April 22 (Bloomberg) -- New Mexico Governor Bill Richardson’s campaigns and political action committees received at least $102,300 from brokers hired by money managers seeking to handle $11.7 billion of state trust funds, campaign finance records show.

In addition to the those donations, Richardson, a Democrat who ran for President in 2008, received at least $95,000 from the state trusts’ outside money managers, including $20,000 from former Quadrangle Group LLC founder Steven Rattner and $50,381 from Leo Hindery, founder of InterMedia Advisors LLC, according to New Mexico and federal campaign finance records.

Rattner, who directs the Obama administration’s auto industry task force, and Hindery have donated $3.8 million to state and federal Democratic candidates and political action committees over time, compared with $110,200 to Republicans.

“There’s an appearance of pay-to-play,” said Steven Robert Allen, executive director of Common Cause New Mexico, a public-interest organization. “Whether there’s a quid pro quo or not, it raises questions in people’s minds, and that’s not good for a democracy to have those sorts of questions being raised about the most powerful elected official in our state.”

Pay-to-play refers to the practice of seeking to influence the award of contracts by making or soliciting political contributions to officials in a position to award business. U.S. Securities and Exchange Commission Chairman Mary Schapiro said in an interview yesterday that the agency is considering rules to restrict money managers from paying to win state business.

Criminal Complaint

The role played by so-called placement agents, who reap fees for helping money managers attract investments from public pension and trust funds, is under scrutiny following allegations of wrongdoing involving New York state’s $122 billion state pension fund, the nation’s third largest.

Last month, Hank Morris, a political adviser to former New York State Comptroller Alan Hevesi was charged with allegedly soliciting millions of dollars of kickbacks and political contributions from firms managing money for the state.

New York Attorney General Andrew Cuomo filed a 123-count criminal complaint against Morris and deputy comptroller David Loglisci, while the SEC filed civil charges.

The National Institute on Money in State Politics in Helena, Montana, initially said a Morris political consulting firm, Morris Carrick & Guma, contributed $52,972 to the New Mexico Democratic Party in February 2001. The group has subsequently removed the amount from its Web site because it can’t confirm the figure, as it disposes of campaign finance records after five years in accordance with government practice. Richardson was elected in November 2002.

Federal Investigation

“Ultimately, enforcement is an inadequate mechanism to deal with what is commonplace at the state and municipal level with respect to public money,” said Mercer Bullard, founder of Fund Democracy LLC, a shareholder advocacy group, and a University of Mississippi law professor in Oxford, Mississippi.

Richardson withdrew his nomination in January to become President Barack Obama’s Commerce Secretary after it was disclosed that a New Mexico grand jury was investigating whether an adviser won work on state bond deals because of campaign donations.

That same month, a lawsuit filed in state court by the former chief investment officer of the New Mexico’s Educational Retirement Board, alleged that Richardson’s top aide pressured investment funds to buy securities sold by a contributor. Richardson has denied any wrongdoing.

Quadrangle used Hevesi’s adviser, Morris, as a third-party broker in New Mexico to secure a $20 million commitment to one of its private equity funds, according to a list of brokers released by the state’s investment council, a nine-member group that oversees the state’s two permanent endowment funds. Adam Miller, a spokesman for New York-based Quadrangle, declined to comment about Rattner’s contributions to Richardson.

Giving to Richardson

A message left with Rattner’s office at the Treasury Department force wasn’t immediately returned. Rattner is “not likely to face any criminal or civil charges” from the investigation, Obama’s press secretary, Robert Gibbs, said on April 17.

New York-based InterMedia paid a broker $125,000 after New Mexico committed $30 million to one of its funds, according to the state investment council. The broker, William Howell, contributed $10,000 to Richardson, campaign finance records show. Calls to Howell’s home weren’t picked up.

Hindery didn’t return a call seeking comment. Neither did Gilbert Gallegos, a spokesman for Richardson.

