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Ex-ERB Boss Seeks To Recover Legal Costs [Albuquerque Journal, N.M.]
[November 09, 2012]

Ex-ERB Boss Seeks To Recover Legal Costs [Albuquerque Journal, N.M.]

(Albuquerque Journal (NM) Via Acquire Media NewsEdge) Nov. 09--A former chairman of the Educational Retirement Board filed a lawsuit in federal court this week seeking payment for out-of-pocket legal expenses associated with federal investigations of the pension fund's investment practices.

Bruce Malott, who resigned from the board in 2010 after the Journal disclosed he had received a $350,000 loan from a Richardson administration insider, alleges he incurred substantial legal costs as a result of investigations by a federal grand jury and the Securities and Exchange Commission.

The lawsuit, filed Tuesday, is based on a second attempt by Malott to have expenses paid by the teachers' pension fund.

In 2010, Malott unsuccessfully sought reimbursement for more than $300,000 in fees paid to lawyers and to a public relations company.

After that request, Attorney General Gary King issued an opinion that the state isn't authorized to protect personal interests of appointees to boards -- only to defend them in actions taken in their official state capacity.

The state Risk Management Division has hired lawyers to represent Malott in civil lawsuits in which he is named as ERB chairman.

But Malott's private attorneys have argued that he also needs private counsel because his personal interests could conf lict with those of the state and that the lawsuits and his involvement in the federal investigations stem directly from his volunteer work on the ERB board.

Malott withdrew the $300,000 reimbursement request related to the civil lawsuits in which he has a state-paid lawyer. Most of those fees have now been paid by his insurance company.

The new request for $131,121 stems from the federal investi- gations and a dispute with his insurance company over legal fees involving the civil lawsuits.

Malott's attorney, Jack Brant said in a statement that Malott's latest request for payment was denied in clear violation of state law and the ERB's own rules.

ERB Executive Director Jan Goodwin said she hadn't seen the lawsuit and couldn't comment.

Earlier this year, Brant sent a letter to the ERB requesting that Malott be reimbursed $131,123 for legal fees his client had paid out of pocket.

The total included more than $20,000 to a Denver law firm for representing Malott during the Securities and Exchange Commission investigation and more than $50,000 to Albuquerque attorney Gregg V. Fallick for representing him during a federal grand jury investigation.

The federal investigations focused on secret finder's fees paid by private financial firms seeking investments from the ERB and the State Investment Council.

Finder's fees Firms receiving more than $1 billion in investments from the ERB and SIC paid more than $22 million in fees to former Santa Fe broker Marc Correra, the son of Anthony Correra, an unofficial adviser to then-Gov. Bill Richardson and key member of his inner circle.

The elder Correra also loaned Malott more than $350,000 during the time Marc Correra was collecting fees from the financial firms for deals with the ERB. Malott resigned from the ERB shortly after being interviewed by the Journal about the loan. He subsequently paid off the loan and passed a polygraph test in which he denied knowing Marc Correra was receiving the fees.

Malott filed a lawsuit in state court against the Correras and others claiming he was an unwitting dupe who was manipulated by people he thought of as personal friends. That case is pending.

The SEC ended its investigation last year. The U.S. Attorney's Office never officially confirmed it was investigating, but federal grand jury subpoenas served on state agencies confirmed there was an investigation begun in 2009.

___ (c)2012 the Albuquerque Journal (Albuquerque, N.M.) Visit the Albuquerque Journal (Albuquerque, N.M.) at Distributed by MCT Information Services

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