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May 10, 2011 01:00 AM

New Mexico files 2 lawsuits over pay-to-play

Arleen Jacobius
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    Gary Bland

    New Mexico State Investment Council, Santa Fe, filed separate lawsuits in federal and state courts, claiming breach of fiduciary duties in connection with alleged pay-to-play and kickback schemes involving purported placement agents and third-party marketers who allegedly benefited personally from marketing investments to the council between 2003 and 2009.

    The case filed in U.S. District Court in Albuquerque names, among others, Renaissance Private Equity Partners, formerly known as Aldus Equity Partners, the council's former private equity consultant; Aldus' founder, Saul Meyer; placement agent Daniel Hevesi, son of former New York state Comptroller Alan G. Hevesi; and Daniel Weinstein and Vicky L. Schiff, co-founders of placement agent DAV/Wetherly Financial.

    Both lawsuits, filed May 6 by the $15.4 billion council, allege aiding and abetting breach of fiduciary duty and unjust enrichment.

    Last year, Mr. Meyer and other Aldus partners agreed to pay a total of $1 million in restitution and forfeit $5.4 million in management fees as part of a settlement with former New York Attorney General Andrew Cuomo in his investigation of pay-to-play involving investments of the $140.6 billion New York State Common Retirement Fund, Albany.

    The New Mexico state court lawsuit claims Gary Bland, former New Mexico state investment officer, made “alternative investments pushed on him by politically connected individuals, even though he knew not only that these politically connected individuals or their associates stood to benefit financially or politically from the investments, but also that the investments were not necessarily in the best interests of New Mexico,” the complaint alleged.

    It also claims that Guy Riordan, former managing director of Wachovia Securities of New Mexico and former New Mexico State Game Commission chairman, aided and abetted Mr. Bland's breach of fiduciary duty.

    The SEC fined Mr. Riordan $1.5 million and banned him from the securities industry for life in 2009 for making secret cash payments to former New Mexico state Treasurer Michael Montoya in exchange for winning state business.

    Both New Mexico lawsuits seek punitive and compensatory damages in an unnamed amount.

    Mr. Bland's attorney, Ira Robinson, had no comment. He said he has not seen the lawsuit and Mr. Bland has not yet been served with the complaint.

    Paul Shechtman, partner in the law firm of Stillman, Friedman & Shechtman, attorneys for Renaissance Private Equity Partners, could not be reached for comment. Ms. Schiff did not return a phone call or e-mails seeking comment, and the other listed defendants could not be reached for comment.

    Related Articles
    Vanderbilt Capital settles with 2 New Mexico funds for $24 million
    New Mexico council settles with placement agent on pay-to-play controversy
    New Mexico Supreme Court ruling revives pay-to-play lawsuits
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