Pay to Play New Mexico: Pension funds Invested In Sub-Prime Mortgages

Separate from the grip scandal there are also accusations that the Pension Plan for the state of New Mexico was used in a risky manner. The heart of the suit by Frank Foy is that Dave Contarino, a former Richardson chief of staff and campaign manager pushed for Pension funds to be invested into a company that made campaign donations. Contarino of course is all ready under Federal investigation for his role with CDR Financial Products and the banks and pay to play over improper actions with the New Mexico Finance Authority.

By Heath Haussamen 3/4/09 11:00 AM

Pauline Turner thought it was unusual for Bruce Malott, chairman of the New Mexico Educational Retirement Board (ERB), to call a special meeting in May 2006 for a vote on whether to invest $40 million with Vanderbilt Financial.

Special meetings weren’t unheard of, but they were by no means common, she said in an interview. And Turner, then an ERB board member, had become increasingly concerned about the board’s move, under Malott’s leadership, toward what she saw as riskier investments

So she was in the minority in voting against the Vanderbilt investment at the May 12, 2006 meeting of the board. Turner explained her opposition at the meeting, according to the minutes: She felt the board was making “what appeared to be a hasty decision” because its members hadn’t been educated on the type of investment they were about to make and didn’t have policies and procedures in place to deal with such investments.

“I felt personally that we were taking more risk in a way that was really irresponsible because a lot of the board members — not all of the board members, but a lot of the board members — didn’t understand what we were doing,” Turner said.

Ultimately, the board voted 4-2 — with then-member Delman Shirley siding with Turner — to go ahead with what was essentially an investment of the retirement funds of public educational employees in subprime mortgages. The state later lost the entire $40 million investment, along with a separate $50 million investment the State Investment Council (SIC) made with Vanderbilt.

That $90 million loss led to the current pay-to-play lawsuit filed on behalf of the state by Frank Foy, who at the time of the investment was the ERB’s chief investment officer. Foy, in seeking damages of $300 million for the state — and a percentage he would keep for himself — alleges that the state made the investments in exchange for a little more than $15,000 in contributions to Gov. Bill Richardson’s 2008 presidential campaign.

Who doesn't invest Pensions funds in sub-prime mortgages? Turner who is now 71 and a Democrat describes the rest of the board that approved the investment as the"Governor's"people. We all ready have reports of possible bid-rigging by Richardson's people so the pattern of abuse that is emerging within the state of New Mexico is just amazing.

For the full Pay For Play CDR and the Democrats including what Black Box deals are click here.