Steve Moseley, president of private equity advisor StepStone Group, has resigned because of an “unfair and unnecessary distraction” from media reports connecting him to a national pension pay-to-play scandal.
Moseley has not been charged and said in a statement: “I have been assured by the Attorney General of New York that I am not a target of the ongoing industry investigation. However, press reports have raised my name, creating an unfair and unnecessary distraction for all of us.”
StepStone is not charged or named in complaints detailing a scheme by Henry Morris, a former political operative in New York, and David Loglisci, former chief investment officer of the $122 billion New York State Common Retirement Fund, to demand sham finder’s fees be paid by investment firms looking for commitments from the pension. Three other people have been indicted in the case, including Saul Meyer, founder of Dallas private equity advisor Aldus Equity.
Moseley joined StepStone last February from Estes Management, which administered a $775 million co-investment fund. Before, he was a managing director and co-president of PCG Capital Partners, an affiliate of gatekeeper Pacific Corporate Group that managed a $500 million direct investment fund and a $150 million co-investment fund.
Moseley’s reported connection to the case is through a co-investment vehicle that PCG launched in 2006 along with the Clinton Group for New York Common.
A complaint filed by the US Securities and Exchange Commission names a managing director with PCG and an executive with Clinton Group, who agreed to set up the fund, and pay fees to Morris and another individual. The complaint does not name the executives from PCG or the Clinton Group.
A company owned by alleged Loglisci family friend Barrett Wissman, W Investment Strategies, received a “free” 10 percent ownership stake in the co-investment vehicle, the complaint states. W Investment would pass half its profits to Morris, the complaint states. Wissman has been charged in the investigation.
In exchange, Loglisci arranged for the retirement fund to invest about $750 million in the co-investment fund. The result of the deal was payments by the co-investment fund of $1.26 million to W Investment in 2006 and 2007, even though W Investment performed no services for the pension, according to the complaint.
The Clinton Group, a hedge fund manager, had no experience making private equity investments, the complaint said. The co-investment vehicle was vetted by one of New York Common’s private equity funds managers, Aldus Equity, which initially balked at approving the vehicle, but “ultimately bowed to pressure from Loglisci and agreed to issue a qualified report that was nevertheless sufficient to allow Loglisci to investment retirement fund money in Strategic Co-Invest.”
Aldus Equity has been named in an SEC civil complaint for its alleged role in the scandal along with Meyer, who also has been charged criminally by Cuomo.
Pensions & Investments magazine first named Moseley as the PCG executive mentioned in the complaint, and Dow Jones reported Moseley as the named executive.
Monte Brem, chief executive officer of StepStone, said he worked with Moseley for nine years and “value him greatly as a colleague. We appreciate the difficult decision Steve has made to step down and the concern he has shown for the firm and its employees”.
Brem and Moseley worked together at La Jolla, California-based Pacific Corporate Group, the parent company of PCG Capital Partners. Pacific Corporate Group is owned by founder Christopher Bower.