LOS ANGELES — Cardinal Americas withdrew its bid for a $10 million private equity commitment from LACERS amid ethics issues involving Robert Aguallo Jr., the pension fund's former general manager, who now is managing partner of the private equity firm.
The Los Angeles City Ethics Commission has launched an investigation into whether Mr. Aguallo violated ethics laws when he lobbied employees of the $10.2 billion Los Angeles City Employees Retirement System to pay higher fees than the negotiated terms, according to documents and e-mails obtained by Pensions & Investments.
LeeAnn Pelham, executive director of the ethics commission, said she could not confirm or deny that an investigation is under way, but sources close to the matter said it is continuing. Mr. Aguallo did not return about 10 calls seeking comment for this story.
The city's ethics policy states that when a high-level public official accepts a job with a firm that does business with the city agency or department, the public official is barred from attempting to influence a decision at his or her former agency for 12 months.
The pension fund's board made a contingent commitment of up to $10 million to Cardinal Americas 18 months ago. Cardinal Americas was formed last year by two executives from Chicago-based private equity firm Cardinal Growth, which receives Small Business Administration funding as a Small Business Investment Company, and the politically well-connected owner of a Los Angeles construction firm, Cordoba Corp.
The commitment was contingent on Cardinal Americas raising a minimum of $50 million for its first fund, which will invest in construction companies tied to infrastructure. That money had to be raised by Aug. 27; on Aug. 25, Cardinal Americas withdrew its funding request, said Sally Choi, Mr. Aguallo's successor.
Mark Vargas, Cardinal Americas spokesman, said the firm is not related to Cardinal Growth, except that two Cardinal Growth executives also work for Cardinal Americas. But the pension fund's consultant, Pension Consulting Alliance Inc., Los Angeles, used Cardinal Growth's track record in its due diligence and recommendation of Cardinal Americas. (PCA had recommended a contingent $5 million commitment; the board increased it.)