- Recouping some of its losses
- Settlement better choice than trial
- No criminal prosecutions in case
The council said Vanderbilt had broken the law by not telling the council’s board that it had paid $6 million in marketing fees to Marc Correra, a placement agent who was alleged to have been one of the primary participants in the pay-to-play scandal. The payments were said to have helped Vanderbilt win the investment contract. Correra, whose father Anthony was an adviser to former Gov. Bill Richardson, denied the allegations. A state suit said that the younger Correra collected some $22 million in placement fees from the state and is now said to be living in France.
Gov. Susana Martinez, the council’s chairwoman, said the settlement “is a significant recovery of money for the taxpayers of New Mexico, and it demonstrates how diligently this council has worked over the past two years to bring a measure of accountability following a deeply disappointing chapter in New Mexico history,” according to a statement.
Private equity was one of the most common types of investments for which fees were said to have been paid as part of the pay-to-play scandal.
The decision to hire Vanderbilt proved disastrous for New Mexico. The council estimates that it lost around $100 million of the roughly $200 million that it had invested with the firm, a fixed income adviser that invested the state’s money in collateralized debt obligations between 2004 and 2006, just prior to the financial crisis.
Steve Moise, New Mexico’s state investment officer, said the decision to settle was “an obvious one.” He said in a statement that New Mexico could “recover tens of millions of dollars today, or roll the dice in court, wait several more years, and face a very uncertain outcome.” Vanderbilt had yet to be formally named in any suit from the council.
Charles Wollman, a spokesman for the council, was more adamant, saying that it could take as much as seven years for a case against Vanderbilt to work its way through the legal system.
There are still more than a dozen others, including Correra and former state investment officer Gary Bland, named in a far-reaching civil suit, which was filed in 2011. The suit claims that the state collectively lost many more millions of dollars through bad investments that were made due to political pressure and pay-to-play payments during Richardson’s governorship. Both Richardson and Vanderbilt denied any wrongdoing.
While the council has cooperated with federal authorities such as the Securities and Exchange Commission and the Justice Department, no criminal charges have yet been filed in the pay-to-play scandal. The same goes for recent pay-to-pay scandals in California and Kentucky.
The council and its chair, Gov. Martinez, are known to be frustrated that they are the only party to be officially pursuing this case. Wollman, the spokesman, said the council’s efforts to recover money would be easier if there were criminal prosecutions in the matter. “A criminal case would improve the standing of our claims and lend credence to the notion that the state has been wronged,” he said.
Despite the lack of a criminal case, Wollman said he was confident that the state would be able to recover more money from settlements later this year.