Andrew Cuomo

Before You Take The Advice Of Credit Solutions Of America And Sell That Plasma, You Might Want To Read This

Moe Tkacik | May 19, 2009, 5:55PM

New York AG Andrew Cuomo sued two major debt settlement companies today for fraud and deceptive advertising practices in the first big development in an expansive probe of the debt settlement industry he announced last week. One of the companies, Credit Solutions of America of Richardson, Texas, was sued by its own state attorney general in March -- and from the numbers it sounds like a busy time for the company's lawyers. Cuomo's office said CSA, which has had more than 1,600 Beter Business Bureau complaints filed against it in the past three years, collected approximately $17 million in fees signing up 18,000 New Yorkers between 2003 and 2008 with promises of reducing their debtload by 60% -- a promise they fulfilled for an average of one percent of their customers.

Two things make that shocking statistic even more shocking. Number one, as a New York Times Magazine story published Sunday makes clear, it's hardly unusual these days for customers to receive a 60% reduction in their credit card debts simply by asking the customer service representative on the other end of the line. Number two, as some documents we received from a lawyer representing an ex-client of CSA makes clear, the company endorsed some pretty desperate measures for settling debts: yup, CSA encouraged its clients to sell their blood plasma!

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Bear Stearns

Carlyle Group To Pay $20 Million, Submit To Cuomo's "Code Of Conduct"

Moe Tkacik | May 14, 2009, 4:06PM

In what New York AG Andrew Cuomo is hailing as a "revolutionary" agreement, Carlyle Group agreed to pay a $20 million settlement to "resolve its involvement" in former New York state comptroller adviser Hank Morris's alleged scheme to collect bribes from hedge funds and private equity firms in exchange for state pension fund investments. As part of the deal Carlyle will agree to Cuomo's new code of conduct banning the use of "placement agents" like Morris, who allegedly collected $13 million in sham fees from Carlyle for steering $730 million in state pension fund investments to the firm.

Carlyle admitted no wrongdoing and announced it was suing Morris and the firm he worked for, Searle & Co., for $15 million. The code of conduct could indeed prove pretty revolutionary in the industry if Cuomo succeeds in making similar settlements with other money managers, which he said was his intention. Whether it marks a considerable change at Carlyle is another matter; after all, if you can name one politically-connected private equity firm it is probably the Carlyle Group.

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Julio Ramirez

If Anyone Can Tell Us How This Massive Pension Conspiracy Worked, It's Probably Julio Ramirez

Moe Tkacik | May 13, 2009, 4:42PM

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."

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Andrew Cuomo

Cuomo Subpoenas 100 Hedge Funds, Enlists 36 States In Mushrooming Pension Probe

Moe Tkacik | May 1, 2009, 5:42PM

What did we tell you? The New York state pension fund scandal is starting to look pretty national. New York AG Andrew Cuomo just issued 100 subpoenas to investment firms in his expanding investigation of pay-to-play schemes that defraud public employee retirement funds, and announced the participation of 100 officials in 36 states' attorney general offices in the probe.

Who are the 14 holdouts? We suspect they're states that already regulate placement agents or ban them altogether, as New York did last week.

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