Monday, October 19, 2009

Who Rob the People's Pensions
California Pension Investigation Gives New Yorkers Some Answers
New Yorkers May Have to Pay Tens of Millions in the Next Few Years into both the City's and State's Pensions Funds to Keep Them from Defaulting

Pay-to-play scams that have roiled the nation’s retirement funds involved a vast and deeply-enmeshed web of super-connected players

We when through an entire election cycle to elected a New York City controller and because of the careful election spin strategies of the candidates to ignore the pension scandal and the absence of media investigation reporting on the which has already seen several convictions and out of court agreements with Cuomo and the pension funds that broke the law. A big result of this dysfunctional election election for comptroller is we have no clue with the pols did to our pension, no clue what the new comptroller will do to get rid of political money managers and will all act shocked if down the road we fund out that these money managers loaded New York's pensions with junk. Will New York's pensions needs tens of billions in tax payer money to prevent defaults? Who knows. In the last

This investigation has uncovered a matrix of corruption – which grows more expansive and interconnected by the day,” said Attorney General Cuomo.

"I believe we are disclosing a national network of actors who often acted in concert and did this all across the country," Mr. Cuomo said. "They collaborated, they often partnered and victimized states and taxpayers across the country. It's also an ongoing scam."

Unraveling the Matrix
Luckily or unluckily the investigation of the California pension fund gives New Yorkers some answers. The reason we can predict the future is these placement agents – middlemen paid to open doors for private equity firms and other money managers for the most part are the same in New York and California. In fact they seem to work together or in concert with each other in so many states that only the chief investigators in the Attorney General office, the SEC and the FBI know what the hell is going on.

What we know From Cal
Two Main Players in Both NY and Cal
We learned last week was that the California pension fund called Calpers is being rocked by 'Pay to Play' investigation. The two main targets of the investigation are Alfred Villalobos who ran the pension investent fund Arvco and Leon Black who ran Apollo Management. California investorgators are looking at how former Calpers board member Vilalobos had reaped more than $50 million in fees for arranging investments that could saddle California taxpayers with hundreds of millions of dollars in losses.

Ferrer Paid as a Placement Agent for Vilalobos
Freddy Ferrer, the Democratic nominee for mayor of New York City in 2005, worked as a consultant for Alvco. Seven months after Mr. Ferrer made the introduced Vilalobos to NY State Comptroller DiNapoli, Ferrer earned $100,000 in fees and a $10 million fee for Vilalobos firm Alvco. Starting in 1977 Leon Black learn the trade while he was employed by ex junk bond king Michael Milken investment bank Drexel Burnham Lambert. Black left in 1990 and started Apollo because Milken was jailed after a guilty plea to six securities and reporting violations.
(Craton Equity Partners)

Arvco Loses Money for California Pension Fund

WSJ reports that Arvco recommended some of Calpers's poorly performing investments; last year the pension fund lost nearly a quarter of its value and more than $50 billion.

Cal is investigation weather Albert and his daugthter gave money to a pension board member campaign in return for Pension business

Albert Vilalobos contributed $2000 to controller Thompson and his daughter Carissa $4,950.00 10/10/2004 right before he recieved NYC Pension funds

Black's Apollo Paid Vilalobos Alvco
The private equity firm Apollo Management (Black), paid Villalobos Arvco Capital a placement-agent fee in 2007 after the New York pension fund invested $350 million Apollo, even though the state has invested with Mr. Black's firm since 1996. How can Vilalobos help Black get in with DiNapoli if he needed Ferrer to introduce him at the same time to the NYS Comptroller?

Poorly Performed

New York State invested $195 million in the Apollo fund, and is currently entitled to roughly $20 million in overpaid commissions.

Money managers leon Black owner NYc penson $365 million because of souring investments, the returning of money is know as clawback

Apollo Management, has asked for and received a two-year extension, to July 2010, in hopes of righting the money-losing fund.

Wetherly Capital Group

An unlicensed intermediary Julio Ramirez working for Wetherly Capital as a broker-dealer, partnered with the chief political operative at the NYS Comptroller’s Office Hank Morris to split profits from corrupt pension fund deals, Ramirez has already pleaded guilty to paying $250,000 in fees to Morris.

