Ex-Blackstone Employee Pleads Guilty In N.Y. Kickback Scandal

May 13 2009 | 11:05am ET

A former employee of a placement agent now owned by the Blackstone Group has pleaded guilty to securities fraud as part of the widening kickback scandal at a New York State pension fund.

Julio Ramirez, who worked at Blackstone’s Park Hill Group until March, admitted that he made payments to a top aide to New York’s then-comptroller while working at California-based Wetherly Capital Group. He entered his guilty plea to a misdemeanor securities fraud charge in March—the second man to plead guilty of the six charged so far—and is cooperating with the investigation, his lawyer said.

Ramirez is not out of the woods just yet, however: The Securities and Exchange Commission said yesterday it would file civil charges against him.

According the prosecutors, Ramirez paid $250,000 to Hank Morris, a former top aide to ex-New York Comptroller Alan Hevesi. In exchange, Morris ensured that the New York State Common Retirement Fund awarded a pair of investment firms that hired Wetherly $50 million each.

Wetherly said it had no knowledge that Ramirez was paying kickbacks, and Blackstone—whose Park Hill has not been identified in the New York probe—said it “found not a shred of evidence that he violated any standard of conduct” during his four years at the firm.

The pay-to-play scandal has already engulfed several well-known alternatives firms, although none have been charged with any wrongdoing. Among those identified as having paid kickbacks are the Quadrangle Group, the private equity firm founded by Steven Rattner, President Barack Obama’s pointman on the bailout of the U.S. auto industry, and the Carlyle Group.


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