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Financial Misconduct: Securities Fraud and Corruption At The Top

Posted by Jane Akre
Wednesday, April 15, 2009 2:12 PM EST
Category: Protecting Your Family, In The Workplace
Tags: Financial Misconduct, Pension Fund, Hedge Fund, Carlyle Group, Conflict of Interest, Securities and Exchange Commission

Financial misconduct charges against Barrett Wissman for profitting from his access to a New York pension fund.



IMAGE SOURCE:  New York Times Web site/ image of Barrett Wissman 

His name is Barrett Wissman and he was a Dallas hedge fund executive. 

Wissman is now just the first executive to be charged with a felony as part of an investigation of corruption at New York state’s $122 billion pension fund, brought by New York Attorney General Andrew Cuomo and the Securities and Exchange Commission, reports the New York Times

He has agreed to pay $12 million to settle an investigation into hedge funds and private-equity companies that would win investments from the pension fund.   

Wissman is accused of receiving millions in fees as a "finder" or middleman between the pension fund and investment firms.  That in itself is not illegal, but prosecutors say Wissman traded his access to state officials for the payments, which raise concerns about conflict of interest. Generating kickbacks to public officials would be illegal.

Cuomos’ office last month brought 123-count indictment against two aids to the New York state comptroller, Alan Hevesi, accusing them of selling access. Hank Morris worked for Hevasi as a top political consultant and David Loglisci was the investment officer for the pension fund. 

Wissman is accused of misrepresenting how he had access.  For example, in helping Access Capital, a fund that invests in private equity firms, win more than $500 million in business from the state pension fund, he received more than $1.5 million in fees. He told Access he would not share the money with a third party.

He did share more than $790,000 with Morris, according to the S.E.C. complaint. 

Court records unsealed Tuesday say Wissman ‘Engaged in fraud, deception, concealment” and “made material false representations and statements with intent to deceive and defraud” reports the Times.

In another case, Wissman received $5 million for arranging a $500 million investment in New York’s pension fund into an energy fund run by the Carlyle Group, a private equity firm that President George H.W. Bush is associated with. 

The Carlyle Group is a hedge fund that is under investigation by the state of New York and the SEC as to whether they paid middle men to secure investments from the pension fund.   Carlyle won $1.3 billion worth of business from the pension fund, reports Bloomberg

Carlyle says it is fully cooperating. 

The Carlyle Group counts among its associates former Secretary of State James A. Baker and former President Bush and has long been criticized for profiting from the war in Iraq.  Carlyle has been profiled in two notable documentaries, Michael Moore’s Fahrenheit 911, and William Karel’s The World According to Bush.  #

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