Ex-L.A. investment agent pleads guilty to N.Y. securities fraud
A San Marino businessman with long-standing connections to Los Angeles City Hall has pleaded guilty to criminal securities fraud as part of a probe of alleged pay-to-play corruption at a New York state government pension fund, prosecutors said Tuesday.
Julio Ramirez Jr., a former employee of Wetherly Capital Group, a Los Angeles investment marketing firm, allegedly gave kickbacks to a top political advisor of former New York Controller Alan Hevesi.
The fees, paid secretly to Henry “Hank” Morris, helped make certain that the New York State Common Retirement Fund would invest with Wetherly clients, New York Atty. Gen. Andrew Cuomo said Tuesday.
Ramirez, 48, entered his plea two months ago, but it remained confidential. He is the latest person to be snagged in an alleged kickback scandal that has spread from New York to New Mexico and California.
In a related enforcement action, the Securities and Exchange Commission announced it had filed a civil complaint in U.S. District Court in Manhattan, accusing Ramirez of violating federal securities laws.
“This investigation has uncovered a matrix of corruption, which grows more expansive and interconnected by the day,” Cuomo said in a statement. “The web of corruption spans the United States and extends into numerous industries.”
Neither Ramirez nor his attorney responded to requests for comment. In a statement, Wetherly founder Dan Weinstein described Ramirez as a former part-time employee who had “dragged the firm into this controversy.”
Weinstein also voiced dismay that his firm was mentioned by Cuomo, saying Wetherly has been cooperating with regulators for many months. The reference to Wetherly “as a party to these transactions has unfairly done grave damage to the reputation and integrity that Wetherly has legitimately earned over the course of many years,” he said.
Ramirez and his wife, Annette Castro, were active in Los Angeles politics throughout the 1990s and the early part of this decade. At different times, Ramirez was involved in the mayoral campaigns of Mike Woo, James Hahn and Richard Riordan.
Wetherly’s Weinstein is also a player in Southern California and statewide politics and has hosted a number of campaign fundraisers for political candidates.
According to Cuomo, two funds hired Wetherly beginning in 2003 to help them get business from the New York pension fund.
Ramirez, working for Wetherly at the time, entered into an agreement with Morris, the controller’s advisor, to use his influence to win contracts for the two funds -- F.S. Equity Partners V and Ares Corporate Opportunities Fund II, Cuomo said. Morris in turn got a 40% cut of the approximately $630,000 in placement fees, he said.
“As part of this corrupt scheme, Ramirez concealed Morris’ role in these transactions,” Cuomo said. “Ramirez through Wetherly funneled payments to Morris to avoid creating a direct money trail between Wetherly and Morris.”
The continuing investigation by Cuomo and the SEC led to the criminal indictment of Morris and another Hevesi aide, David Loglisci, in March. Saul Meyer, a principal with the Dallas investment manager Aldus Equity Partners, has also been charged with helping his firm get a $175-million deal by paying $300,000 to Morris.
Cuomo’s two-year inquiry has spread to Los Angeles, where two members of the city Fire and Police Pensions board resigned after receiving letters from the SEC asking for information about any income they might have gotten from companies that did business with the pension fund.
The board members, former supermarket union executive Sean Harrigan and investment manager Elliott Broidy, said they had done nothing inappropriate and that their resignations were in the best interests of the $11-billion pension fund.
The publicity surrounding the Los Angeles pension fund as well as the burgeoning national scandal prompted the California Public Employees’ Retirement System board on Monday to approve a first-ever policy for disclosing the identity of placement agents.
Such intermediaries typically help put together deals between investment fund managers and the $179-billion pension fund, the nation’s largest government retirement program.
Until recently, Ramirez, who left Wetherly in 2005, worked as a placement agent for Park Hill Group in Los Angeles, a unit of private equity firm Blackstone Group.
Ramirez has been heavily involved in Los Angeles politics for years. He worked for the unsuccessful mayoral campaign of Woo, then a city councilman, in 1993. He switched sides four years later, serving as campaign manager to the 1997 reelection campaign of Riordan.
Ramirez, who had worked for Hahn when he was city attorney, volunteered for his mayoral campaign in 2001. Castro, Ramirez’s wife, was retained by Hahn as a fundraiser for his 2002 campaign against San Fernando Valley secession and his unsuccessful 2005 reelection bid. Castro also served as chief of staff to then-Los Angeles Councilman Richard Alarcon and earlier as press secretary to Riordan.
After Hahn was elected, Ramirez opened a lobbying firm, representing companies that sought business at Los Angeles World Airports, the agency that operates Los Angeles International Airport.