More States Start Pension Inquiries

A survey of practices across the country portrays a far-reaching web of friends and favored associates: political contributors, campaign strategists, lobbyists, relatives, brokers and others, capitalizing on relationships and paying favors. These influential figures can determine how pension funds are invested, as well as state university endowments, municipal bond proceeds, tobacco settlement funds, hurricane insurance pools, prepaid tuition programs and other giant blocks of public money.

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In New Mexico, the former chief investment officer of the state teachers’ pension fund has filed a lawsuit saying he was forced out after he opposed a $40 million investment in mortgage-related securities. The investment was made anyway, and the securities are now worthless. The lawsuit describes an informal network of state officials, political insiders and campaign contributors stretching to Illinois.

The disgruntled officer, Frank Foy, says these people worked in concert to talk him into making the investment, then worked together to remove him from office when he did not cooperate.