A state judge has ruled that a whistle-blower and his attorney can't disqualify New Mexico Attorney General Gary King from trying to recover taxpayer dollars lost in a deal struck by the State Investment Council.

District Judge Stephen Pfeffer of Santa Fe late Wednesday denied a motion to remove King and an out-of-state firm hired by the State Investment Council because of what Frank Foy, a former Educational Retirement Board investment officer, and his attorney, Victor Marshall, allege are multiple conflicts of interest.

Foy and Marshall lacked standing to "assert the conflicts of interest they have alleged," Pfeffer wrote.

In a separate ruling, Pfeffer said Marshall cannot not depose King, current State Investment Officer Steven Moise and State Investment Council member Doug Brown prior to an Aug. 17 court hearing.

"Judge Pfeffer's ruling is a huge step forward in clearing the air of Mr. Marshall's self-serving and spurious allegations of conflict," King said Thursday in a news release. "I believe the motion to disqualify my office has always been about preserving Mr. Marshall's legal fees at the expense of the best interests of the state."

Marshall, who also does legal work for The New Mexican, had no comment on the judge's rulings.

Since May, Foy and Marshall have dueled with King, the State Investment Council and Day Pitney, the out-of-state law firm, over who will decide the state's strategy in attempting to recover millions of dollars.

Estimates are the state of New Mexico lost hundreds of millions of dollars in recent years due to a pay-to-play scandal in which investment deals were struck to reward political contributors to and fundraisers for then-Gov. Bill Richardson.

Contact Trip Jennings at 986-3050 or at tjennings@sfnewmexican.com.