New Mexico drops ‘pay-to-play’ lawsuit against Chiefs owner after $5.65M settlement
New Mexico dropped its lawsuit against Kansas City Chiefs owner Clark Hunt and other defendants, which accused them in a kickback scheme tied to former Gov. Bill Richardson’s administration, after approving a $5.65 million settlement.
The lawsuit had accused Hunt of improperly securing hundreds of millions of dollars in state investment money through a “pay to play” arrangement 14 years ago with political insiders Anthony and Marc Correra.
Shoreline, Inc., a U.S. Virgin Islands corporation that managed one defendant, Hunt Family Ventures, paid to settle the August 2017 lawsuit, according to the New Mexico State Investment Council, which sued Hunt. Shoreline became part of the litigation when HFV, where Hunt was one of two managing directors, was dissolved.
It’s unclear who owns Shoreline, which settled to release all claims in the lawsuit. In a statement, Benjamin Silva, Jr., an attorney who represented Hunt, said neither Hunt nor any entity affiliated with him paid anything to resolve the lawsuit.
“The claims against Mr. Hunt were completely false and without merit, which is why the claims were dismissed several months ago,” Silva said.
But Charles Wollmann, a spokesman for the investment council, said the claims were dismissed because of the settlement agreement.
Hunt is not named in the settlement. The parties in the settlement recognized the “significant costs and uncertainties associated with litigation,” according to the agreement.
In the lawsuit, the New Mexico investment council alleged the Correras, in exchange for kickbacks, used their influence to steer state investment money to a hedge fund firm in which Hunt was a partner. The council said it awarded $300 million to HFV and paid the firm millions in management fees, enriching Hunt and his business partner.
The investment council manages New Mexico’s $21.5 billion permanent endowment, which provides a significant portion of the state’s budget. The council has said it lost tens of millions of dollars in a pay-to-play investment scandal under Richardson’s administration and has reached settlements with investment firms and advisers it said mishandled money.
Attorneys for the defendants have called the lawsuit “baseless,” saying HFV received less than the alleged amount and actually made money for the investment council. Shoreline denied any wrongdoing in the settlement.
Barrett Wissman, Hunt’s business partner who pleaded guilty to a felony charge of securities fraud in a similar New York case, also settled with the investment council, for $15,000. Wissman agreed to testify truthfully in other investment council legal matters.
In an affidavit, Wissman said Hunt was “equally knowledgeable as I about the use and involvement of the Correras” for investments involving the New Mexico investment council. The two were willing to pay the Correras a fee if they obtained an allocation, Wissman wrote in court documents.
The settlement ended the litigation with others listed as “John Does 1-20.” Those defendants were thought to include Hunt family trusts, through which Hunt owned some or all of his interest in HFV, according to New Mexico’s lawsuit.
In asking the state’s investment council to approve the settlement, its deputy general counsel, Bruce Brown, called the agreement reasonable for several reasons, including the “strength of available evidence” and a comparison of similar settlements.
Thirty days after Shoreline received a notice of the approval, the money was to be wired to the State Investment Council Suspense Fund at the New Mexico Treasury, according to the settlement. After the payment was received, a stipulated motion for dismissal in the lawsuit was filed, the agreement shows.
The settlement was approved in November, investment council documents show. The lawsuit was then dismissed in January with prejudice, according to court documents signed by Silva and a special assistant attorney general in New Mexico.
Unlike the lawsuit filing, news of the settlement was not widely reported. It was the investment council’s “second-largest settlement under long-running ‘pay to play’ litigation,” according to the Albuquerque Journal.
The settlement barred the parties from making “disparaging remarks or derogatory statements” about one another.
The Correras were not included in the released parties under Shoreline’s settlement.
According to the lawsuit, Hunt agreed to pay Marc Correra 25% of the fees HFV received from the investment council in exchange for steering the state money to Hunt’s firm. Those payments were disguised by a fee-sharing deal through a Chicago-based broker-dealer that passed 90% of the fees it received from HFV to Correra, the Albuquerque Journal has reported.
Anthony Correra, frequently joined by his son Marc, was considered a political gatekeeper to the investment council, according to the lawsuit. Companies paid them millions of dollars in finder’s fees to get access to state investment money.
In a meeting at an airport in Albuquerque, the Correras allegedly told Hunt and Wissman they could use their personal relationship with Richardson and then-investment officer Gary Bland to get Hunt’s firm a substantial investment.
At the time, HFV — then called Arbitex Asset Management LP, which Hunt and Wissman founded — was one of 82 firms seeking investments from the council, which sent out a request for proposals. HFV had already responded when it entered into the finder’s fee arrangement, according to the lawsuit.
The petition claimed Hunt “sought to gain unfair advantage by paying for influence over the process.”
In May 2005, the investment council awarded HFV Management $300 million for investment in two hedge funds, three times what other hedge fund managers received, according to the lawsuit.
Bland allegedly made the investment without seeking the approval of the council. He did so even though the council’s adviser on hedge funds did not recommend that HFV receive any state investments, the lawsuit claimed.
One of the hedge funds lost $13.8 million while Hunt and his partners were paid millions of dollars in management fees, according to the lawsuit. Another fund also underperformed, the investment counsel said.
Silva, the New Mexico-based attorney who represented the defendants, has said the pay-to-play accusations in Hunt’s case were false. Regulators previously examined HFV’s dealings with the investment council and found no wrongdoing, he has said.
The allegations in New Mexico came to light in 2009 as part of the criminal investigation in New York that ended with several convictions. Those included Saul Meyer, who introduced Hunt and Wissman to the Correras, according to the lawsuit.
