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Ex-investment officer claims state wasted $90M

Ex-investment officer claims state wasted $90M

A former investment officer for the state's educational pension program claims New Mexico taxpayers lost more than $90 million in an alleged "pay-to-play" scheme in which political contributions to Gov. Bill Richardson influenced the awarding of investment business.
Frank Foy says in a lawsuit that the Educational Retirement Board made a $40 million investment through Chicago-based Vanderbilt Capital Advisors and Vanderbilt Financial because of pressure from a Richardson appointee who served as chairman of the pension system's governing board.
The investment went bust, as did another for $50 million made through Vanderbilt by the state Investment Council that Foy also claims was the result of political influence.
Foy, chief investment officer at the Educational Retirement Board from 1996-2006, claims Vanderbilt executives later contributed at least $15,100 to Gov. Bill Richardson's failed presidential campaign.
The whistleblower lawsuit was filed in July on behalf of the state under a 2007 law but had been sealed until this week. Plaintiff's attorney Victor Marshall said at a news conference Wednesday that damages could total more than $300 million. Defendants include two of the governor's appointees, Vanderbilt and several of its employees, but the governor himself is not named.
"The reason I came forward was not to inflict harm on the state of New Mexico," said Foy, who contends he was forced to retire from state government last year. "My hope is to help the state recover more than $300 million that is owed to taxpayers and teachers."
Gilbert Gallegos, a spokesman for Richardson, said the governor "is confident that the state agencies named in this lawsuit acted properly and in the best interest of New Mexicans.
"This lawsuit, filed by a disgruntled former employee who was accused of serious misconduct during his time as a state employee, makes absurd claims against state agencies," Gallegos said. "The state will vigorously defend those agencies."
The lawsuit adds to the cloud gathering over Richardson because of pay-to-play allegations.
Foy is the first high-ranking state employee to go to court and publicly allege Richardson political appointees helped steer state business to the Democratic governor's campaign contributors.
In announcing his decision to withdraw his nomination as U.S. commerce secretary this month, Richardson expressed concern that the investigation was dragging on and could become an unnecessary distraction to President-elect Barack Obama's economic initiatives.
The governor has denied any wrongdoing in the federal case.


Updated : 2021-05-17 21:08 GMT+08:00