Saul Meyer, Investment executive charged in NY pension probe

By DAVID B. CARUSO Associated Press Writer

An influence-peddling scandal that began in New York, but is now expanding to other states, broadened Thursday as authorities brought criminal charges against a Dallas executive whose firm advises some of the country's biggest public pension funds.

Saul Meyer, the 38-year-old managing partner of Aldus Equity Partners, was arraigned in Manhattan on charges that he violated state business law.

Prosecutors said Meyer helped his firm land a deal to manage $175 million in New York public pension fund assets by paying $300,000 in kickbacks to an aide to the state's former comptroller.

Court papers said that when Aldus wanted an additional $200 million from the fund, Meyer curried additional favor by arranging for the comptroller's son to get $250,000 in fees on an unrelated investment deal with a public pension fund it advised in New Mexico.

Meyer flew from Texas to New York to surrender to authorities. He was released on $200,000 bail and flew home. His lawyer, Paul Shechtman, said his client is innocent.

"The time and the evidence will show that Saul Meyer did nothing wrong," he said.

Meyer is the fifth person charged in a two-year probe led by New York Attorney General Andrew Cuomo involving allegations that several investment companies paid millions of dollars in kickbacks to political figures to obtain pension fund business.

Some of the firms that made payments now under scrutiny include the Carlyle Group, one of the nation's biggest private equity firms, and the Quadrangle Group, a private equity firm founded by Steven Rattner, the head of the Obama administration's auto industry task force.

So far, Cuomo's probe has focused on deals struck at New York's $122 billion state pension fund during the tenure of former state Comptroller Alan Hevesi, but he signaled Thursday that the investigation had raised suspicions of wrongdoing elsewhere.

"I believe we are disclosing a national network of actors who often acted in concert and did this all across the country," Cuomo said.

He said his investigators were passing information to law enforcement agencies in several states and that more people and companies could face charges soon.

Asked if Rattner or other investment executives could be among those charged, Cuomo would only say, "stay tuned."

"Just because a company hasn't been charged yet, it doesn't mean it wont be charged," he said.

Aldus Equity has denied any wrongdoing. It released a statement Thursday expressing solidarity with Meyer.

"At Aldus, we can't begin to describe our disappointment and astonishment regarding the unexpected legal developments in New York today," it said. "Our heart goes out to Saul and his family during this unsettling time."

It is not illegal per se for companies to pay politically connected "placement agents" for help obtaining business from the government, but some public pension funds require those arrangements to be disclosed. The payments also cannot be made as a cover for outright bribes.

The Securities and Exchange Commission filed court papers Thursday charging Meyer and Aldus with regulatory violations, saying the payments they made to Hevesi political aide Hank Morris amounted to "sham fees."

Prosecutors have described Morris as the driving force behind the scheme, saying he wielded tremendous influence over pension fund investments in New York, and let companies know they could be shut out of investment deals if they weren't willing to pay him.

In a court filing, Cuomo's office said one hedge fund manager involved in the scheme was asked to pass a message from Morris when Meyer got cold feet about their fee arrangement.

"Tell that little peanut of a man that I can take the business away as easily as I provided it," Morris said, according to authorities.

Morris was charged in March along with the retirement fund's former chief investment officer, David Loglisci.

Others swept up in the probe include Dallas businessman Barrett Wissman, who pleaded guilty to helping collect kickbacks for Morris. The former chairman of New York's now-defunct Liberal Party, Raymond Harding, has also been charged with accepting bogus "placement agent" fees in return for political favors.

Neither Hevesi nor his son, Daniel, who briefly worked as a placement agent while his father was in office, have been charged. Both have denied any wrongdoing.

An attorney for Aldus Equity, Matthew Orwig, said in a statement that the SEC's complaint was "appalling and careless."

The scandal quickly threatened to upend Aldus' business.

Deutsche Bank, which owns a minority stake in Aldus, said Thursday that it was pulling out of the company.

New Mexico's State Investment Council fired Aldus as its financial adviser Wednesday because of the concerns raised by the probe. The state's pension fund for public school employees has also suspended the firm and is scheduled to take a vote to fire it in June.

Together, the two funds had been paying Aldus $1.5 million per year to analyze possible investment deals.

Hevesi's successor in New York, Comptroller Thomas DiNapoli, announced Thursday that he had also ended the state's investment relationship with the company. New York City's comptroller has informed Cuomo's office that he intends to do the same.

Aldus also serves as an adviser to retirement systems managing the pension assets of government workers in San Antonio and Fort Worth, Texas, Louisiana, Oklahoma, and at the Los Angeles Fire and Police Pension, where SEC investigators have been seeking documents related to the company.

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Associated Press Writer Barry Massey contributed to this report from Santa Fe, N.M.