GP forfeits $3m in New Mexico pay-to-play settlement

The New Mexico State Investment Council (NMSIC) agreed to a $3 million settlement with private equity manager Spyder Management (now rebranded as Silver Creek Ventures) in connection with the state endowment’s ongoing fight against a pay-to-play scandal uncovered in 2009.

New Mexico committed $9.4 million to Spyder’s Silver Creek Ventures II in 2005. In 2009, following the discovery of a related scandal at the New York State Common Retirement Fund, NMSIC learned that Silver Creek investors had paid a placement fee to third party marketer Marc Correra, whose father Anthony was an unofficial advisor to New Mexico’s then governor Bill Richardson.

Corerra worked in conjunction with now defunct placement agent Aldus Equity Partners, which helped guide hundreds of millions of New Mexico investment dollars during Richardson’s tenure. NMSIC has sued more than a dozen entities and individuals, including the Correras, in relation to these payments. A trial date has been set for late 2016.

NMSIC has also experienced a negative return on the Silver Creek fund investment, according to documents from the state endowment’s website. Spyder, which denies any wrongdoing, will also purchase the remainder of NMSIC’s investment at current net asset value – $1.9 million, according to sister publication Secondaries Investor.

“This is a sizeable recovery – an appropriate result for New Mexico taxpayers,” said state investment officer Steve Moise in a statement. “Given the state’s claims, we believe the amount is fair and just, and would note that without a protracted legal fight, we can invest these dollars and put them to work right away for New Mexico schools and taxpayers.”

The SIC also continues to pursue recoveries against investment managers and others it believes were unjustly backed during Correra’s involvement. The council has thus far secured settlements in excess of $32 million from investment managers and individuals who allegedly subverted the state’s investment process for their own benefit.

Most recently, NMSIC agreed to a $775,000 settlement with placement agent and investment manager Alfred Jackson and his fund Capital Point Partners in December. As part of the settlement, Jackson must provide assistance and truthful testimony to the NMSIC as it pursues additional recoveries of improper payments made to other marketers, funds and individuals.