Saul Meyers Aldus Equity Partners
The pension system terminated one of the advisers, Aldus Equity Partners, whose partner Saul Meyer has been criminally charged in connection with the scandal. Meyer pleaded guilty to charges that he paid over $300,000 in bogus finders fees to Henry Morris, chief aide of former state comptroller Alan Hevesi, in exchange for $375m of investments in Aldus private equity funds between 2004 and 2006. Hevesi resigned from his post in 2006

Meyer is also being investigated in New Mexico on charges of helping Hevesi’s son, Dan, to land a $25m investment deal with the New Mexico pension fund. At the time, Aldus was a private equity advisor to the fund and seeking business with the Hevesi-controlled New York pension fund. Dan Hevesi received a $250,000 placement fee for the transaction. On this charge, Meyer writes, “On numerous occasions, however, contrary to my fiduciary duty, I ensured that Aldus recommended certain proposed investments that were pushed on me by politically-connected individuals in New Mexico.

Wissman Aldus
New Mexico, which has paid Aldus millions in investment advisory fees

Hevesi Gives Aldus Payoff After His Son Was Paid Off

Aldus is accused of helping Daniel Hevesi, Mr. Hevesi’s son, profit from a deal in New Mexico at the same time that the New York comptroller’s office, then run by his father, agreed to increase by $200 million the amount of pension money overseen by Aldus.

Arvco also brokered a deal involving the city’s pension fund last year, but the office of City Comptroller William C. Thompson Jr. said Mr. Ferrer had not approached Mr. Thompson as part of any deal or for Arvco.(Year)

Cal is investigation weather Albert and his daugthter gave money to a pension board member campaign in return for Business

Separating the cash from the billionaires, in a process known as a clawback, won't be easy. Already, one of the wealthy asset managers, Leon Black and his Apollo Management, has asked for and received a two-year extension, to July 2010, in hopes of riguhting the money-losing fund.

One Apollo investor who would like his money back, speaking on the condition of anonymity, said he is basically being forced to give Apollo "an open-ended interest-free loan on a bad credit risk."

A second investor, who also spoke only if he wasn't identified, seemed irked that Black had not even addressed the issue. He would handle things differently if he were running Apollo -- and at least talk to investors about the roughly $365 million it owes all investors in the fund. New York's state pension represents about 6 percent of the Apollo fund.

Arvco clients have obtained seven commitments from CalPERS totaling more than $3.3 billion since 2006, not bad for a pension fund that accepted fewer than 10 percent of the proposals made by private equity firms represented by placement agents.

In 1993 Villalobos resigned as Los Angeles' deputy mayor for economic development after the Los Angeles Times reported that he had suffered huge gambling losses and filed for personal bankruptcy in the 1980s.

Saul Meyer Aldus
The other thread running through both the New York and New Mexico pension funds was the advisory firm Aldus Equity, whose founder Saul Meyer was charged yesterday with participating in the New York conspiracy and which also until this week advised similar investments in New Mexico.

Aldus acted as an adviser to the New York state fund and a New Mexico government fund, helping them conduct due diligence and select investment managers.

In 2006, Aldus advised the New Mexico government fund to make a $25 million investment in Catterton Partners, a private-equity firm in Greenwich, Conn. Catterton paid a finders' fee on that investment to the firm of Mr. Hevesi's son, Dan Hevesi

“On numerous occasions…I ensured that Aldus recommended certain proposed investments that were pushed on me by politically-connected individuals in New Mexico. I did this knowing that these politically-connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico.”

It seems odd that the individuals aren’t named here; our previous reporting has turned up plenty of public references, in lawsuits and other places, to folks being investigated for possible pay-to-play connections in New Mexico. They include Julio Ramirez and Marc Correra, as well as placement firm Wetherly Capital. Ramirez has already pleaded guilty in the New York case.

awsuit filed in New Mexico state court by the former chief investment officer of the New Mexico Educational Retirement Board

he complaint charges that Henry "Hank" Morris and Searle Co. received, paid or arranged kickbacks from firms to win investment business from New Mexico. Morris, along with David J. Loglisci, New York state's former deputy comptroller and chief investment officer, are two of the key figures in the ongoing New York State Common Retirement Fund pay-to-play scandal. Both were charged in a 123-count indictment in March and have denied wrongdoing.

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