US - The New York State comptroller Thomas DiNapoli has filed a suit against Aldus Equity Partners, its principals and others, in the latest development of alleged misdeeds at the New York pension funds.
He seeks, among other things, rescission of the contract with Aldus, reimbursement of more than $5m in fees paid and other compensatory and punitive damages.
"Last week, we terminated our relationship with Aldus. The suit we're filing today is the next step to unravel the tangled web of misconduct we inherited from the Hevesi [former New York State comptroller Alan Hevesi] administration," DiNapoli said.
"The one million members of the New York State Common Retirement Fund (NYSCRF) deserve a full accounting of, and full reparations for, the misdeeds and abuses committed against their pension fund."
The complaint states in May 2004 Aldus agreed to pay Henry Hank Morris [a senior political advisor to and fundraiser for Hevesi] through a Morris-controlled entity, a share of fees earned from creating and managing Aldus/NY Emerging Fund to invest monies committed by the NYSCRF.
The complaint also states Morris performed "no legitimate services" in exchange for these fees and the payments represented "illegal kickbacks" to Morris for his arrangement with David Loglisci [then deputy comptroller for pension investments and cash management] to have Aldus selected as fund manager.
It also alleges defendants were "knowing and willful participants in an elaborate pay-to-play kickback scheme orchestrated and operated by Morris and Loglisci".
DiNapoli said further legal action against others remained a possibility.
The complaint was filed against the following companies: Aldus Equity Partners LP, Renaissance Private Equity Partners LP, Aldus Management Company LLC, Erasmus Capital Management LP, Pantigo Emerging LLC.
Other defendants are Saul Meyer, Matthew O'Reilly and Marcellus Taylor, who, according to the complaint, were partners or principals respectively of Aldus Equity Partners, Aldus Management Company and Erasmus Capital management.
DiNapoli filed the complaint in the Supreme Court of the State of New York, Albany County. Day Pitney LLP is plaintiff's counsel.
Last week, the Securities and Exchange Commission filed charges against Aldus Equity Partners and Meyer, in connection with the same alleged kickback scheme (www.globalpensions.com: 1/05/09).
In as statement released yesterday on the suspension of Aldus Equity by a number of pension funds across the US, New York state attorney general Andrew Cuomo said: "Pension funds across the country are now taking appropriate steps to clean up abuses.
"The recent actions with respect to Aldus Equity by pension funds in New York, Connecticut, New Mexico, and Texas are the latest examples. But we should not forget that the real goal must be systemic reform so we can avoid continually closing the barn door after the horse has bolted the stable."
In addition, DiNapoli today released a list of placement agents involved in investments made during former comptroller Hevesi's administration, which, he said, might not be complete.
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