Results tagged “Aldus Equity” from Ron Kaye L.A.

Political corruption is an insidious thing, a lot like swine flu or in this case flu among the swine.

For far too long, the political system in LA has been morally corrupt: Political money buys access, access begets favors. And after a while, the ethical line becomes so blurred that favors are sold outright and political money becomes expected. It's what pay-to-play is all about.

The tentacles of the New York public employee pension fund scandal is reaching deeper into the LA political scene according to the Wall Street Journal which reports today that Julio Ramirez, a politically-connected operative formerly with Wetherly Capital, has "pleaded guilty to securities fraud and is cooperating with the investigation, according to people familiar with the matter."

Ramirez, 48, of La Canada-Flintridge, pleaded guilty to a criminal misdemeanor charge and is likely to face a civil complaint from the Securities and Exchange Commission.

The charges stem from a series of fraudulent transactions with Hank Morris, central figure in the New York probe and long-time partner of top LA political consultant Bill Carrick, and others.

They were part of a "national network of actors who often acted in concert across the country" to help firms secure investments from pension funds and allow agents to collect lucrative fees, according to the Journal.

"Both men acted as middlemen, or placement agents, who received payments from private-equity and hedge-fund firms for helping secure contracts to manage pension-fund money. At the heart of the case is concern investment decisions regarding retirees' money were guided by improper influence peddling."

The allegedly fraudulent transactions involved the Los Angeles-based placement agent firm, Wetherly Capital Group, where Ramirez was a top manager, and Dallas-based Aldus Equity Partners.

Wetherly has represented equity firms that got funds from the LA Fire and Police Pension Fund and Aldus advised the the fund's board. Two directors of the fund -- Sean Harrigan and Elliot Broidy -- resigned after the SEC sought details of their personal financial dealings.

Ramirez and his wife, political fund-raiser Annette Castro, have given generously to local political campaigns over the years as has Wetherly.
 
A Wetherly spokesman told the Journal that in 2003,  Ramirez recommended working with Morris to get pension business. 

Wetherly, headed by Daniel Weinstein, paid Ramirez or his company Ramirez Partners Inc., then Mr. Ramirez paid Mr. Morris. "Ramirez informed us that this was how Morris wanted to be paid for his services," the Wetherly spokesman said.
 
New York Attorney General Andrew Cuomo alleges in the indictment that $313,750 in payments to Morris were "proceeds of criminal conduct" involved in a money laundering and kickback scheme.
 
The Journal said  Wetherly "has come within the scope of the investigation." The company denies wrongdoing and it is cooperating in the investigation.

In 2004, Ramirez reportedly told Saul Meyer, founder of Aldus Equity, that his firm also should hire Morris to get hired by the New York pension fund. Meyer is charged with security fraud in the case.

Ramirez worked for the Park Hill Group as a placement agent from 2005 until shortly after the scandal erupted. A spokesman for the private-equity firm Blackstone Group, which own Park Hill Group, said its own investigation found that Ramirez did not violate "our high standards of conduct or evaded our rigorous controls."

Clearly, this is just the tip of a scandal that could touch many others.

What's not clear is whether Attorney General Jerry Brown will vigorously go after a pay-to-play scandal that reaches deep into the Democratic Party at a time when he's seeking the party's nomination for governor or whether District Attorney Steve Cooley will muster the energy and skill to conduct a thorough investigation.

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.

Sincerely,

Ron Kaye