NY Attorney General Andrew Cuomo today announced two guilty pleas in the kickback scandal involving state pension fund investments into private equity.
The pleaders were: Saul Meyer, founding partner of private equity “gatekeeper” Aldus Equity, and Ray Harding, former head of the New York Liberal Party. Both have admitted to violating the Martin Act, and will be considered convicted felons unless a judge later removes that designation based on cooperation with the ongoing investigation.
No word yet on whether either Meyer or Harding will face jailtime, as sentencing will be determined by a judge at the case’s conclusion (Cuomo’s office will make a recommendation). Cuomo also said that Meyer “is cooperating” with similar investigations in other states, including one led by the U.S. Attorney in New Mexico.
Meyer and Harding are the third and fourth people to plead guilty as part of this scandal. Alleged masterminds David Loglisci (former CIO of New York Common Retirement Fund) and Hank Morris (a conspiring placement agent) have both pled not guilty and remain under indictment.
Cuomo calls the placement agent system easily corrupted, and believes that it has been that way for decades. He notes that the SEC comment period on its proposed placement agent ban (for public pensions) ends today.
Cuomo also said that PE firms have agreed to repay $70 million in “penalties.” These payments have previously been referred to as simple “agreements,” and firms have strenuously objected to them being referred to as fines or penalties. I asked Cuomo about the terminology, and he backed off a bit — saying that he used the term “penalties” in the aggregate, but that each agreement was specific to the firm in question. Many, he said, were repayments of management fees paid by NYCRF or repayments of costs incurred by Cuomo’s office.
Here’s a link to the press release announcing the guilty pleas.
As an interesting sidenote, Saul Meyer was a keynote speaker at our Buyouts Texas event last year. My guess is he won’t be hanging out with us in Dallas next week.