MANHATTAN (CN) – A Los Angeles businessman is the second person to plead guilty in a kickback scheme involving New York State’s $122 billion pension fund, New York Attorney General Andrew Cuomo said. An SEC investigation has also targeted Julio Ramirez, stemming from his relationship with Henry Morris, a top political adviser to the state’s former comptroller.
The amended SEC complaint says Ramirez served as a middleman between Morris and Saul Meyer, managing partner for Dallas-based Aldus Equity Partners, making it clear the firm must pay a kickback to gain access to the New York State Common Retirement Fund. Aldus agreed to pay 35 percent of its management fee to a shell entity run by Morris, who kicked back a portion to Ramirez, according to the SEC. As a result, Aldus secured the Retirement Fund’s emerging fund portfolio business.
The SEC previously charged Aldus and Meyer.
The guilty plea by Ramirez is the latest round in the “pay to play” scandal that ensnared Morris and David Loglisci, the alleged orchestrators, former state Liberal Party Chairman Raymond Harding and former hedge fund manager Barrett Wissman. The SEC says they collected sham finder’s fees from numerous firms seeking to manage the assets of the state’s largest pension fund.
The defendants allegedly directed investment managers to make the payments to offshore accounts or entities owned or controlled by Morris. The managers would send disclosure forms only to Loglisci and one of the shell entities, and not copy any other member of the comptroller’s staff, according to the complaint. The SEC says the disclosure files disappeared when Loglisci left the Comptroller’s office in mid-2007.
Morris allegedly paid the girlfriend of a high-ranking comptroller staff member nearly $100,000 in cash to not ask questions and not reveal the scheme to others, according to the complaint.
Morris made over $15 million in finder’s fees between 2003 and 2007, and Wissman got at least $12 million, the SEC says. The defendants allegedly received the sham fees in connection with $5 billion – more than half of the $9.5 billion – in alternative investments made by the retirement fund.
Cuomo called the scheme a “matrix of corruption which grows more expansive and interconnected by the day.”
Ramirez, 48, pleaded guilty to a misdemeanor charge. Wissman, 46, pleaded guilty to a felony charge in April. The SEC said its investigation is continuing.