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State stand is hard to justify

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By Ralph Damiani

The attorney who filed a lawsuit against Vanderbilt Financial, nine company executives and about two dozen other investment firms and numerous individuals as defendants alleging the state lost money in flawed investments through an alleged pay-to-play scheme involving Gov. Richardson’s unsuccessful campaign for the Democratic presidential nomination, says he is being stone-walled by the state.

He told the Associated Press that the Chicago-based brokerage firm and state officials are refusing to turn over documents sought in a whistle-blower lawsuit that claims New Mexico lost $90 million because of flawed state investments.

Frank Foy, a former investment officer for the state Educational Retirement Board, alleges in a motion filed last week in state District Court that the defendants refused to answer any interrogatories or produce any documents, “even the most basic documents concerning the transaction giving rise to this lawsuit.”

State District Judge Stephen Pfeffer has not set a hearing over the documents. That should be done soon.

This does not do the governor well, who is already being investigated in California for alleged pay-to-play charges. These charges cost him a Cabinet post in the Obama Administration.

Failing to comply with this investigation only makes that investigation seem more real.

The lawsuit claims Bruce Malott, chairman of the Educational Retirement Board, and state Investment Officer Gary Bland, working on orders from Richardson’s former chief of staff, David Contarino, pressured board members to select Vanderbilt investments.

It said Vanderbilt executives contributed $15,100 to Richardson’s unsuccessful Democratic presidential campaign.

The defendants have denied any wrongdoing and have asked that the case be dismissed. Their motions are pending.

One Vanderbilt transaction with the State Investment Council was for $50 million; one with the Educational Retirement Board was for $40 million. They later proved worthless, which the defendants attribute to the global economic slump.

Marshall’s motion alleged there was another reason for the Vanderbilt deal – what he termed “thinly disguised kickbacks” to Santa Fe investment broker Mark Correra, who made $2 million in finder’s fees for the Vanderbilt contracts.

Correra is the son of a longtime Richardson supporter. His lawyer, Sam Bregman, has denied any wrongdoing on Correra’s part.

Marshall wrote in his motion that “these kickbacks might explain why the Richardson appointees on the ERB voted in favor of the disastrous Vanderbilt investment.”

The State Investment Council has since banned third-party placement or marketing agents.

Bland said Foy’s motion for various documents was “vague, overly broad and overly burdensome.” Vanderbilt’s response says some information Foy seeks is “confidential, internal or proprietary business information, including trade secrets.”

The state should step up here and submit to any request. The public has a right to know what it’s government is doing and it has a right to have confidence in its actions.