"Cahill ally brokered pension fund deal; Fund-raiser takes home $2.3m fee" by Frank Phillips, Globe Staff | May 24, 2009
He is a close political ally and prodigious fund-raiser for state Treasurer Timothy P. Cahill. When a blue-chip New York financial firm was trying to persuade Cahill and his staff to award it a lucrative contract to manage state pension money, it hired Anthony S. Rust to push their cause.
In the end, the payday was a big one for everyone involved. Ivy Asset Management was awarded the contract in 2004 to manage $393 million in state pension funds, a deal that would net it about $18.3 million in fees, according to state records. Ivy paid Rust an estimated $2.3 million for brokering the deal, according to the records.
Rust's introduction to Ivy came through Cahill's closest political associate and close friend, Thomas F. Kelly, whose firm, CanAm Consultants, specializes in acting as a placement agent for financial firms seeking to manage public pension funds, according to a person briefed on the arrangement.
State campaign disclosures show that Cahill collected tens of thousands of dollars in campaign contributions from Rust and his family members, from Ivy executives, and from executives at Ivy's corporate parent, the
There was nothing illegal about the financial arrangements between Cahill's office, Rust, and Ivy, but their actions echo controversies that are raging in state capitals across the nation.
Federal regulators and state investigators from New York to New Mexico are probing the way major public pension funds hand out contracts to manage billions of dollars in taxpayer money. What they're finding is that major money management firms often pay seven-figure fees to politically connected middlemen to help them in their bids, while at the same time showering public officials with campaign contributions.
And then LOSE all the MONEY: Mismanaging the Massachusetts Pension Fund
In Massachusetts, Cahill chairs the Pension Reserves Investment Management Board in his capacity as state treasurer, overseeing the $37 billion public pension fund. The fund is managed by private financial firms, who compete ferociously for the lucrative contracts that typically carry significant fees. As part of that competition, the firms often hire brokers, or middlemen, to help their cause....
Michael Travaglini, PRIM's executive director, strongly defended the integrity of the selection process for money managers. "I can speak to the integrity of our process," Travaglini said. "But why a firm would pay a third party? There are many times where we don't understand why, particularly in a process like ours, which is open and competitive."
He said, however, the use of middlemen is a legitimate practice....
Yup, the same guy who managed such losses got a raise -- a nice "$64,000 bonus on top of his $322,000 annual salary!"
Rust did not return repeated telephone calls placed to his cellphone; the number listed for his company, Newport Capital, has been disconnected.
Interesting.
Rust, according to state pension officials, has been active for well over a decade in public pension circles, representing financial firms seeking business from the state and city of Boston pension fund managers.
Rust was one of a half dozen people who met as often as every week in the Quincy office of the treasurer's brother-in-law, Anthony Falco, to map out political fund-raising plans, according to two people who were involved in Cahill's fund-raising operations. Cahill has been a prodigiously successful fund-raiser, building a $3 million political war chest. He has told associates he is ready to challenge fellow Democrat, Governor Deval Patrick, next year....
And he's our hope?
The contract with Ivy came during a particularly interesting juncture for the state pension system, as Cahill was among the first public pension overseers in the country to branch out into higher-risk investments like hedge funds and private equity companies in an attempt to increase returns. These money managers, in turn, fought hard for the Massachusetts business, which would then give them credibility to win business from funds in other states.
And so his friends could make $$$!
This is the TREASURER, huh? The one that is supposed to be SAFEGUARDING TAXPAYER $$$?
Rust's company appeared on a disclosure list of third party marketers that the Massachusetts PRIM board released to the Globe at the newspaper's request. Those marketers make multimillion-dollar fees by pitching investments to pension funds on behalf of private money managers - often hedge and private equity funds.
Cahill played an active role in the selection of Ivy as a member of the treasury selection committee, which is typical for Cahill but a departure from past practices. Previous state treasurers did not involve themselves in the selection process. Cahill pushed for the change in state investment policy that allowed the PRIM fund to invest $2 billion in pension proceeds in hedge funds. Cahill then sat on the nine-member selection committee that chose the money managers.
The list of third-party marketers helping financial firms secure Massachusetts pension investments shows that others with political cachet or inside connections, including a firm with ties to a member of the Kennedy clan, have served as middlemen with the Massachusetts pension system.
Oh, so FAT TED'S FRIENDS were BILKING the MASS. PENSION SYSTEM from the OTHER END, 'eh?
Included on that list is Kelly's firm CanAm Consultants. The documents provided to the Globe show CanAm Consultants has twice represented a client bidding on treasury business since Cahill took office in 2003. The clients were not awarded any work.
