Feds seek documents from governor, SIC for ongoing investigation

The Associated Press
Posted: 11/24/2010 10:59:23 AM MST

SANTA FE — Federal prosecutors have asked a court to force Gov. Bill Richardson's office and the State Investment Council to provide documents for a continuing investigation of state investments.

At issue is whether certain records are protected by executive or attorney-client privilege, which would shield them from disclosure to federal investigators, according to State Investment Officer Steve Moise.

Moise revealed the dispute over documents during testimony to a legislative committee last week when a lawmaker asked whether the agency had finished providing materials subpoenaed by a federal grand jury and the Securities and Exchange Commission.

Moise said the council, in its filing in a sealed court proceeding, did not take a position on whether the documents are covered by a legal privilege that makes them confidential and beyond the reach of prosecutors.

"We are merely letting the court make the decision as to what is or is not covered by privilege," Moise told the Legislative Finance Committee.

Charles Wollmann, spokesman for the council, said the agency could not disclose what documents are being sought by prosecutors.

Alarie Ray-Garcia, a spokeswoman for Richardson, declined to say whether the governor's office has claimed executive privilege for any documents sought by investigators.

"In order to protect the integrity of an ongoing investigation, we will not comment other than to say we are cooperating and working through the legal process," she said in a statement.
Norm Cairns, a spokesman for the U.S. Attorney's Office, declined comment because the agency doesn't publicly discuss investigations or secret grand jury proceedings.

Federal prosecutors and the Securities and Exchange Commission have been investigating state investments and the use of third-party placement agents, including a politically connected New Mexico broker who shared in nearly $22 million in fees.

The investigation came to light last year after several firms and placement agents involved in New Mexico investments were implicated in a New York pension fund pay-to-play scheme.

The council and a state pension agency previously have released copies of subpoenas they received last year from a grand jury and the SEC.

Those sought a wide range of materials, including records about placement agents used for investment deals and e-mail of former state Investment Officer Gary Bland, who resigned last year amid the federal investigation. Bland was appointed by Richardson to run the office that manages state endowment funds valued at about $13 billion.

Bland's resignation came after the council used an outside law firm to conduct an internal review of the handling of investments. The firm also has briefed Department of Justice officials about its findings, which have not been released publicly.

The council also has turned over 1.9 million documents to federal investigators, Wollmann said. However, he said the council had some documents that were "identified as basically governor's documents" and it was decided the governor's office should review them to determine whether any privilege applied.

Although the council is not trying to block release of those documents, Moise said the agency has not voluntarily waived any potential legal privilege for materials in its possession because it doesn't want to set a precedent that might create problems later as it brings lawsuits to recover losses from failed investments and questionable fees paid to marketing agents.

http://www.lcsun-news.com/las_cruces-news/ci_16701848