Wednesday, May 13, 2009

Ex-Blackstone Employee Pleads Guilty In N.Y. Kickback Scandal

A former employee of a placement agent now owned by the Blackstone Group has pleaded guilty to securities fraud as part of the widening kickback scandal at a New York State pension fund.

Julio Ramirez, who worked at Blackstone’s Park Hill Group until March, admitted that he made payments to a top aide to New York’s then-comptroller while working in 2005 at California-based Wetherly Capital Group..

According to New York State Attorney General Andrew Cuomo , Ramirez paid $250,000 to Hank Morris, a former top aide to ex-New York Comptroller Alan Hevesi. In exchange, Morris ensured that the New York State Common Retirement Fund awarded a pair of investment firms that hired Wetherly $50 million each.

Wetherly said it had no knowledge that Ramirez was paying kickbacks, and Blackstone spokesman Pete Rose said Blackstone “found not a shred of evidence that he violated any standard of conduct” during his four years at the firm.

The pay-to-play scandal has already engulfed several well-known firms, although none have been charged with any wrongdoing. Among those identified as having paid kickbacks are the Quadrangle Group, the private equity firm founded by Steven Rattner, President Barack Obama’s pointman on the bailout of the U.S. auto industry, and the Carlyle Group.

PEhub says a hedge fund manager will be next to face charges in the on going saga that proves politically created power creates extremely strong pressure points for corruption.

It appears that Blackstone and Carlyle kept one player in the middle, these "placement" agents, resulting in their not being involved in any direct bribes. I'm sure everyone at Carlyle and Blackstone is shocked, shocked, I tell you, that this was going on.

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