Frank Foy, former chief investment officer of the $8.8 billion New Mexico Educational Retirement Board, Santa Fe, may proceed with a shorter version of his 2-year-old whistle-blower lawsuit seeking hundreds of millions of dollars for the state from state fund investment losses, a judge ruled.
Mr. Foy’s lawsuit alleges the defendants misrepresented the collateralized debt obligations they sold to the state and also engaged in a “pay-to-play” bribery scheme.
In April 2010, New Mexico District Judge Stephen Pfeffer had dismissed the lawsuit because some of the investments were made before New Mexico’s whistle-blower law had been enacted. In September, the Santa Fe District Court reinstated Mr. Foy’s lawsuit on behalf of the state against a number of investment firms including Vanderbilt Financial, Citigroup, UBS, J.P. Morgan and Merrill Lynch.
On Monday, Mr. Pfeffer ruled Mr. Foy could proceed with the portion of his lawsuit concerning investments on or after July 1, 2007, the effective date of the law. He found that the Mr. Foy’s remaining claims were credible, allowing him to file an amended complaint.
Separately, on Tuesday, Mr. Foy filed a motion to force the state to turn over documents concerning former Gov. Bill Richardson’s correspondence with some of the placement agents who allegedly fraudulently sold the investments to the state. State officials have declined to turn over the documents requested by Mr. Foy.