Saul Meyer, founder of Dallas-based private equity advisory firm Aldus Equity, has pleaded guilty to fraud charges related to the growing pay-to-play investigation led by New York State attorney general Andrew Cuomo.
The guilty plea was unsealed today, according to Cuomo’s office. Meyer entered his plea in New York County Supreme Court on 2 October. He faces “up to four years in prison”, according to a press release from the attorney general.
Another figure in the pay-to-play scandal, Raymond Harding, also pleaded guilty today before the same court. Harding is the former chair of New York's Liberal Party.
According to the press release, Meyer admitted to having conducted due diligence on and recommending an investment in the Strategic Co-Investment Partners, a partnership to which his client the New York State Common Retirement Fund committed $750 million. Meyer knew that political operative and friend of pension’s senior leadership, Barrett Wissman, would receive a share of the economics in the partnership.
The fund was owned by three partners – California-based consulting firm Pacific Corporate Group, hedge fund Clinton Group and an entity controlled by Wissman.
Meyer also agreed to share economics on a separate pension commitment to the Aldus/NY Emerging Fund with Hank Morris, another political operative and supporter of New York Comptroller Alan Hevesi and former pension chief investment officer David Loglisci. Both men have been arrested and face multiple charges. Neither have plead guilty and the “indictment remains pending”, according to Cuomo’s office.
Harding admitted to having acted as a “sham placement agent” for certain Common Retirement Fund commitments in coordination with Morris, Hevesi and Loglisci. He also admitted to having arranged for Hevesi’s son, Andrew, to pursue a vacated New York State Assembly seat in exchange for business with the pension.
In addition to his admissions related to the New York pension, Meyer said in court that “on numerous occasions, contrary to his fiduciary duty to [clients New Mexico State Investment Council] and [client New Mexico Educational Retirement Board], he ensured that Aldus recommended proposed investments that were pushed on him by politically connected individuals in New Mexico, knowing that these politically connected individuals or their associates stood to benefit financially or politically form the investments. . .”
Meyer was arrested and charged by the attorney general with fraud April 30. On the same day, the US Securities and Exchange Commission announced charges against both Meyer and his firm. The remaining partners at Aldus Equity have strongly protested the SEC charges against the firm, saying they are without merit.
To date, several prominent participants in the private equity industry have agreed to pay fines to Cuomo’s office to resolve their involvement in the pay-to-play scandal. These firms include The Carlyle Group, Riverstone Holdings, Pacific Corporate Group, HM Capital, Falconhead Capital, Levine Leichtman Capital Partners and Access Capital Partners. Together some $60 million in fines have been agreed. These same firms have also agreed to adopt a code of conduct crafted by the attorney general’s office.
In related news, today the SEC closed a comment period for a proposed rule that would ban contact between placement agents and public pensions. Several US public pensions, including New York State Common Retirement System, have already instituted similar bans.