Private Equity Part of Massive Fraud Case

The New York Attorney General’s office has indicted two former officials of the NY State Common Retirement Fund, for a kickback scheme that involves multiple private equity firms.

The accused — Hank Morris and David Loglisci — allegedly took kickbacks from investment firms looking for fund commitments from NY Common, which is the nation’s third-largest public pension fund with around $122 billion in assets under management. Specifically, the bribes were paid via a Greenwich, Conn.-based “placement firm.” 

It is unclear at this time if the NY AG believes that the investment firms bear any blame, or if they were unwitting pawns (none of the firms or their partners are named as defendants, so it seems like the latter). Among those firms named are The Carlyle Group, Aldus Equity, Ares Management, Falconhead Capital, Levine Leichtman Capital Partners, Lion Capital, Ivy Asset Management, Odyssey Investment Group, Quadrangle Group, Paladin Capital Group, Pequot Private Equity and an affiliate of GKM Newport.

Here is the SEC complaint. Here is the NY indictment:

Morris Group Corruption Indictment