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.
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.
The agency asked Moldenhauer "on numerous occasions" to swap out Marc Correra's $3 million and replace it with his own money, Knepper said. He never did.
"It became of concern that with Correra on [the Baltimore City Entertainment Group's] proposal as a principal that BCEG would not be able to qualify," Knepper said.
Asked by The Baltimore Sun in August 2009 about his relationship with Marc Correra, Moldenhauer said Correra had "expressed an interest" in the Baltimore casino but "we never really got to the stage where it reached a formality of him becoming a partner."
In fact, Moldenhauer had submitted paperwork to the Lottery Agency showing that Marc Correra had a 46.25 percent stake in the group, according to court documents filed in Baltimore. Moldenhauer never amended the filing.
Moore says she has an affidavit from Correra indicating that he has no claim on the $3 million fee.
But in papers filed in the Baltimore court, the lawyers for New Mexico say the New Mexico State Investment Council "believes it will be able to show that this $3 million payment was funded by the bogus placement agent fees paid to Marc Correra with NMSIC funds."
It was Maryland lottery officials who had tipped off the New Mexico attorney general's office to Correra's involvement in the Moldenhauer group. The Maryland officials had contacted New Mexico in the search for potential claimants to the fee.
Michael Cryor, a former partner in Moldenhauer's group, said he understood that the $3 million was money that Correra owed Moldenhauer from an unrelated deal.
"That story got harder and harder to track," said Cryor, who is also claiming a portion of the money.
He said Moldenhauer told him consistently that Correra was not a part of the Baltimore casino deal. He said he was surprised to learn that court papers indicated otherwise.
"I can't begin to tell you how crazy this is," Cryor said.
Baltimore Sun reporter Scott Calvert contributed to this article.