Feds focus on state investment figures

SANTA FE (KRQE) - A federal pay-to-play investigation stretching from New York to New Mexico is looking at the relationship between a former state official and the son of a friend of Gov. Bill Richardson, KRQE News 13 has confirmed.

The question to be resolved is whether then-State Investment Officer Gary Bland, a Richardson appointee, pressured companies doing business with the state to pay Marc Correra to act as a middleman. Correra, who raked in millions from working with state investment business, is the son of Anthony Correra, a friend of both Richardson and Bland.

"The bottom line is fees have been paid out that didn't need to be paid out," State Land Commissioner Pat Lyons told News 13.

Lyons is a member of the State Investment Council and sits on a council subcommittee that was pushing to have Bland fired. Bland resigned last week before the full council could consider the request.

Attorneys hired by the Investment Council found evidence News 13 has learned the Feds want for their investigation.

On Thursday Lyons explained that the evidence allegedly shows Bland pressured companies to hire certain middlemen after the state had already struck deals with those companies.

"My concern is, "What did the people of New Mexico get for $22 million of fees," said Lyons.

Marc Correra shared in those fees, but it is unclear to News 13 if the evidence Investment Council lawyers found shows Correra being hired before or after the Investment Council decided to invest with the companies.

News 13 has learned a report by Investment Council attorneys zeroes in on the relationship between Bland and Marc Correra. Lyons wouldn't confirm that but said he was the first official to push for a ban on using middlemen like Correra.

As investigations heated up, Richardson, who also sits on the Investment Council, ordered it and the Educational Retirement Board to stop using the middlemen to connect state investment funds with investment companies.

"We banned third-party marketers," Lyons said. "We don't need them.

"Then our basis points for doing investments would be cheaper, and it saves the state of New Mexico more money."

Even though the investment companies paid those middleman fees, Lyons said he believes the investment companies passed the costs on to the state. He wants the money back from those middlemen.

Neither Bland nor Marc Correra has been charged with a crime. Both maintain they did nothing wrong.

News 13 attempted to contact Bland for further comment on Thursday but was unsuccessful.

The state is incurring another expense with the scandal as federal investigators have asked the Investment Council for three million documents. So far, the attorneys have delivered about half of them at a cost of $500,000 in attorney fees.

In a separate case, a federal grand jury meeting in New York Thursday indicted California based-CDR Financial Products, its founder, David Rubin, and two company employees for allegedly taking kickbacks while handling municipal bond deals for local governments.

The indictment alleges CDR, hired to generate competitive bids from investment firms, instead took kickbacks to steer to deals to favored companies. An attorney for the company said the case is without merit.

CDR was the subject of an investigation in New Mexico for over its role in the issuance of bonds to finance transportation projects. Rubin was a contributor to Richardson's presidential campaign committees, but the governor said there was no connection between the contributions and CDR being awarded its state contract.

The federal investigation did not produce any criminal indictments in New Mexico although the U.S. Attorney for New Mexico said evidence showed politics tainted the awarding of the contract.

The then-ongoing investigation forced Richardson to withdraw his name as a nominee to become President Obama's secretary of commerce.

The founder Aldus Equity, a Dallas-based investment company that worked with the state Investment Council, recently pleaded guilty to fraud in New York in another kickback scheme. In his courtroom statement founder Saul Meyer said he had steered New Mexico investments based on pressure from politically connected individuals.

However neither Meyer nor prosecutors have identified those individuals.