The former general manager of the Los Angeles City Employees’ Retirement System is under investigation by a city ethics panel for accepting a job at a private equity manager that had done business with the $10.5 billion system, sources said.
According to the sources, who asked not to be identified, the commission is investigating whether Robert Aguallo Jr. was negotiating to join Cardinal Americas in February while the system’s board extended by six months the deadline for the firm to raise its first fund. Mr. Aguallo left the system in May.
In March 2007, the system voted to commit up to a maximum of $10 million to Cardinal’s fund contingent on Cardinal raising at least $50 million from other investors by Feb. 27. Cardinal’s fundraising target is $100 million
Mr. Aguallo could not be reached for comment.
LeeAnn Pelham, executive director of the Los Angeles City Ethics Commission, and Sally Choi, the system’s current general manager, both said they could neither confirm nor deny the existence of an investigation.
“We are required to report in a timely manner potential wrongdoing within the Ethics Commission's jurisdiction to the Ethics Commission for appropriate action … Any matters raised were referred to the Ethics Commission,” Ms Choi said.
Tom Moutes the fund’s assistant general manager, said that he was not aware of Mr. Aguallo’s planned employment with Cardinal until he read an April 30 Cardinal press release. He referred all other questions to Ms. Choi.
Mr. Aguallo had announced in August 2007 that he would retire from the system in December. The system later allowed Mr. Aguallo to work for 90 days non-contiguously while it searched for a new general manager. He continued serving as general manager until he joined Cardinal Americas on April 30 as managing partner.
Mark Vargas, spokesman for Cardinal Americas, said he was not aware of any investigation and that the firm has not been contacted by the Ethics Commission.
The system’s commitment to the fund is set to expire Aug. 27 unless Cardinal raises at least $50 million by that date, Ms. Choi said.
