U.S. Securities and Exchange Commission
Litigation Release No. 18829 / August 12, 2004
SEC v. William A. DiBella and North Cove Ventures, LLC, Civil Action No. 304CV1342 (WWE) (District of Connecticut)
SEC FILES FRAUD CHARGES AGAINST WILLIAM DIBELLA, FORMER MAJORITY LEADER OF THE CONNECTICUT STATE SENATE, AND HIS CONSULTING FIRM
The Securities and Exchange Commission filed a civil fraud action today against William A. DiBella, the former Majority Leader of the Connecticut State Senate, and his consulting firm, North Cove Ventures, L.L.C., in Connecticut federal district court. The Commission=s Complaint alleges that, beginning in November 1998, DiBella and North Cove participated in a fraudulent scheme with the-then Treasurer of the State of Connecticut, Paul J. Silvester, concerning Silvester's investment of $75 million of the state pension funds with Thayer Capital Partners, a Washington, DC-based private equity firm. According to the Complaint, Silvester used the investment to reward DiBella, his friend and political supporter, for past and anticipated future services. In connection with the investment, Silvester requested that Thayer, through its chairman, Frederic V. Malek, hire DiBella. Thayer agreed to retain DiBella and to pay him a percentage of the state pension fund's total investment with Thayer, even though DiBella had no prior involvement with the transaction and ultimately performed no meaningful work related to the investment. DiBella understood from Silvester that there was no work to be done on the deal. The Complaint also alleges that Silvester increased the amount of the pension fund=s investment with Thayer by at least $25 million (to a total of $75 million) solely to secure a larger fee for DiBella. DiBella was ultimately paid a total of $374,500. The Complaint alleges that DiBella and North Cove aided and abetted Silvester=s violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and the violations by Thayer and its two affiliates of Section 206(2) of the Investment Advisers Act of 1940. The Commission is seeking injunctive relief, disgorgement, and civil penalties, and an order permanently barring defendant DiBella from serving as an officer or director of a public company. In October 2000, Silvester settled related Commission charges concerning his investment of state pension fund money with two other private equity funds.
The Commission also instituted separate, but related, settled administrative and cease-and-desist proceedings against Thayer, Malek, and two Thayer affiliates, TC Equity Partners IV, L.L.C. and TC Management Partners IV, L.L.C. concerning their failure to disclose to the state pension fund that, at the request of Silvester, they retained and paid DiBella nearly $375,000 in connection with the state pension fund's investment with a Thayer private equity fund, Thayer Equity Investors IV, L.P. Without admitting or denying the Commission=s findings, Thayer, Malek, and the two Thayer affiliates consented to the issuance of an order censuring them and requiring them to cease and desist from violating certain provisions of the Securities Act of 1933 and the Investment Advisers Act of 1940. The Commission also ordered Thayer to pay a civil penalty of $150,000 and Malek to pay a civil penalty of $100,000.