Jeb Bush

A government money market debacle unfolding in Florida is raising questions about former governor and presidential brother Jeb Bush's involvement in the mess.

Florida froze withdrawals from a state investment fund earlier this month when local governments withdrew billions of dollars out of concern for the fund's financial stability.

In the past few days, municipalities have withdrawn roughly $9 billion, nearly a third of the $28 billion fund (which is similar to a money market fund) controlled by the Florida's State Board of Administration (SBA). The run on the fund was triggered by worries that a percentage of the portfolio contained debt that had defaulted.

A majority of this paper was sold to SBA by Lehman Brothers (nyse: LEH - news - people ). Bush, as the state's top elected official, served on a three-member board that oversaw the SBA until he retired as governor in January. In August, Bush was hired as a consultant to the bank. Lehman spokesperson Kerrie Cohen, speaking on behalf of Bush, said they had no comment and would not say when the bank had sold Florida the paper. SBA did not return calls.

While SBA wouldn't confirm, Bloomberg reported the amount of debt in default is around $900 million.

Edward Siedle, a former Securities and Exchange Commission attorney who investigates money management wrongdoing and has worked on behalf of several Florida public pension funds, thinks this is just the tip of the iceberg. He expects problems with defaulting debt to crop up in public funds across the country, especially in states with disclosure laws weaker than Florida's.

The state is now trying to pull together a committee of investors over the weekend to find a solution. Until they do, the several small local governments in Florida that had invested in the SBA could have a crisis on their hands if they are barred from withdrawing funds for their operations.

Florida's Orange County was among the earlier investors to withdraw its $370 million when they heard reports of the fund's risky investments. "We had been feeling some discomfort with things in the market, and when we couldn't get good answers from the SBA, we felt we had other options and needed to take care of ourselves," says Chief Comptroller Martha Haynie. "The state's going to have to do a lot of work to get us back. My responsibility is to Orange County and not the state pension fund."