Aldus Equity Partners' current and former partners will pay a total of $1 million in restitution and forfeit $5.4 million in management fees as part of a settlement with New York Attorney General Andrew Cuomo in his pay-to-play investigation of investments with the $132.8 billion New York State Common Retirement Fund, Albany.
Also, any direct or indirect interest in the $650 million Aldus/NY Emerging Fund will be forfeited, according to the settlement announced Wednesday by Mr. Cuomo's office.
Aldus founder Saul M. Meyer, who pleaded guilty in 2009 to New York state fraud charges, agreed to pay a total of $412,500 in restitution to the New York state fund. Matthew O'Reilly, partner, also agreed to pay $412,500 in restitution. Marcellus Taylor, a former partner, agreed to pay an additional $165,000; he already has paid $10,000.
Mr. Meyer's sentencing hearing is scheduled for Dec. 16.
The fund had paid Aldus $5.45 million in management fees.
The New York fund terminated Aldus as a manager in April, said Ola Fadahunsi, spokesman for Thomas P. DiNapoli, New York state comptroller and sole trustee of the state pension fund. Mr. Fadahunsi said he was unable to immediately provide a recent value of the Aldus fund or what manager was hired as a replacement to manage the fund. The New York fund had invested $650 million in the Aldus fund.
As a result of the attorney general’s agreement, Mr. DiNapoli will drop the suit he filed separately last year against Aldus, the three partners and others alleging fraud and seeking reimbursement of the more than $5 million in fees and other damages, Mr. Fadahunsi said.
In a separate settlement, Patricia Lynch Associates, a major Albany lobbyist firm, will pay $500,000 to Mr. Cuomo's office and founder Patricia Lynch “will be banned from appearing in any capacity” before the office of the New York state comptroller.
PLA contributed and bundled tens of thousands of dollars in contributions to Alan Hevesi's 2006 campaign for re-election as state comptroller and sought to persuade the New York fund to invest with LW Strategies, an investment made by the fund. Ms. Lynch is identified in the agreement as a member of LW Strategies.
Mr. Hevesi resigned as comptroller in December 2006 and pleaded guilty in October in New York State Supreme Court to accepting nearly $1 million in gifts in exchange for approving $250 million in investments for the fund.