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Friday, December 04, 2009
N.Y. Guilty Plea Has N.M. Ties
By Mike Gallagher / Journal Investigative Reporter
Another money manager with ties to New York and New Mexico state investment scandals has pleaded guilty to bribing state officials in New York in exchange for a $250 million investment from that state's pension fund.
Elliott Broidy, founder and chairman of Markstone Capital Group, admitted paying nearly $1 million in bribes — some in the form of gifts and expensive international trips — to employees of the New York State Comptroller's Office to secure an investment from the state pension fund.
In 2004, the New Mexico State Investment Council invested $20 million in Markstone Capital, a Los Angeles firm Broidy founded that specializes in corporate buyouts of privately held companies in Israel.
One of the bribes outlined in court documents was a secret investment by Broidy in an obscure movie called "Chooch," which was produced by the brother of a New York state official and partly filmed in New Mexico.
The investigation of the pension fund scandal by New York Attorney General Andrew Cuomo has uncovered numerous links to New Mexico investment funds, leading to a federal investigation here.
Broidy, a prominent fundraiser for the Republican National Committee, also served as a trustee of the Los Angeles Fire and Police Pension fund until earlier this year.
He resigned after the Securities and Exchange Commission quizzed him about his firm's relationship with Aldus Equity Partners, a now-defunct Dallas financial advisory firm that figures prominently in the New York and New Mexico investigations.
Aldus Equity was paid more than $1.5 million a year to advise the State Investment Council and Educational Retirement Board in New Mexico on private equity investments involving companies that are not publicly traded.
Saul Meyer, a founding partner in Aldus, has pleaded guilty in New York to paying kickbacks disguised as third-party placement fees in return for state pension fund investments.
But in his New York plea, Meyer also said he made sure Aldus recommended certain proposed investments "that were pushed on me by politically connected individuals in New Mexico" and went on to say he did that even if the investments "were not necessarily in the best economic interest of New Mexico."
In New Mexico, the federal investigation focuses on the use of third-party placement agents who received fees for helping financial firms secure investments from the State Investment Council and the Educational Retirement Board.
Last spring, the State Investment Council and the ERB revealed in response to requests for information that Marc Correra shared in more than $22 million in so-called finder's fees paid to him by companies for his role in helping secure investments from the Investment Council and ERB.
He is the son of Anthony Correra, a close friend of and adviser to Gov. Bill Richardson.
Marc Correra's attorney, Sam Bregman, said his client "has done nothing wrong and committed no crime."
Broidy faces four years in prison for his plea to a felony charge of rewarding official misconduct and like Meyer will cooperate in the attorney general's ongoing investigation. Broidy will also forfeit $18 million in connection with his plea.
Broidy isn't charged with using third-party placement agents to hide his kickbacks.
The payments he pleaded guilty to making went directly to employees of the New York Comptrollers Office, which oversees the pension fund.
In a press release, Cuomo said, "Broidy paid nearly a million dollars in bribes to get a quarter-billion-dollar investment. For Broidy, this was a small price to pay. For New York taxpayers, the harm is incalculable.
"Corruption corrodes the integrity of the pension system and the public's trust in government. That is too high a price to bear."
Besides Broidy and Meyer, the New York investigation has led to the guilty pleas of Dallas hedge fund manager, Barrett Wissman and California broker Julio Ramirez both of whom had connections to New Mexico investment funds.
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