It looks like a major figure in the ever-expanding public pension fund scandal is cooperating with New York AG Andrew Cuomo’s probe.
The player in question is Julio Ramirez, a former Los Angeles politico who until March worked for the tony boutique investment bank Blackstone. In the nineties, Ramirez managed one of former LA mayor Richard Riordan’s campaigns and worked on various others. Yesterday Cuomo announced Ramirez had pleaded guilty to securities fraud in the scheme allegedly masterminded by Hank Morris, the former top adviser to Comptroller Alan Hevesi, along with David Loglisci, the chief investment officer of the New York general pension fund. Ramirez could be the key to unwinding the Western wings of what Cuomo yesterday called “a matrix of corruption - which grows more expansive and interconnected by the day.”
The AG office says Ramirez got involved in the scheme in 2003 while he was working for two hedge funds on behalf of Wetherly Capital Group, a well-connected placement agency in LA. Morris, who effectively became the “gatekeeper” of pension investments after Hevesi won the 2002 comptroller election, promised to secure investments for Ramirez’s clients if he gave him a 40% cut of his fees. Unbeknownst to the pension funds and money managers, Ramirez wired a cut of his fees into a shell company Morris incorporated called PB Placement. In a statement Wetherly president Dan Weinstein called Ramirez a “part-time employee who…dragged the firm into this controversy.”
But Weinstein, who was involved in a below-the belt direct mail campaign when he worked (along with Ramirez) on former LA mayor Jim Hahn’s campaign, is hardly a stranger to such “controversy.” His late father-in-law, with whom we strolled down pension rigging memory lane last month, was a union activist who championed some questionable investments when he sat on the board of the CalPERS pension fund in the nineties — including a $60 million investment in a firm in which Weinstein was a partner. One of some Wetherly’s directors, Vicky Schiff, was similarly criticized for voting to invest in Wetherly clients when she served as a commissioner on the Los Angeles City Employee retirement fund a few years ago. And even for a part-timer, Ramirez was a bit suspect — unlike Morris, who bothered to take an exam to get his stockbroker license in 2003, Ramirez was unlicensed.
And as “controversial” part-time employees of Wetherly go, Ramirez looks like small potatoes. Ramirez’s arrangement with Morris in New York netted just under $400,000 in finders fees for Wetherly. New Mexico — whose public finance is also the subject of an intensifying probe — was a much more lucrative source of funds for Wetherly’s clients, apparently thanks in part to its decision to hire a prolific Santa Fe agent named Marc Correra.
Between 2005 and 2008 Wetherly secured its money manager clients more than half a billion dollars in New Mexico state investments. That’s more than the $300 million it secured from the much-larger CalPERS, in its home state. Weinstein and Schiff are listed as the lead agents on deals that reaped Wetherly millions of fees. Marc Correra’s name is listed on transactions that netted Wetherly another $3 million in fees.
You’ve heard about Correra here before: he booked a hefty $2 million fee securing a $90 million investment from the teacher fund in a controversial subprime mortgage-backed CDO that lost all its value within a year. State records show that Correra, whose wife briefly served as the state’s “protocol officer,” has shared in some $16 million in fees for his work getting investments from New Mexico public funds. He collected his fees under a variety of different corporate auspices: Wetherly, SDN Advisors, a New York firm called Diamond Edge Capital run by the former DNC finance chief famous for choosing which donors would be rewarded with Lincoln Bedroom sleepovers during the Clinton years, a Chicago firm called Cabrera Capital Markets, and a subagency called Ajax.
Ramirez also went after New Mexico money and split fees with Correra, but not until after he left Wetherly and started working for the Blackstone division Park Hill. Yesterday Blackstone said they had no evidence that Ramirez had done anything illegal for the firm. Ramirez did help nab one Park Hill client, a private equity firm called Wayzata, a $25 million investment from the New Mexico State Investment Council. But his freelance transactions are more intriguing. In 2007, he split one $500,000 fee with Marc Correra on behalf of Cabrera. In another 2007 deal, he collected a $400,000 fee as part of a “verbal agreement” securing a $20 million investment in a fund run by the private equity firm St. Cloud, according to state records.
The only state record of the decision to invest $20 million investment in St. Cloud III appears to date back to 2005, when $20 million was approved upon the enthusiastic recommendation of Aldus Equity, a Dallas advisory firm that has also been indicted in the New York case.
If Ramirez is talking, in other words, we bet he has a lot to say.