State investment case costs rise to $517,000

The state has spent $177,211.56 on legal fees since July 2009 in an alleged pay-to-play case involving the State Investment Office and the Educational Retirement Board, according to records obtained by The New Mexican.

The total spent so far is $517,014.

The biggest chunk of the legal fees paid out recently in the case known as Foy v. Vanderbilt -- $52,485 -- went to the Narvaez Law Firm, which is representing Educational Retirement Board Chairman Bruce Malott.

The lawsuit, filed by Frank Foy, a former investment officer for the Educational Retirement Board, alleges taxpayers were defrauded of $90 million by a host of financial companies and two state officials. Foy's lawyer in recent days has told lawmakers that the total amount the state lost in investments with Vanderbilt actually is about $243 million.

Among the defendants in the suit are Malott and former State Investment Officer Gary Bland. The suit alleges Bland and Malott were instructed by former Richardson chief of staff Dave Contarino to invest with Vanderbilt Financial and associated companies in exchange for political contributions from the firm's employees. The men accused in the case have denied wrongdoing.

Records from July through December of last year show six law firms were being paid by the state for the case.

The Montgomery & Andrews firm, which is representing Bland, charged the state $46,709.23. The Simone, Roberts & Weiss firm, which is defending Contarino, charged $17,339.28. Canepa & Vidal, which is representing the Educational Retirement Board, submitted invoices for $25,999.42, the records show.

Meanwhile, Long, Pound & Komer, which is representing the Governor's Office, charged $2,933.90. The Walz and Associates firm charged $31,744.05. Invoices from that group show part of the billing was to represent the Governor's Office.

The lawsuit was filed in July 2008 under the Fraud Against Taxpayers Act and is still pending in District Court. It was unsealed in January 2009.

Foy, who testified at the Capitol last week, told lawmakers that the state is spending taxpayer money to cover up what he called ``bribery and kickbacks.'' He and his attorney, Victor Marshall, also said that the administration is stonewalling his efforts to get information related to the case. A State Investment Office spokesman has denied that, saying Foy and Marshall have been given information.

Marshall in the past has represented The New Mexican.

Contact Kate Nash at 986-3036 or [email protected]