Sunday, 31 July 2016
Last updated 1 day ago
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.