensitive allegations and involve allegations of political influence peddling linked to highest levels of the New Mexico government. We wanted to be responsible and diligent and obtain confirmatory discovery before revealing that part of our case.”

UPDATE: Here's my story in The New Mexican.

Meanwhile, here's the suit for yor reading pleasure.

2010 01 02 Hill v Vanderbilt Complaint