No Involvement

“Campaign contributions should not and do not play any role whatsoever in investments made by the state investment council,” Charles Wollman, a spokesman for the New Mexico State Investment Council, said.

A list distributed by the New Mexico State Investment Council showed that 42 brokers received as much as $35.9 million for placing public money with more than 60 funds. The state trust’s money is handled by more than 200 fund managers.

Nine of the brokers contributed to Richardson’s 2002 and 2006 gubernatorial campaigns, his 2008 presidential campaign or a political action committee he established to register Hispanic and American Indian voters, Moving America Forward.

Two of them, Guy Riordan and Alfred Jackson, are listed as officers on Si Se Puede Boston 2004, a political committee Richardson set up to pay for expenses for 2004 Democratic Convention. Riordan also served as former chairman of the New Mexico Game Commission.

Brokering Investments

Riordan, a former Wachovia Corp. employee who contributed $41,560 to Richardson’s gubernatorial campaigns, helped broker investments of $400 million with Crestline Investors Inc., a hedge fund of funds while working as an agent for Juniper Capital.

He also placed another $46 million private equity investment with New Mexico Co-Investment Partners LP established by Fort Washington Investment Advisors, according to the state investment council.

Wachovia was paid $318,958 for the Fort Washington Investment. Juniper Capital, which receives a percentage of fees paid by New Mexico to Crestline, was paid $2.47 million through Dec. 31, according to the state investment council. The council wasn’t able to determine how much Riordan was paid. Riordan declined to comment.

Jackson, a former professional football player for the Atlanta Falcons and founder of Inroads Group, was paid at least $3.4 million for brokering $395 million of investments from the New Mexico fund, records show.

Managing Partner

Jackson, a managing partner of Davis Hamilton Jackson & Associates LP, a Houston-based asset management firm, donated $9,040 to Richardson’s state and federal campaigns, records show. He didn’t return a phone call to his office at Inroads Group seeking comment.

Los Angeles-based Wetherly Capital Group and three of its current and former executives, contributed $31,000 to Richardson’s gubernatorial and presidential campaigns and Moving America Forward, records show. Wetherly arranged the investment of $385 million of New Mexico’s trust fund money from 2003 to 2008, earning more than $2.7 million.

Dan Weinstein, a managing director at Wetherly, has raised money for Democrats in California, including former Governor Gray Davis, former Treasurer Phil Angelides, and former Comptroller Steve Westley.

Both Westley and Angelides held seats on the California Public Employees’ Retirement System and the California State Teachers’ Retirement System, two of the largest pension funds in the U.S. Weinstein didn’t return a call seeking comment.

Pay for Play

Under then chairman Arthur Levitt, the SEC proposed in 1999 to prohibit money managers from engaging in pay-to-play. Patterned after a 1994 rule that sought to quash the practice by investment bankers seeking to underwrite municipal bonds, the rule would have prohibited advisers from managing public money two years after they or their employees contributed more than $250 to public officials, such as comptrollers or treasurers, or candidates seeking offices that controlled public investment.

The SEC proposal also would have banned advisers from making contributions indirectly through third parties. Critics, including public officials, said the prohibitions were too broad. The rule wasn’t adopted.

The agency is re-evaluating the 1999 proposal by “looking at everything related to municipal markets,” Schapiro said.

“One of the first things I asked the staff to do was dust off” the earlier proposal and “take a look at it,” said Schapiro, chairman since January. “Let’s see if it still makes sense or if there are things that we should do differently.”

Quadrangle handles the personal and philanthropic finances of New York City Mayor Michael Bloomberg, whom Rattner supported through his chairmanship of Democrats for Bloomberg during the mayor’s 2005 re-election campaign.

Bloomberg is the founder and majority owner of Bloomberg LP, the parent company of Bloomberg News.

To contact the reporters on this story: Martin Z. Braun in New York at mbraun6@bloomberg.net; William Selway in San Francisco at wselway@bloomberg.net.

Last Updated: May 1, 2009 12:35 EDT