Three weeks ago we told you about accusations that the New Mexico State Investment Council had been under political pressure to invest teachers’ retirement funds in risky investments like a $90 million “toxic waste” CDO backed by subprime mortgages — and wondered if any of the other intensifying corruption investigations across the country might involve some of the same pay-for-players.
Sure enough, a few names emerged last week to link the New Mexico pension fund scandal to the alleged conspiracy to defraud the New York general pension fund under investigation by the state attorney general’s office. One was Obama car czar Steve Rattner, who paid alleged ringleader Hank Morris more than a million dollars for securing investments in both states’ pension funds. Morris was indicted in March for collecting $30 million in fraudulent “finder’s fees” as a top adviser to the former state comptroller Alan Hevesi, in collusion with the pension fund’s manager David Loglisci. But the indictment didn’t address Morris’s “placement” services in other states; his name turned up on a list of placement agents released by the New Mexico State Investment Council as the broker of a $20 million investment in Rattner’s private equity firm Quadrangle.
The other thread running through both the New York and New Mexico pension funds was the advisory firm Aldus Equity, whose founder Saul Meyer was charged yesterday with participating in the New York conspiracy and which also until this week advised similar investments in New Mexico.
The further we looked, the wider and farther-back the suspicions of public pension fund pay-to-play seemed to extend, as Cuomo noted himself at yesterday’s press conference:
“This is sort of like when you pull a thread on the sweater and that one thread starts to unravel the entire fabric. We’re pulling threads and it turns out the other end of the thread is in New Mexico or Connecticut or Illinois or in California.”The latest yarn linking the two states’ parallel scandals is that of a Santa Fe placement agent named Marc Correra, the (wealthy) son of Bill Richardson’s longtime friend Anthony Correra and a major contributor to both Richardson and his charity. Correra’s particular thread of the scheme connects New Mexico’s toxic CDO to a Dallas hedge fund manager who pleaded guilty to conspiring with Morris in New York and a politically entrenched Los Angeles placement agent with a history of eyebrow-raising conflicts involving public pension funds in California.
Not a lot has been reported about Correra since 2004, when Richardson appointed his wife Claudia to a $20,000-a-year gig as the state’s first international protocol officer.
It would not be the last dividend their connections to the governor would pay to the couple. (If only the state’s teachers could say the same for some of the investments he “placed” in their retirement funds.) Correra also has also built a lucrative business as a “placement agent” since Richardson came into office. Operating under the names of various firms, he’s made at least $11.5 million in fees securing big hedge funds investments from the state’s Educational Retirement Board, according to records released recently by the state. Unlike Aldus, Correra was paid by hedge funds and private equity firms, not the state itself, so he had no fiduciary responsibility to the pension fund.
Correra sits on the boards of four Santa Fe nonprofts with Loglisci’s counterpart in New Mexico, State Investment Officer Gary Bland, who told the Albuquerque Journal he was “somewhat surprised” to learn the extent to which his friend Correra had been raking it in.
“I knew he was working the process pretty hard,” he said. “I knew he was out trying to drum up business.” Bland said he talks to Correra regularly… He said he also talks to Anthony Correra frequently to get his viewpoint on investment matters. The father has worked as a broker and investment adviser. “I know him (Anthony Correra) better than I know his son, actually,” Bland said.Correra was listed as the “placement agent” in a few noteworthy transactions, but none was more controversial than “Vanderbilt Financial Trust,” otherwise known as the “toxic waste” CDO, the riskiest tranche of a pool of subprime mortgages that lost $86 million of a $90 million investment.
Although state records list Correra as the placement agent for at least $50 million of the $90 million investment, they do not list the fee he received, and Correra’s lawyer claims he was not involved at all in the CDO.
But Correra did pull in a $900,000 fee steering another $100 million to HFV, a hedge fund run by Barrett Wissman, the Dallas fund manager who last week pleaded guilty to conspiring with Hank Morris. At the fund’s board meeting last June a consultant to the fund singled out HFV for its exceptionally poor performance.
Correra is also listed as the placement agent, working for a firm called Wetherly, that made $950,000 securing a $95 million pension fund investment in funds run by the private equity firm Levine Leichtman — a fund that is also named in the New York indictment as the source of $250,000 allegedly phony finder’s fees collected by Hank Morris.
Wetherly is run by a Los Angeles Democratic operative named Dan Weinstein. He’s the son-in-law of Jerry Cremins, the late California union activist who in his time as a California Public Employees’ Retirement System board member attracted much media attention over apparent conflicts-of-interest — including a decision to invest $60 million in a fund in which Weinstein was a partner. The indictment accuses Wetherly of splitting fees in certain transactions with Morris, though neither Weinstein nor the firm has been charged with anything.
But as Cuomo put it at yesterday’s press conference: “I would say stay tuned.”