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New Mexico Supreme Court finds lawsuits alleging investment fraud can go forward


SANTA FE, New Mexico — New Mexico's highest court on Thursday cleared the way for two lawsuits that allege political support for former Gov. Bill Richardson influenced state investment deals.

The state Supreme Court ruled that former chief state investment officer Frank Foy can receive triple-damage awards if he can prove corruption was taking place. His lawsuits have been put on hold since an opposite ruling by the Court of Appeals nearly two years ago.

Foy filed whistleblower lawsuits on behalf of taxpayers in 2008 and 2009. He alleges a pay-to-play scheme that improperly shaped investment decisions involving billions of dollars by the Educational Retirement Board and the State Investment Council in favor of Richardson supporters.

The council sued its former top manager, officials with private financial firms as well as a Richardson supporter. All contend there was no wrongdoing.

The agency alleged that state investment business was steered to Richardson's political contributors.

Marc Correra, whose father was a fundraiser for Richardson, shared in more than $22 million in fees from firms that got state investments, the Albuquerque Journal reported ( ).

Correra ended up paying the state nearly $329,000 to resolve a tax-evasion case.

A now defunct financial advisory firm settled with New Mexico last year over accusations of funneling public investment deals to Richardson's political allies. Dallas-based Aldus Equity Partners and three of its officials agreed to pay the state more than $600,000.

The council manages investments of New Mexico permanent funds valued at roughly $19 billion.

The state Supreme Court decided that the Fraud Against Taxpayers Act is constitutional and ordered that the two whistleblower lawsuits over state and pension fund investments be consolidated.

The high court will appoint a pro-tem judge to handle the litigation.

One of the main issues in the appeal was the constitutionality of a provision for whistleblower lawsuits on behalf of the state for alleged fraud that took place as far back as July 1987.

Rulings by two district court judges and the Court of Appeals had invalidated that provision, declaring it unconstitutional to apply the law's penalties to actions that occurred before the statute became effective on July 1, 2007.

Those district court and Court of Appeals rulings left the rest of the law intact and allowed whistleblower cases for alleged fraud that happened after the law went into effect in 2007.

The Supreme Court concluded the retroactive application of the Fraud Against Taxpayers Act was constitutional. The law allows triple damages to be awarded — in other words, three times the amount of the losses or damages suffered by the government.

The whistleblower bringing the lawsuit, in some instances, can receive up to 30 percent of the damages or settlement award. The remainder goes to the state.

Information from: Albuquerque Journal,

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