- The Washington Times - Tuesday, April 21, 2009

SANTA FE, N.M. (AP) - A Chicago-based financial firm paid a politically connected New Mexico broker to help obtain a $50 million state investment that a whistleblower lawsuit alleges was made as part of a pay-to-play scheme.

The money paid to Santa Fe investor and broker Marc Correra was part of more than $11 million in fees he potentially shared in for helping investment firms secure business with the State Investment Council, according to records released by the state agency that’s responsible for managing and investing New Mexico’s permanent funds. Those funds were valued at about $11 billion at the end of last year.

The fees were disclosed in a report prepared by the investment council staff in response to an ongoing corruption investigation involving a New York state pension fund. The conduct of several executives, including auto task force leader Steven Rattner, is being examined by state and federal officials as part of New York Attorney General Andrew Cuomo’s investigation into whether top aides to former New York Comptroller Alan Hevesi took bribes from investment firms seeking deals with that pension fund.

Vanderbilt Financial Trust paid an unspecified amount to Correra in connection with a $50 million investment by the council in collateralized debt obligations, which are securities backed by pools of mortgages or other assets. The state lost its investment when values dropped sharply as the credit crisis and financial market meltdown caused investors to abandon all but the safest forms of debt.

Correra is part owner of a horse racing track and casino planned in Raton, which received a state license earlier this year. His wife, Claudia, once worked in Gov. Bill Richardson’s administration as the state’s international protocol officer.

Correra is the son of a Richardson political supporter, Anthony Correra, who along with his investment management firm, Sandia Asset Management, contributed $27,800 to Richardson’s 2002 campaign for governor. After winning the election, Richardson named Anthony Correra to a transition committee that recommended candidates for state investment officer _ the top administrator at the investment council. He also served as a director of the Moving America Forward Foundation, a nonprofit that Richardson formed to do voter registration in preparation for the 2004 presidential election.

Marc Correra did not return a telephone message seeking a comment on the $11 million in fees that the investment council reported were paid by financial firms involving two dozen investments by the state in 2003-2008.

Kurt Florian, chief operating officer and counsel in the structured finance group at Vanderbilt Capital Advisors, confirmed Tuesday that the firm had paid a fee to Correra but declined to provide the amount or describe what services Correra had provided.

“I can’t go beyond what’s in the SIC’s report. I don’t have any comment beyond that,” said Florian.

Correra was the potential recipient of the largest amount of almost $35 million in fees _ often called placement or finder’s fees _ paid by money managers and investment firms that did business with the investment council, according to the agency’s records. A spokesman for the council, Charles Wollmann, cautioned that the information was preliminary and in some instances the council’s staff had not been able to determine the specific amounts paid to some third-party agents and brokers.

The fees are not illegal and are a common industry practice. However, the payments can create potential conflicts of interest or cross over legal boundaries if they are used as kickbacks to public officials in exchange for business.

In New Mexico, a former investment officer for the state’s educational pension program filed a lawsuit alleging a pay-to-play scheme in which political contributions to Richardson influenced the awarding of $90 million in investments with Vanderbilt _ $50 million by the investment council and $40 million by the Educational Retirement Board.

The lawsuit by Frank Foy, which was filed last summer and unsealed in January, alleges that Richardson’s former chief of staff, Dave Contarino, pressured state investment officials to support the investments.

Contarino and other defendants in the case, including State Investment Officer Gary Bland, say there has been no wrongdoing and they are seeking to have the lawsuit dismissed.

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