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Private equity firm Aldus Equity Partners LP and its founder Saul Meyer were charged Thursday by the Securities and Exchange Commission with participating in a multimillion dollar "pay to play" scheme involving New York's largest pension fund. In an amended complaint attached to a motion filed in federal district court in Manhattan, the SEC alleges that Meyer and Aldus participated in a fraudulent kickback scheme in order to win investment business from the $122 billion 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 former New York Liberal party chief Raymond Harding and ex-hedge fund executive Barrett Wissman, who have also been charged in the case. "As alleged in our complaint, Aldus was chosen by the pension plan because of Aldus' willingness to illegally line the pockets of others," said James Clarkson, acting director of the SEC's New York Regional Office. "When another investment manager refused to pay kickbacks, that firm was rejected and Aldus cashed in." The SEC alleges that Meyer caused Aldus to pay a shell company owned by Morris approximately $320,000 in sham finder fees, in exchange for which Loglisci caused the pension fund to invest a total of $375 million with Aldus from 2004 to 2006. The SEC's amended complaint further alleges that Loglisci 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 the pension fund's business. In a parallel criminal action, Andrew Cuomo, the attorney general of the State of New York, announced the filing of a criminal complaint against Meyer. Meyer reportedly surrendered early Thursday morning, and bail was set at $200,000 in a hearing in New York State Supreme Court in Manhattan. The SEC said its investigation remains ongoing. - Donna Block See press release and complaint from SEC
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