SEC Charged Dallas Firm In Pension Fund Kickback Scheme

May 1 2009 | 11:40am ET

Regulators have filed charges against Dallas-based Aldus Equity Partners and one of its founding principals, Saul Meyer, in connection with a multi-million dollar kickback scheme involving New York's largest pension fund.

In an amended complaint attached to a motion filed yesterday in federal district court in Manhattan, the Securities and Exchange Commission alleges that Meyer and Aldus Equity participated in a fraudulent kickback scheme in order to win investment business from the New York State Common Retirement Fund.

The SEC previously charged Henry “Hank” Morris and David Loglisci for orchestrating a fraudulent scheme to enrich Morris and other political allies and associates, including Raymond Harding and Barrett Wissman, who have also been charged in the case.

The SEC alleges that Meyer demanded Aldus pay a shell company owned by Morris approximately $320,000 in sham finder fees, in exchange for Loglisci directing the pension fund to invest a total of $375 million with Aldus from 2004 to 2006.

Loglisci allegedly ensured that Aldus and certain other investment managers who were willing to make the requisite payments to Morris and others were rewarded with lucrative investment management contracts, while investment managers who declined to make such payments were denied Common Fund business.

Loglisci allegedly chose Aldus as the Common Fund's emerging fund portfolio manager on the sole basis of Meyer's willingness to pay Morris. Prior to selecting Aldus, the Comptroller's office had been in discussions with another investment manager about creating and managing an emerging fund portfolio for the Common Fund. When that investment manager refused to pay kickbacks to Morris, Loglisci rejected that firm and recruited Aldus to manage the Common Fund's emerging fund portfolio.

After Morris's friend made clear to Meyer that Aldus would not be hired if Aldus did not retain Morris, Meyer arranged for Aldus to kickback 35% of its management fees to a shell entity run by Morris. As a result of the quid pro quo arrangement, Aldus secured the Common Fund's emerging fund portfolio business.

The SEC's complaint seeks permanent injunctions against future violations of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

In a parallel criminal action, the Office of the Attorney General of the State of New York also announced the filing of a criminal complaint against Meyer.

RELATED ARTICLES:

New Mexico Suspends Adviser Linked To Kickback Scandal
Big Apple Seeks Emerging, Minority-Owned Private Equity Managers


In Depth

Will Liquid Alts’ Performance Sustain Future Asset Flows?

Aug 25 2014 | 10:34am ET

Liquid alternative investment funds saw the highest percentage of capital inflows...

Lifestyle

Och Funds Women In Finance Initiative At U-M

Aug 28 2014 | 3:01pm ET

Och-Ziff Capital founder Daniel Och and his wife have made a "generous donation"...

Guest Contributor

Looking Ahead: What’s In Store For Managed Futures?

Aug 22 2014 | 12:52pm ET

The last five years were phenomenal for investors in equity indices. Will the next...

 

Editor's Note

    Get A Sneak Peak Of The Alpha Pages

    Aug 25 2014 | 11:21am ET

    As many of you know, FINalternatives was recently acquired by the owners of Futures magazine, a firm called The Alpha Pages LLC. Today marks the soft-launch of a new sister site for both publications. As its name suggests, The Alpha Pages will cover all types of alternative investments, going far beyond the more well-known ones such as hedge funds and private equity. Read more…

 

Futures Magazine

July/August 2014 Cover

The time was right

Commodities/Futures magazine launched at the precipice of a revolution in the futures industry—really a revolution in the idea of risk management—that would move it from a small niche industry to ...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.