Saul Meyer through Aldus Equity advised the New Mexico State Investment Council on its private equity investments from 2004 through 2009.  In his guilty plea to criminal activity in a probe of New York’s pension fund investments, he admitted in his allocution

“that on numerous occasions, contrary to his fiduciary duty to SIC and [the Education Retirement Board], he ensured that Aldus recommended proposed investments that were pushed on him by politically-connected individuals in New Mexico, knowing that these politically-connected individuals or their associates stood to benefit financially or politically from the investments and that the investments were not necessarily in the best economic interest of New Mexico.”

Qui bono? And how did Meyer toss favors to the politically-connected?

Meyers’ Aldus Equity advised the SIC on a portfolio of private equity investments. Aldus did not invest those funds itself.  Instead, it recommended certain fund mangers to the SIC.  The SIC would then vote to commit a certain amount of funds to that manager’s program.

Aldus would present its recommendation at SIC meetings.  In some instances, Meyer was present in the room while the presentation was made by another Aldus employee, who would then invite the fund manager to explain their program.  SIC members would have an opportunity to question the Aldus representative as well as the fund manager.

A review of the SIC meeting minutes from 2005 to the present shows that in every instance the SIC voted unanimously to make the investment recommended by Aldus. The discussion reveals that the SIC relied heavily on Aldus to screen the fund managers. Indeed, the resolutions under consideration explicitly state that the investments were being approved “based upon the recommendation” of Aldus.  Some investments were approved without any discussion.

Between June 28, 2005, and February 24, 2009, the SIC approved 40 investment recommendations by Aldus.  Those decisions committed approximately $1.2 billion to fund managers recommended by Aldus.  The precise amount is difficult to compute because several of those investments were made in Euros in order to place an investment with a foreign fund.

Fund managers recommended by Aldus paid millions of dollars in third-party placement fees to individuals who have pleaded guilty with Saul Meyer or are under indictment or investigation by the New York Attorney General into kickbacks, bribes, and securities fraud involving New York state pension funds. A review of SIC records shows that a number of those individuals were “politically-connected” in New Mexico and elsewhere.

In his plea agreement, Meyer stated that he helped Dan Hevesi land a $25 million investment with the New Mexico SIC that earned him a $250,000 fee.  Dan Hevesi is the son of former Democratic New York State Comptroller Alan Hevesi.  Meyer has admitted paying over $300,000 to Alan Hevesi’s aide, Henry “Hank” Morris, in exchange for investment of New York pension funds into Aldus Equity funds.

The $25 million SIC investment was made into Catterton Partners IV based upon Aldus’ recommendation at the SIC’s April 26, 2006, meeting.  Catterton invests in consumer focused industries such as restaurants and food producers.  Its investments include Outback Steakhouses and Breyer’s Yogurt.  Catterton also owned Archway cookie company, which collapsed after revelations it had been inflating sales to maintain its lines of credit. Catterton is defending at least one lawsuit alleging it manipulated Archway’s data to defraud creditors.

Morris also made money off SIC investments. According to a June report compiled by SIC staff, Morris received a $150,000 fee for a $20 million SIC investment in the Carlyle Mezzanine fund in 2004. Morris was a well-known New York fundraiser and adviser for Hevesi and other New York Democrats. He also had nationwide connections through unions and other Democrats, including Diane Feinstein. He is under indictment in New York and is being sued by the Securities and Exchange Commission.

The National Institute on Money in State Politics (followthemoney.org) has reported that a political consulting firm owned by Morris contributed $52,972 to the New Mexico Democratic Party in 2001. Richardson was elected in 2002. That information is no longer available on their website as they do not maintain records beyond five years. We will attempt to independently confirm that information by inspecting original records maintained by the New Mexico Secretary of State.

In 2006, Aldus recommended a $25 million investment in KH Growth Equity Fund. Julio Ramirez shared in a $500,000 placement fee for that investment. Ramirez has pleaded guilty to securities fraud in the New York pension prosecutions and is cooperating with investigations in New Mexico and California. Ramirez is a former employee of Los Angeles-based Wetherly Capital Group. He made corrupt arrangements with Morris to get New York pension funds for Wetherly’s investments. Ramirez introduced Morris to Aldus’ Meyer, and helped extract kickbacks from Aldus.

Ramirez made another $400,000 fee on a $20 million investment in St. Cloud Capital Partners, a recommendation to the SIC made by Aldus in June 2007. St. Cloud is a Los Angeles private investment firm.

Wetherly Capital, Ramirez’ former employer, was founded by Dan Weinstein, a prominent Democratic fundraiser. Weinstein, according to the June 2009 SIC report, earned $950,000 in fees on $95 million in investments in the Levine Leichtman III fund recommended by Aldus. Levine Leichtman is a Los Angeles private equity and leveraged buyout firm.

As reported by the AP’s Barry Massey:

Richardson also has received $25,800 since 2002 from a Los Angeles-based firm, Wetherly Capital Group, and its principals, which served as placement agents on several New Mexico investments. They shared in $3 million in fees for investments by the council and the Educational Retirement Board, according to agency records.

Wetherly’s founder, Dan Weinstein, contributed $10,000 to a Richardson political committee, Moving America Forward, two weeks after the council approved a $25 million investment in 2004 in which Wetherly served as a broker.

Marc Correra profited the most by Aldus’ recommendations. He shared the $500,000 fee from the KH Growth investment with Ramirez. Correra earned $900,000 from a $60 million investment in Fenway Partners Capital Fund, $600,000 on a $30 million investment in GF Capital Partners Private Equity Fund, $600,000 from a $30 million investment in HM Capital fund, $756,250 from a $48.5 million investment in Lehman Merchant Banking Partners, $600,000 from a $30 million investment in Newstone Capital Partners, $530,000 from a $26.5 million investment in Quaker Bioventures, and $188,333 from a $9.4 million investment in Silver Creek Ventures. All those investments were recommended to the SIC by Aldus.

Correra also made $600,000 from Aldus recommendations that the SIC invest $30 million in the HM Capital Fund and $950,000 in fees from a $95 million stake in Levine Leichtman, another investment in the same firm that earned Weinstein a $950,000 fee. Both HM Capital and Levine Leichtman also paid Henry “Hank” Morris directly or through intermediaries to secure New York pension fund investments. The firms have concluded a multimillion dollar settlement with the New York Attorney General for their role in that scheme.

Correra, as has been widely reported, is politically-connected to Richardson through his father, Anthony Correra, a close Richardson advisor and fundraiser who played a role in selecting Gary Bland as the State Investment Officer. Bland has stated that he spoke with Correra, a disbarred New York Stock Exchange broker, almost daily about state investments. Bland recently resigned after SIC members say they learned he had been pressuring investment firms to hire third-party placement agents.