Legal News

Another Name Emerges in NY Pay-To-Pay Probe

By Ashby Jones

The two-year New York pay-to-play investigation involving state pension funds has, so far unfolded rather slowly. But it seems the pace is starting to pick up.

The latest news: New York AG, Andrew Cuomo is expected to announce soon that an associate of Hank Morris (pictured), the indicted political adviser at the center of the probe, has pleaded guilty to securities fraud and is cooperating with the investigation. Click here for the WSJ story, from Craig Karmin and erstwhile Law Blogger Peter Lattman. Click here for a previous LB post on the situation.

Julio Ramirez, age 48, has pleaded guilty to a criminal misdemeanor charge, according to people familiar with the matter. The SEC, conducting a parallel investigation, is expected to announce civil charges against Ramirez.

Morris was charged in March with perpetrating a scandal in which he allegedly extracted fees in return for investments from New York State’s large pension fund. Morris has denied the charges. Ramirez, based in the Los Angeles area, pleaded guilty for his participation in a series of fraudulent transactions between Morris and others, a person familiar with the matter said.

Both men acted as middlemen, or placement agents, who received payments from private-equity and hedge-fund firms for helping secure contracts to manage pension-fund money. At the heart of the case is concern that investment decisions regarding retirees’ money were guided by improper influence peddling. Morris’s lawyer didn’t respond to requests for comment.

The wrongful conduct to which Ramirez pleaded guilty in part concerns dealings between Morris and a Los Angeles-based placement agent firm called Wetherly Capital Group, as well as a Dallas-based firm called Aldus Equity Partners, according to a person familiar with the matter.

In 2003, Ramirez recommended to Wetherly, where he was then employed, that the firm work with Morris to get pension business, according to a Wetherly spokesman.

Under this arrangement, Wetherly paid Ramirez or his company Ramirez Partners Inc., then Ramirez paid Morris.

Photo: AP

Full post as published by Law Blog - WSJ.com on May 12, 2009 (boomark / email).