U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 21036 / May 12, 2009
Securities and Exchange Commission v. Henry Morris et al., 09-CV-2518 (SDNY) (CM)
SEC Charges Los Angeles-Based "Finder" in Kickback Scheme Involving New York Pension Fund
On May 12, 2009, the Securities and Exchange Commission today announced charges against Julio Ramirez, Jr., who was formerly affiliated with broker-dealers DAV/Wetherly Financial, L.P. and Park Hill Group LLC, in connection with a multi-million dollar kickback scheme involving New York's largest pension fund.
In an amended complaint attached to a motion filed today in federal district court in Manhattan, the SEC alleges that Ramirez participated in the fraudulent scheme by helping his friend and associate Henry "Hank" Morris extract kickback payments from Aldus Equity Partners, an investment management firm that was seeking to win investment business from the New York State Common Retirement Fund (Retirement Fund). The SEC has previously charged Morris and David Loglisci with orchestrating this wide-ranging scheme to enrich Morris and others and has alleged that Aldus and one of its founding principals, Saul Meyer, also participated in the scheme by agreeing to pay kickbacks to Morris.
According to the SEC's amended complaint, Ramirez facilitated Morris's scheme by contacting Meyer and making clear to him that Aldus must pay a kickback to Morris to secure an investment from the Retirement Fund. Although Aldus was already negotiating with the Retirement Fund's investment staff about the proposed investment at the time, Aldus agreed to kick back 35 percent of its management fees to a shell entity run by Morris. Morris in turn paid Ramirez a portion of those fees. As a result of the quid pro quo arrangement, Aldus secured the Retirement Fund's emerging fund portfolio business, and Ramirez shared in the profits even though he performed no legitimate services.
The SEC's amended complaint alleges that Ramirez aided and abetted violations of Section Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The complaint seeks permanent injunctions against future violations of the federal securities laws, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties.
The SEC's investigation is continuing. In a parallel criminal action, the Office of the Attorney General of the State of New York today announced the unsealing of criminal charges against Ramirez.
For further information, see Litigation Release No. 20963 (March 19, 2009), Litigation Release No. 21001 (April 15, 2009) and Litigation Release No. 21018 (April 30, 2009).