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Editor: Eric C. Chaffee
Univ. of Toledo College of Law

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Tuesday, May 12, 2009

Participant in New York CRF Corruption Scheme Pleads Guilty

New York's Attorney General Andrew M. Cuomo announced that Julio Ramirez, an unlicensed placement agent formerly associated with Wetherly Capital Group, has pled guilty to securities fraud under New York’s Martin Act in Cuomo’s ongoing investigation into corruption involving the New York State Common Retirement Fund (“the CRF”).  Ramirez’s plea arises from his participation in fraudulent schemes involving multiple investment transactions with the CRF while he was an unlicensed placement agent associated with Wetherly Capital, a placement agent and broker-dealer. Between 2003 and 2006, Ramirez entered into corrupt arrangements with Hank Morris, the top political adviser to then Comptroller Alan Hevesi, to secure investments from the CRF for Wetherly clients and others. Transactions included FS Equity Partners V, the Ares Corporate Opportunities Fund II, and the Aldus/NY Emerging Fund.

Attorney General Cuomo has also charged former state Liberal Party Chairman Ray Harding with allegedly obtaining over $800,000 in illegal fees on State pension fund investments as a reward for over 30 years of political support to Hevesi. Additionally, hedge fund manager Barrett Wissman pleaded guilty last month to a felony charge under the Martin Act for conduct related to the pension fund.

In addition, the SEC filed civil charges against Ramirez relating to his alleged participation in the fraudulent scheme. The SEC has previously charged Morris and David Loglisci with orchestrating this wide-ranging scheme to enrich Morris and others and has alleged that Aldus and one of its founding principals, Saul Meyer, also participated in the scheme by agreeing to pay kickbacks to Morris.  The SEC's amended complaint alleges that Ramirez aided and abetted violations of Section Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions against future violations of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.

http://lawprofessors.typepad.com/securities/2009/05/participant-in-new-york-crf-corruption-scheme-pleads-guilty.html

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