A former pension fund official behind a whistleblower lawsuit on Thursday tried to stop Attorney General Gary King and a state agency from taking over legal efforts to recover money for New Mexico from investment deals allegedly influenced by political considerations.

Frank Foy, the former chief investment officer of the state's educational pension fund, was seeking to keep control of a lawsuit he brought nearly three years ago. Foy contended there was a pay-to-play scheme involving government and pension investments during former Gov. Bill Richardson's administration.

Foy and his lawyer are trying to prevent the State Investment Council and the Attorney General's Office from taking the lead in recovering investment money for the state of New Mexico. His lawsuit was brought under a law allowing private citizens to sue on behalf of the government for claims of fraud against taxpayers. King had approved the whistleblower case when it was filed in 2008.

But the council, which oversees endowment funds worth $15 billion, filed lawsuits last month suing some of the same defendants in Foy's case. King asked a state court to dismiss parts of the whistleblower case, contending the council's legal push was a better way for the government to recover damages.

In a request filed with state district court in Santa Fe, Foy's lawyer, Victor Marshall, said King and the Attorney General's Office should be disqualified from any involvement in state investment lawsuits.

Marshall, who also does work for The New Mexican, said King had a conflict of interest because the treasurer of King's unsuccessful 2004 congressional campaign was a prominent Albuquerque accountant who is a defendant in Foy's lawsuit.

Foy claimed that Bruce Malott, a former chairman of the educational pension fund's governing board, joined with others in steering investments to Richardson's political supporters. He and other defendants in the whistleblower lawsuit, including former State Investment Officer Gary Bland, have said Foy's allegations are baseless.

Marshall said the Investment Council should reconsider whether to independently bring lawsuits rather than rely on Foy's whistleblower case. He said the council's lawsuits will delay and "mess things up" in recovering money for the state.

"Just when we're about to get rolling, they filed these lawsuits," Marshall, a former Republican state senator, said.

King said his office has no conflicts of interest in the investment cases and Malott's work for his old campaign committee had ended. The Investment Council lawsuits are in the state's best interests, according to King.

Foy's case can't recover money for investment decisions before July 2007, when New Mexico's whistleblower law took effect, but the SIC lawsuits can, King said. If the state assumes the lead role in the investment lawsuits, King said, Marshall could end up getting less money in attorney's fees if the cases succeed.

State Investment Officer Steve Moise also defended the agency's legal decisions, saying that "using a highly qualified and vastly experienced securities litigation firm working in tandem with the New Mexico attorney general's office ... is the most appropriate and the only legitimate avenue in recovering pay-to-play damages."

Republican Gov. Susana Martinez serves on the 11-member council, along with one of her cabinet-level department secretaries and three gubernatorial nominees. The Legislature appoints four members, and the state treasurer and state land commissioner also serve on the council.



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