Editor’s Note: This item is a formal California Public Records Act request for information in the control of LA city officials about the role of Aldus Equity of Dallas, Tex., in becoming and operating as an investment adviser to the LA Fire and Police Pension Fund. Nearly two months after an LA connection surfaced in the New York public employee pension fund pay-to-play kickback scandal, LA officials have failed to take any effective action or to disclose important information about this issue No local official has indicated that any level of investigation is under way. Given that taxpayers face paying billions of dollars to keep city pension funds solvent over the next five years, this information should be disclosed immediately.
Dear Mayor, Pension Department General Manager, LACERS and LAFPP board presidents:
This is a formal demand made under the California Public Records Act for all information relevant to Aldus Equity and any of its employees. This is a matter of urgency and I respectfully request that this information be turned over to me as soon as it is available in whole or parts.
On May 1, consultant Saul Meyer of Aldus Equity
was charged with felony fraud involving the New York State pension fund and accused of violating Securities
and Exchange Commission laws as part “a
multimillion-dollar kickback scheme.” Aldus also was charged.
In announcing these charges, New York Attorney General Andrew Cuomo said he has shared information about his investigation with his counterparts in California and 30 other states after determining he had uncovered “a national network of actors who often acted in concert and did this all across the country,”
“Obviously, we have information relevant to California and we’ve been sharing information with California,” Cuomo said. “The amount of information has increased so dramatically that it no longer works to do it on an informal basis.”
“If there is wrongdoing in California, we will look into it and take appropriate action,” said Scott Gerber, a spokesman for California Atty. Gen. Jerry Brown.
New Mexico has taken significant steps in the light of this investigation, suspending Aldus as investment adviser and instituted tough rules modeled on New York’s requiring that all investment funds and others doing business with the state’s pension funds to disclose in elaborate detail all aspects for its financial arrangements relevant to the funds.
The City of Los Angeles has not taken similar steps to protect the public interest. The city’s pension funds have sustained such dramatic losses that LA faces potential bankruptcy in the next few years.
Aldus, a Dallas-based company started in 2003 with a limited track record, was chosen by the LA Fire and Police Pension Fund as an adviser on its investment policies, including investments in private equity funds that may or may not have been represented by placement agents.
The public is entitled to know answers to the following questions and all other information available to city officials:
How did Aldus — a Texas firm with a short history — become an adviser to LAFPP?
Did it replace a previous adviser?
Was its selection done on a competitive basis against other firms?
If so, what were the criteria? If not, what was the justification? Who supported hiring Aldus?
What advice did Aldus provide to LAFPP?
What equity firms did it recommend? What equity firms has LAFFP invested funds in? Which placement agents or individuals represented those equity firms?
What fees were paid to Aldus?
What are the terms of its contract and what is it required to disclose of its financial dealings and relationships?
Toward that end, I request all letters, contracts, memos, emails and all other materials that would provide knowledge about its activities with regard to the LAFPP from 2005 to the present.