NEW YORK (Reuters) – New York state’s pension fund has sued Aldus Equity Partners LP, its principals and others, charging they took part in a kickback scheme that has already resulted in state and federal charges.
The probes have turned a spotlight on lawyers, lobbyists and placement agents hired by investment firms eager to help run nearly $3 trillion in public pensions around the nation.
New York state’s suit aims to recover $5 million in fees, as well as compensatory and punitive damages, State Comptroller Thomas DiNapoli said on Wednesday.
“The suit we’re filing today is the next step to unravel the tangled web of misconduct we inherited from the Hevesi administration,” he said in a statement announcing the suit.
DiNapoli was referring to his predecessor, Alan Hevesi, a fellow Democrat. The U.S. Securities and Exchange Commission and New York Attorney General Andrew Cuomo say Hevesi’s top fund raiser, Henry Morris, and his chief investment officer, David Loglisci, collected millions of dollars in kickbacks.
Hevesi has not been charged in the two-year probe; lawyers for him, Morris and Loglisci say they are innocent.
A spokesman for Dallas-based Aldus, which manages more than $5 billion, said firm officials were not available to comment.
DiNapoli, the sole trustee for New York’s $122 billion pension, also disclosed placement agents the pension fund used when it was run by Hevesi at web site.
New York’s complaint names as defendants Aldus principals Saul Meyer, who has already been charged by the SEC, along with his firm, as well as Matthew O’Reilly and Marcellus Taylor.
Other firms named include Renaissance Private Equity Partners LP, which the complaint called “an alter ego” for Aldus, Erasmus Capital Management L.P., which replaced Aldus as a general partner in a fund, and Pantigo Emerging LLC, whose “sole member” is Morris, the document added.
Meyer and Raymond Harding, who previously led New York’s Liberal Party, all face state criminal charges in the probe; their lawyers have said their clients are innocent.
Cuomo, a Democrat who says a “national network of actors” are running ongoing pension kickback schemes, on Wednesday said: “Pension funds across the country are now taking appropriate steps to clean up abuses.”
New York City’s over $80 billion pension funds have begun firing Aldus, and the Los Angeles Fire and Police Pensions fund board could cut the firm as soon as Thursday. [ID:nN04434272].
The Texas Senate and House are weighing bills to stiffen oversight over public pensions and Aldus has already lost clients in its home state. Ruth Ryerson, executive director of the Fort Worth Employees’ Retirement Fund, said it dropped Aldus in April to consolidate private equity investments with Credit Suisse (CSGN.VX).
Aldus was recommended by the Memphis-based Consulting Services Group, Ryerson added. A Consulting Services Group spokeswoman was not immediately available.
On April 30, the firm said it had cooperated with the SEC probe, was not involved in the litigation and had asked the SEC to “correct inaccurate allegations” about its disclosures of a solicitation agreement with Searle & Co. Morris was registered as a broker-dealer with Connecticut-based Searle.
By Joan Gralla (Additional reporting by Jon Stempel in New York and Jim Christie in San Francisco)