NEW YORK — A Los Angeles investment firm run by a well-known Southern California political operative has become ensnared in a widening probe into the fees paid to advisors who help place investments in public pension funds.
Wetherly Capital Group has come under scrutiny for a $313,750 payment it made to a firm run by a New York political advisor who was arrested last month on charges of running a kickback scheme involving New York state's pension fund.
Wetherly was founded by Dan Weinstein, a high-profile advisor to local politicians and longtime Democratic fundraiser. The firm made two payments to an entity controlled by Henry Morris, a New York political consultant at the center of the burgeoning scandal, according to an indictment last month in a case filed by New York Atty. Gen. Andrew Cuomo. The payments "represented the proceeds of criminal conduct," said the indictment, which did not elaborate.
Wetherly has not been accused of wrongdoing and is not under investigation by Cuomo's office, a person with knowledge of the probe said. Investigators are trying to determine the circumstances surrounding Wetherly's payment to Morris' firm, the person said.
Wetherly spokesman Brian Maddox said the $313,750 payment covered consulting work performed for the firm by Morris' company.
"Wetherly and its personnel have been fully cooperating with the attorney general's investigation," Maddox said. "There has been no suggestion that Wetherly or its staff engaged in any criminal wrongdoing or had any knowledge of improper conduct by Morris."
Weinstein served as a fundraiser for former California Gov. Gray Davis and raised money in 2001 for former Los Angeles Mayor James K. Hahn's winning campaign. Last fall he was the co-host of a fundraiser for the gubernatorial campaign of Atty. Gen. Jerry Brown at Davis' home.
Wetherly and the firm for which Morris worked, Searle & Co., also have shared fees for helping a private equity firm seal three multimillion-dollar deals at three major pension funds: the California Public Employees' Retirement System, the California State Teachers' Retirement System and Los Angeles Fire and Police Pensions.
The indictment came out of lengthy investigations by Cuomo and the Securities and Exchange Commission into whether Morris and others required investment firms to pay kickbacks for the right to manage money for the New York pension fund. Last month, the SEC and Cuomo accused Morris and another former official in the state comptroller's office, David Loglisci, of taking millions of dollars in kickbacks from firms looking to manage assets from New York's $122-billion public pension fund.
