N.M. lays claim to Md. casino fees

State says $3 million for Baltimore slots license should be returned

August 03, 2011|By Annie Linskey, The Baltimore Sun

The State Lottery Agency says it wants to return $3 million in fees submitted by backers of a failed bid for the Baltimore slots license.

But with so many lawyers, former business partners and vendors claiming the cash, officials have turned to a court to figure out who should get it.

Now a new group is demanding the money: the people of New Mexico.

Lawyers working for the New Mexico attorney general's office say the money paid in support of Canadian developer Michael Moldenhauer's bid came from proceeds of an alleged pay-to-play scheme involving the son of a friend of former New Mexico Gov. Bill Richardson.

In papers filed last week in Baltimore Circuit Court, New Mexico says it wants the money back and will use it "to fund public education and government programs for the benefit of the citizens of New Mexico."

Dana P. Moore, an attorney who represents Moldenhauer, disputes New Mexico's claim and says the $3 million should be returned to the Toronto homebuilder.

"They say they can prove the money came from ill-gotten means," Moore said. "I don't think they can prove that. I don't think they can substantiate that."

It is the most recent twist in the long campaign by Moldenhauer to build a casino in Baltimore — and it draws Maryland, unwittingly, into the alleged scheme surrounding public investment funds that sank Richardson's nomination for secretary of commerce in the administration of President Barack Obama.

Moldenhauer's Baltimore City Entertainment Group was the sole bidder for the license to run a casino on Russell Street near the sports stadiums.

Officials envisioned a 3,750-machine slots casino, the second-largest in the state, that would generate nearly $430 million annually. It was supposed to open this year.

The state slots commission rejected Moldenhauer's bid in December 2009, citing his group's failure to meet deadlines or pay millions of dollars in required fees, and a lack of clarity about who would control the project.

Moldenhauer later filed lawsuits against the city and state. The commission has attempted to move on with a new round of bidding for the Baltimore license, with applications due in September.

Moldenhauer has said that he still is interested in building a casino in Baltimore.

Moore warned that the legal wrangling over the $3 million fee would have a "chilling effect" on others considering building a casino in the city. Would applicants see their fees refunded if their bids failed?

"It is a very bad message to send out to the business community," Moldenhauer's attorney said.

Moldenhauer's group included local businessmen, a former casino executive and Marc Correra, a placement agent in New Mexico.

Correra and Moldenhauer had attempted to do business together before, proposing to build a casino at a racetrack in Raton, a small city in northern New Mexico, near the Colorado border. That project also stalled.

Court documents show the $3 million application fee was supplied in February 2009 via three wire transfers — two from Marc Correra and one from an organization owned by his father, Anthony Correra, a Democratic fundraiser and Richardson friend.

Within months of the transfers, the New Mexico State Investment Council said Marc Correra had earned millions of dollars in fees from financial firms that had sought to invest part of the state's $12 billion endowment.

In a civil lawsuit filed two months ago, the office of the New Mexico attorney general alleges that Anthony Correra used his position on the New Mexico State Investment Council to steer the state's money to investment firms that paid disproportionate fees to Marc Correra.

Lawyers for the state of New Mexico say that Marc Correra received $14 million in placement agreements from the companies.

"Correra performed little or no work in connection with those deals," the civil complaint alleges.

The Correras have denied any wrongdoing. While a federal grand jury has investigated the allegations, no criminal charges have been filed.

Marc Correra, who reportedly left New Mexico for France in 2009, could not be located for comment for this article. Ralph Siciliano, an attorney for Correra, declined to comment.

The investigation ended Richardson's aspirations to return to the Cabinet.

Richardson had been energy secretary and ambassador to the United Nations under President Bill Clinton. Obama nominated him at the end of 2008 to head the Department of Commerce.

Richardson withdrew after it was reported that Republicans planned to raise questions about the New Mexico probe during his confirmation hearings.

As authorities were looking at the Correras, Maryland officials took notice.

"The background investigation began to indicate that there were potential allegations about irregular activities involving Correra in New Mexico," said Holly Knepper, deputy counsel at the Maryland State Lottery Agency.

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