New York City Comptroller William C. Thompson, Jr., in the wake of today’s New York State Attorney General’s issuance of a criminal complaint against a partner in Aldus Equity Partners and the Securities & Exchange Commission’s filing of charges against both Aldus and that partner, today urged the New York City Pension Funds to terminate their relationships with the Texas-based consultant to the Funds.

Thompson made the recommendation based on the complaints filed against Aldus and Saul Meyer, a founding partner in Aldus, as well as ongoing concerns regarding improper transactions involving Aldus and the New York State Common Retirement Fund.

Just yesterday, the New Mexico State Investment Council fired Aldus Equity Partners, one of three firms that advises the council, citing the ongoing New York investigation.

“My office last month increased its scrutiny of Aldus Equity Partners based on the New York State Attorney General’s issuance of an indictment and the Securities & Exchange Commission’s filing of a complaint against Hank Morris and David Loglisci, and the extremely troubling allegations made against Aldus in those documents,” Thompson said.

“My office has had a lengthy discussion with principals of Aldus to discuss those allegations,” he said. “Those discussions have only served to increase my office’s concerns.”

“Those concerns, coupled with today’s charges against Aldus and arrest and indictment of Saul Meyer , lead me to now recommend that the City Systems immediately pursue termination of their relationships with Aldus,” Thompson said. “I would also like to thank the Attorney General and his staff for their diligence in investigating this matter and uncovering the broad scope of this corrupt scheme.”

The Comptroller, who serves as investment advisor to the five funds and as a trustee on four of them, notified trustees of the Funds today. The funds are the: New York City Employees’ Retirement System (NYCERS), Teachers’ Retirement System (TRS), New York City Police Pension Fund, New York City Fire Department Pension Fund, and Board of Education Retirement System.

Aldus has provided investment services to the City Pension Funds for the last four years. In 2005, the Police Pension Fund hired Aldus as a private equity consultant for investments in Funds smaller than $750 million. The Fire Pension Fund separately approved a $40 million investment commitment with Aldus in 2005, and another $15 million in 2008.

Additionally, NYCERS and TRS approved investment commitments of a combined $70 million in the Aldus-managed Erasmus New York City Growth Fund in July 2005. And the Police and Fire Funds invested another $50 million in Erasmus New York City Growth Fund 1A in June 2008.

Thompson noted that his office is not under investigation but believes that the continuing concerns and allegations against Aldus warrant prompt action by the trustees. In recent days, he has taken other steps to address concerns about investment practices, particularly in the use of placement agents, firms, and middlemen.

Last week, Thompson announced he would ask the Pension Funds to suspend the use of placement agents, and on Tuesday, trustees at NYCERS – the largest of the city’s pension funds with more than $30 billion in assets - unanimously voted to suspend their use in private-equity investments. The remaining Funds are expected to discuss the matter at their meetings in the coming weeks.

Additionally, Thompson asked the State Attorney General to look into whether the city retirement systems were “intentionally misled or deceived” as to the identities of any placement agents involved in an investment by the city’s pension funds in the Quadrangle Group. Thompson’s request was prompted by media reports indicating that Hank Morris and Searle & Company had received a placement fee.

The Pension Funds invested $125 million in Quadrangle in 2005 and 2006, but at no time did the Pension Funds’ consultant ever identify Hank Morris or Searle & Company as a placement agent in that transaction. In fact, in a due diligence questionnaire issued by the Pension Funds’ consultant, Quadrangle identified Monument Group and Helix Associates Limited as the only placement agents.

Trustees of the Pension Funds include Mayor Bloomberg, his commissioners, and representatives and appointees from labor unions. The Funds cover more than 237,000 retirees and beneficiaries and more than 344,000 City and City-affiliated employees. The Funds have combined assets of more than $82.5 billion as of December 31.

The Comptroller said the Pension Funds’ assets are invested for the benefit of the plan participants and their beneficiaries. All assets of the Pension Funds are managed by registered investment advisors.

Besides Thompson, the New York City Pension Funds’ trustees (chairs in bold) are:

New York City Employees’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); New York City Public Advocate Betsy Gotbaum; Borough Presidents Scott Stringer (Manhattan), Helen Marshall (Queens), Marty Markowitz (Brooklyn), James Molinaro (Staten Island), and Acting Borough President Earl D. Brown (Bronx); Lillian Roberts, Executive Director, District Council 37, AFSCME; Roger Toussaint, President Transport Workers Union Local 100; and, Gregory Floyd, President, International Brotherhood of Teamsters, Local 237.

Teachers’ Retirement System: New York City Finance Commissioner Martha E. Stark (Chair); Deputy Chancellor Kathleen Grimm, New York City Department of Education; and, Sandra March, Melvyn Aaronson and Mona Romain, all of the United Federation of Teachers.

New York City Police Pension Fund: Mayor Michael Bloomberg; New York City Finance Commissioner Martha E. Stark; New York City Police Commissioner Raymond Kelly (Chair); Patrick Lynch, Patrolmen’s Benevolent Association; Michael Palladino, Detectives Endowment Association; Edward D. Mullins, Sergeants Benevolent Association; Thomas Sullivan, Lieutenants Benevolent Association; and, Roy T. Richter, Captains Endowment Association.

New York City Fire Department Pension Fund: Mayor Michael Bloomberg; New York City Fire Commissioner Nicholas Scoppetta (Chair); New York City Finance Commissioner Martha E. Stark; Stephen Cassidy, President, James Slevin, Vice President, Robert Straub, Treasurer, and John Kelly, Brooklyn Representative and Chair, Uniformed Firefighters Association of Greater New York; John Dunne, Captains’ Rep.; John J. McDonnell , Chiefs’ Rep., and James J. McGowan, Lieutenants’ Rep., Uniformed Fire Officers Association; and, Joseph Gagliardi, Marine Engineers Association.

Board of Education Retirement System: mayoral appointees Schools Chancellor Joel Klein (Designee, Kathleen Grimm, serves as co-chair), Alan Aviles, Philip Berry, David Chang, Tino Hernandez, Edison O. Jackson, Richard Menschel and Marita Regan; Patrick Sullivan (Manhattan), Wendy Gilgeous (Brooklyn), Joan Correale (Staten Island); and Dmytro Fedkowskyj (Queens) ; and employee members Joseph D'Amico of the IUOE Local 891 and Milagros Rodriguez of District Council 37, Local 372 (serves as co-chair).

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