NEW YORK, LOS ANGELES AND SACRAMENTO — A multimillion-dollar pension-kickback scandal widened further Thursday as a consulting firm for a Los Angeles city retirement fund was sued by federal regulators and one of its partners was arrested on criminal charges.
Aldus Equity was charged by the Securities and Exchange Commission with civil securities fraud for allegedly making improper payments to win business managing money for a New York state pension fund.
Dallas-based Aldus is one of two firms that recommend private equity funds to the Los Angeles Fire and Police Pension agency, which manages a $10.7-billion portfolio for retired firefighters and police officers.
Aldus has a three-year contract and receives $1 million a year to advise the Los Angeles fund, said Tom Lopez, the pension agency's chief investment officer.
Saul Meyer, a founding partner of Aldus, was arrested and charged by New York Atty. Gen. Andrew Cuomo with one count of criminal fraud.
Lawyers for Aldus and Meyer denied the charges against their clients.
Cuomo's investigation of alleged pension abuses is turning up signs of potential problems in California and other states, the attorney general told reporters.
"I don't think this is unique to New York," he said. "I believe other states have similar problems."
Cuomo said his office would coordinate more with other states regarding pensions, "and we're going to be doing that literally in the next couple of days."
Scott Gerber, a spokesman for California Atty. Gen. Jerry Brown, declined to elaborate on Cuomo's statement.
"We work with New York on lots of issues, but we're not going to confirm nor deny an investigation on this," Gerber said.
The allegations against Aldus raise new questions about the Los Angeles Fire and Police Pension agency.
The Times reported last week that the SEC's Los Angeles office asked two pension board members, Sean Harrigan and Elliott Broidy, for detailed information about their personal financial dealings and about any communications they had with Aldus and other firms whose names have been linked to the pension scandal.
A lawyer for Broidy, Randy Mastro, said Thursday that his client was fully cooperating with "any regulatory inquiries." Harrigan hasn't responded to requests for comment.
On Wednesday, a New Mexico agency fired Aldus as its private-equity advisor, saying the firm didn't tell the state of fees paid to middlemen, including an indicted political consultant.
