Last week we introduced you to Marc Correra, a longtime ally of New Mexico Governor Bill Richardson, who appointed his wife Claudia Correra in 2004 to be the state’s first “international protocol officer.” Last month Correra’s name surfaced as the most successful in a list of dozens of “placement agents” paid by hedge funds and other money managers to secure investments in the state teachers’ retirement fund; he was listed as having netted at least $11.5 million in fees for channeling around a billion dollars in pension investments to various money mangers — including a controversial $90 million investment in a near-worthless “toxic waste” tranche of a subprime mortgage-backed CDO. The CDO, Vanderbilt Financial Trust, was put together by a Chicago firm called Vanderbilt Capital Group.
At the time the state said it did not know Correra’s fee for the transaction, and his attorney strenuously denied his involvement whatsoever with Vanderbilt in the Albuquerque Journal:
“That did not happen,” Bregman said Friday. “Marc Correra never received a fee for that transaction. He was not involved in that transaction in any way, shape or form.”But that’s not what Vanderbilt told New Mexico, according to a document the state released yesterday.
A footnote (typed in approximately 3.14-point font) at the end of the most recent spreadsheet accounting for the state’s involvement with “placement agents” like Correra reads:
Vanderbilt is checking its records; a Vanderbilt representative informed an ERB staff member that Vanderbilt Capital Group paid Marc Correra a $2MM placement fee on the total $90MM State of New Mexico investment. VFT did not reimburse VCG for the fee.What that last part appears to mean is that Vanderbilt Financial Trust, the actual “trust” holding the CDO, did not reimburse its parent company Vanderbilt Capital Group for Correra’s $2 million fee as is general practice in such transactions. That’s little wonder — VFT would only manage to make two dividend payments before the state declared its investment essentially worthless. Those payments totaled $3.7 million, according to a whistleblower lawsuit alleging fraud in the Vanderbilt CDO filed last July former New Mexico Educational Retirement Board Chief Investment Officer Frank Foy. The first one totaled $1.8 million. Had Vanderbilt Financial Trust paid Correra’s $2 million from its own coffers, its funds would have run out even earlier than they did — in May 2007, according to the Foy lawsuit.
Foy’s suit names more than twenty investment banks, financial services firms and other intermediaries involved in the scheme to “peddle” to the teachers’ retirement funds “the residue left over ” after “the lucrative process whereby the defendants and others assemple assets and securitize them, taking large fees and commissions in the process.” Foy’s suit doesn’t name Correra, but it looks as though his $2 million was the last — and one of the fattest, as “finders fees” don’t generally exceed 1% of an investment — in the long line of fees that went into creating Vanderbilt Financial Trust. If the CDO had paid Correra’s fee itself, the value of the actual investment would have been even closer to zero.
Bregman wasn’t immediately available for comment, and Vanderbilt’s attorney Peter Simmons said he had not seen the latest documents but would respond when he had.