A New Mexico judge tossed out a pay-to-play lawsuit filed by Frank Foy, former chief investment officer for the $8.3 billion New Mexico Educational Retirement Board, Santa Fe.
In his lawsuit, Mr. Foy, who retired as CIO in 2008, sought to recoup at least $90 million in state funds lost through investments in mortgage-backed securities sold by a firm whose executives donated to New Mexico Gov. Bill Richardson’s presidential campaign.
District Judge Stephen Pfeffer dismissed the case, saying in a decision Wednesday that the actions at issue preceded the law under which the case was filed, the Fraud Against Taxpayers Act. The law took effect in 2007. The money-losing investments began in 2004.
Mr. Foy claimed that as much as $243 million in state funds were used to buy “worthless” collateralized debt obligations sold by Chicago-based Vanderbilt Capital Advisors. Mr. Foy began the lawsuit in 2008, claiming that as much as $22 million in finder’s fees were shared by the son of a political ally of Mr. Richardson, a Democrat.
“We’re very pleased with the decision,” said Peter Simmons, a partner at Fried, Frank, Harris, Shriver & Jacobson who represented the Vanderbilt units named as defendants. He is based in New York.
State records show Vanderbilt paid $5.6 million in fees to Marc Correra or his associates. Mr. Correra’s father, Anthony, is a friend and political supporter of Mr. Richardson. The elder Mr. Correra couldn’t be reached for comment. Ronald Rubin, a lawyer in New York for Marc Correra, had no comment.
Starting in February 2007, at least four Vanderbilt employees contributed as much as $8,400 to Mr. Richardson for President Inc., Federal Election Commission records show.