SANTA FE, N.M. (CN) - A class action claims Vanderbilt Capital Advisors and others, including Aldus Equity, put more than $40 million of the New Mexico Educational Retirement Fund into an unsound "pay to play" investment scheme involving "individuals with powerful political connections to New Mexico Governor Bill Richardson." Aside from some "small dividends," the complaint states, "the entire $40 million principal investment was lost."
The class claims Vanderbilt invested teachers' pension funds into "a highly speculative, risky, and leveraged investment ... for the political or financial gain of the perpetrators of the schemes and/or those involved in political fundraising for or on behalf of, inter alia, Governor Richardson."
Richardson is not named as a party to the case.
The single named plaintiff, Donna Hill, claims that an unnamed former aide to Richardson joined others to create a risky investment instrument, gathering together sub-prime (Alt-A) mortgages and similar bad investments.
Hill says that the former aide then joined with sitting members of the Educators Retirement Board to talk the board into purchasing the instrument by painting it as a sound investment.
A few months after the deal was made, members of the Vanderbilt investment group made donations to Bill Richardson's presidential campaign totaling more than $15,000, according to the complaint in Santa Fe County Court.
The complaint also blames Aldus Equity and its principals as liable for losses incurred by the retirement fund.
It claims that in October 2009 Saul Meyer, of Aldus Equity, "pleaded guilty to securities fraud in New York arising from his conduct involving a public pension fund kickback scheme there. It claims that Meyers' plea allocution included the statements, "On numerous occasions, however, contrary to my fiduciary duty, I ensured that Aldus recommended certain proposed investments that were pushed on my by politically connected individuals in New Mexico. ... I did this knowing that these politically connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico."
The class claims Meyer's allocution included the statement: "From in or about January 2003 through in or about February 2009, acting in concert with others, I made false representations of material facts and concealed material information while engaged in inducing the promoting the exchange, sale, negotiation and purchase ... [of] investment transactions involving ... the New Mexico Educational Retirement Board in the state of New Mexico. As a result of this, I along with Hank Morris and others wrongfully obtained agreements and fees relating to these transactions." (Ellipses and bracketed word in complaint.)
Hill claims that those individuals include the unnamed former Richardson aide who participated in the Vanderbilt scheme.
Hill seeks class damages for breach of contract, breach of fiduciary duty and fraud. Her lead counsel is by Gordon Rowe III of Albuquerque.
Here are the defendants: Vanderbilt Capital Advisors LLC, Vanderbilt Financial LLC, Vanderbilt Financial Trust, Pioneer Investment Management USA, Bruce Malott, Gary Bland, Veronica Garcia, Douglas M. Brown, Patrick A. Livney, Osbert M. Hood, Stephen C. Bernhardt, Kurt W. Florian Jr., Anthony J. Koenig Jr., Mark E. Bradley, Ron D. Kessinger, Robert P. Nault, James R. Stern, New England Pension Consultants LLC, Aldus Equity, Saul Meyer, The New Mexico Educational Retirement Fund, and Does.
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