Saturday, July 09, 2005

Let the Pillaging Begin Again?

Connecticut's Poster Child for Corruption, former Governor, John G. Rowland Posted by Picasa

State pension fund may commit millions to firm with ties to Silvester scandal

By: Don Michak, Journal Inquirer Staff Writer
July 09, 2005

The state pension fund is poised to invest as much as $75 million with a Simsbury-based firm penalized by federal regulators in for paying $1.5 million in "finder's fees" to two cronies of the corrupt former state Treasurer Paul Silvester.

Landmark Partners, which specializes in "private equity" and real estate investments, is now headed by a former state treasurer, Fransicso L. Borges, a Democrat and former Hartford city official like the current state treasurer, Denise L. Nappier.

The firm is slated next week to present a state pension fund oversight panel, the Investment Advisory Council, with a proposal that the fund join other institutional investors in a $750 million partnership run by Landmark.

The partnership is focused on so-called secondary market transactions in which parties that already have invested as much as $100 million in certain deals put their stakes up for sale.

Current investors in the partnership include pension funds run by the International Association of Machinists, which has invested $200 million, the New York City Retirement System, which has invested $125 million, and the city of Hartford, which has invested $10 million.

The chief investment officer at the Connecticut fund, Susan B. Sweeney, last week wrote Nappier recommending that she commit between $50 million and $75 million to the partnership, citing Landmark's long-term investment performance in a dozen similar ventures.

The treasurer, in a subsequent letter to the 12 members of the IAC, said investing the proposed deal with Landmark would "give us exposure" to "mature private equity interests" dating from 1999 through 2003, when the pension fund purposefully avoided making investments like those championed by her corrupt predecessor.

Sweeney specifically cited a "due diligence" report by a consulting company hired by the pension fund, Franklin Park of Bala Cynwyd, Pa., which concluded that Landmark has a track record of "solid absolute returns" and that the deal could help diversify the fund's investment portfolio.

The 28-page report states that Landmark has been "a leading brand name" in the secondary market and that its team is "experienced and cohesive."

But it also says that team "has recently undergone significant senior level changes," a reference to Landmark's hiring of Borges as its chief executive officer and chairman in 1999 and the "transition to a less active role" in 2001 of its founder and former chairman, Stanley F. Alfeld.

The consultant noted that those changes were due in part to the civil fraud charges brought by the U.S. Securities & Exchange Commission against Landmark and Alfeld, who in 2000 paid civil penalties of $100,000 and $50,000, respectively, to settle them.

The SEC had alleged that Silvester agreed to invest $150 million in state pension money with Landmark in 1998 and that, in return, Landmark and Alfeld agreed to pay $1.5 million in fees to Ben F. Andrews Jr. and Christopher A. Stack.

To secure the pension fund investment, the agency charged, Alfeld agreed to retain Andrews as a consultant and arranged for Andrews and Stack to be paid through a New York City law firm, Rogers & Wells.

Silvester, who was convicted on federal racketeering and money laundering charges in 1999, has said he had Landmark pay a $626,000 fee to Jerome L. Wilson, a former New York state senator now residing in Connecticut who was associated with Rogers & Wells.Silvester said Wilson then hired Andrews at a fee equal to 1 percent of the pension fund's $150 million investment with Landmark and that Andrews was supposed to split the payment with Stack, who would kick back some of the loot.

Stack, a Darien lawyer who ran a company that Silvester put in charge of the state's tax-deferred college savings program, received immunity from federal prosecutors in exchange for testifying against Silvester and his associates.

Andrews, the longtime head of the NAACP in Connecticut and the Republcians' unsuccessful candidate for secretary of the state in 1998, was convicted two years ago on federal charges of bribery, money laundering, mail fraud, wire fraud, and making false statements to federal agents.

A former Simsbury resident who moved to Ohio, he was ordered in May to serve 30 months in prison and pay a $250,000 fine.

Andrews in 1997 persuaded former Gov. John G. Rowland to appoint Silvester as state treasurer following the resignation of Christopher Burnham from the post.Andrews is the brother-in-law of Lisa Thiesfield, Silvester's former mistress, campaign manager, and aide at the state treasury. Thiesfield, who was convicted of corruptly aiding and abetting Silvester in 2003, had been presented with a $1 million consulting contract by a Boston-based investment firm, Triumph Capital Group, ostensibly to identify individuals like Andrews who were supposed to pitch deals to the Mashantucket Pequot Tribe.

Triumph Capital and its general counsel, Charles B. Spadoni of West Hartford, were convicted on federal racketeering conspiracy, bribery, wire fraud, and obstruction of justice charges in 2003.

Paul F. Quirk, a former managing director at Triumph Capital, is now a vice president at Landmark Partners. Quirk is not part of the team Landmark has handling its proposed deal with the state pension fund, according to the Franklin Park report.

The investment Silvester authorized with Landmark, had generated a negative 0.08 percent net internal rate of return as of the end of last year, according to Franklin Park, which noted that the pension fund participated in just two of its three structured stages.

* * * *

Rowland Investigation: Who's Who

The Who’s Who in Corrupticut

My sarcastic letter to Governor John G. Rowland Oct. 2, 2003

My nasty letter to Governor John G. Rowland for the day he arrived in Federal Prison for Corruption 3-30-2005


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