Monday, December 6, 2010

AG Opinion: State Shouldn't Have to Pay Malott For Legal Expenses, PR Firm.

State Attorney General Gary King's office released a long-awaited opinion on a question whether the state should have to reimburse former Education Retirement Board Chairman Bruce Malott for legal expenses and other costs related to lawsuits and federal investigations related to ERB investments.

Malott racked up at least $300,000 in legal fees from private attorneys. He's also been represented by state lawyers in the case. He also hired a public-relations firm. Malott has threatened to sue the state if he doesn't get reimbursed.

The opinion said:

... in light of the other statutes that provide legal representation to state officers and employees, we do not believe it requires the state to reimburse Mr. Malott and other ERB members for expenses resulting from privately retained counsel, particularly when an attorney has been made available at state expense through (the state Risk Management Division….)

Earlier this year, members of the Legislative Finance Committee balked at the pay-out, but they don't have the power to stop the ERB from setting aside money in its budget for such reimbursements.

Malott resigned from the board in September following the revelation that he'd taken a $350,000 loan from Anthony Correra, a friend and financial backer of Gov. Bill Richardson. Correra's son, Marc Correra, shared in millions of dollars in finder's fees from investments by the ERB and the State Investment Council.

Update 4:08 pm: ERB executive director Jan Goodwin just told me that Malott never has submitted formally a request for reimbursement. So unless Malott does submit such a request, nothing will happen.

Asked what she thought of the opinion, she would only say, "We're glad to have it."

Correction: An earlier version of this post misidentified the Legislative Finance Committee, calling it mistakenly, the "Legislative Council."

UPDATE 4:56 pm Here's a copy of the AG's opinion.

3 Dec 10-Jan Goodwin-Opinion 10-05