HARTFORD, Conn. -- A venture capitalist has alleged the State of Connecticut Retirement & Trust Funds ended negotiations on a $100 million commitment to his investment partnership after he declined to pay a finder's fee.
Bradley Heppner, president of Dallas-based Crossroads Investment Co. LP, alleges in an October letter to Connecticut pension officials that a former colleague who successfully raised money in 1998 for his own real estate partnership told him then-Treasurer Paul Silvester wanted Crossroads to pay a finder's fee in order to receive a commitment from the state's pension fund.
A recipient for the fees was not identified, wrote Mr. Heppner, but he nonetheless instructed the former colleague, Larry Landry, to tell Mr. Silvester he would not pay. A short time later, alleges Mr. Heppner, a representative for Mr. Silvester informed him the state would not be an investor in the partnership.
The allegations in the letter -- if true -- shed additional light on Mr. Silvester's scheme to have his associates act as placement agents on state pension fund investments and kick back to him a portion of the fees they earned.
Mr. Heppner wrote the letter in response to State Treasurer Denise Nappier's request last month that all vendors to the state treasury, which oversees the $18 billion pension fund, disclose the amount paid in finder's and placement fees and the identity of the recipients.
Mr. Silvester, a Republican, pleaded guilty to bribery, money laundering and racketeering charges in September in connection with the wrongdoing. He faces up to 40 years in prison when he is sentenced in March.
Mr. Landry apparently understood how business was done at the Connecticut pension fund.
As he wrapped up his involvement with Crossroads, Mr. Heppner said, Mr. Landry started Westport Senior Living Investment Fund LP and received a $100 million commitment from the state pension fund. The fund is an affiliate of Westport Realty Advisors Ltd., Palm Beach Gardens, Fla.
Mr. Landry paid -- in connection with the $100 million commitment -- finder's fees of $16,960 to Hartford-based M.P. Guinan Associates for government relations and $1.1 million to Andrew Moses of New York Capital Partners FL Inc. for capital-raising assistance, according to state treasury department records.
Four telephone calls to Mr. Landry were not returned. Five telephone calls to Mary Phil Guinan, president of M.P. Guinan, also were not returned. Ms. Guinan served on Mrs. Nappier's transition team.
According to Connecticut state treasury records, Ms. Guinan also received a finder's fee from PaineWebber Inc. for help in receiving municipal finance business from the treasury.
Mr. Moses is a mysterious figure. He is not listed in any of the directories of private equity investment professionals, nor in New York City directory assistance. The April 29, 1998, agreement with Westport Realty, written on his letterhead, does not have a telephone number, although it does list a fashionable Upper East Side New York City address, located between Fifth and Park avenues.
Neither Mr. Moses' name nor that of his company were listed in the directory in the building's lobby. A woman, answering the buzzer for the law offices of Albert Simmons III, and claiming to own the four-story sandstone townhouse, said no such company or individual was housed in the building.
Treasury records reveal another Connecticut partnership managed by buyout firm Wellspring Capital Partners Management LLC paid Mr. Moses $437,500 to "identify potential purchasers of limited partnership interests."
Under Mr. Silvester, Connecticut invested $50 million in Wellspring Capital Partners II in January 1998.
Greg Feldman, managing partner of New York-based Wellspring, said he was not directed by Mr. Silvester to use New York Capital as a placement agent.
He conceded knowledge of the federal investigation but said he had not been contacted by the U.S. attorney regarding Connecticut's investment with his firm.
The allocation to Westport Realty was one of several that Mr. Silvester made late in his term as treasurer, and it raised the suspicion of law enforcement officials. Ms. Nappier negotiated unsuccessfully to have Westport return a portion of the commitment, according to a spokesman in her office.