The list also includes Marwood Group, a firm run by Edward M. Kennedy Jr., the son of US Senator Edward M. Kennedy. Marwood Group served as a third party marketer for a $325 million allocation that PRIM assigned to Arden Asset Management to invest in hedge funds in April 2004. Arden did not return calls seeking comment. But if industry standards were followed, Marwood would have made over $3 million from $22.6 million in fees that Arden charged PRIM.
Ain't liberals grand?
Kennedy, who has been, politically, a low-key member of his famous family, declined to comment on his work on behalf of Arden. Although he only contributed $250 to Cahill's campaign coffers, Kennedy has attended numerous Cahill fund-raisers and a hosted Cahill and other pension finance experts at a clambake at the Kennedy compound shortly after the decision was made to invest with Arden in 2004, according to people who were there.
You smell something?
The value of Massachusetts pension money managed by Arden grew from $325 million to $556 million by 2007, according to state records. That included an allocation of another $81.7 million in 2005 and 2006.
In October 2005, the PRIM board chose EARNEST Partners, an Atlanta-based financial firm, to manage $250 million in pension money. EARNEST used Connors & Co. as a middleman on the deal. Paul F. Connors Jr. and his wife have contributed $12,000 to Cahill's campaign committee. Connors's director of marketing, Josephine Shea, a Quincy resident, is one of Cahill's chief fund-raisers and, along with Rust, attended the fund-raising strategy meetings at Falco's office. She has given $3,000 to the treasurer's political account.
The firm also employs Robert Q. Crane Jr., the son of the former state treasurer, and a Harvard classmate of Connors. Shea declined to comment. Connors did not return a call made to his office.
The mix of politics, campaign fund-raising, and public pension fund investments has raised serious questions - and in some cases, criminal allegations - in other states, particularly in New York. The attorney general there, Andrew Cuomo, has brought charges against political insiders in Albany he says were carrying out a "pay-to-play" scheme involving pension investments.
I'll give you a little clue: IT IS HAPPENING EVERWHERE!!
That's what passes for "politics" these days in AmeriKa!
Earlier this month, Cuomo pulled together prosecutors from 36 states, including Massachusetts, to participate in a telephone conference to discuss the issue.... Middlemen are legal, as are their significant fees, unless it can be proven that they were paid as bribes.
What's with the word games?
Still, the mix of campaign contributions and politically connected brokers calls into doubt Cahill's assertion that the PRIM selection process is devoid of political considerations....
--more--"Part of a pattern, it would seem:
"Conference aid called ethics issue for Cahill; Series underwriters manage state's cash" by Andrea Estes, Globe Staff | June 1, 2009
A conference series run by Massachusetts state Treasurer Timothy Cahill with the goal of helping women manage their finances is raising ethical questions, not because of the subject matter, but because its high-dollar sponsors have a strong interest in currying favor with Cahill.
They are all the same!
But the same financial institutions that underwrite the sessions also earn millions of dollars in fees from Cahill's office by handling the state's bond offerings or investing the state's pension fund....
Cahill was traveling on vacation last week and was unavailable for an interview, according to his spokeswoman. In a statement released by his office, Cahill did not address the ethical issues raised by the conferences in detail, but instead focused on the educational benefits of helping women learn about financial management.
Gee, I wonder who footed the bill for his vacation, taxpayers?
No "staycation" for him.
The financial companies, Cahill said, sponsor the conference voluntarily. "Their support has helped educate a diverse group of women and families across the state. The YWCA and my office are grateful for their partnership because without their support, we could not help these people who desperately need financial help during this extraordinarily difficult time," his statement said.
Cahill's spokeswoman, Francy Ronayne, said the companies "do not feel compelled to contribute for any reason other than to provide a public service. There is absolutely no conflict of interest."
Cahill opens each conference, appearing before the gathered investment executives and women. His website features 10 photographs of him posing with speakers, volunteers, and bankers at three money conferences, one in 2008 and two in 2009.
"It's a way to game the system," said Bill Buzenberg, executive director of the Washington, D.C.-based watchdog group the Center for Public Integrity.
Must all politicians be equivocating liars? Oh, right, job qualification one.
Buzenberg said the conference sponsorships are ethically questionable but legal under a loophole in the rules prohibiting "pay-to-play" schemes that have helped Wall Street businesses and banks win state municipal bond and investment work around the country.
The businesses, he said, "do it for a good cause. But they also do it for the purpose of political influence - to gain a great deal more money than it costs them. This is a way to remain in the good graces of the people who make these decisions."
Isn't that BRIBERY?
An advocate for ethics in state government said the practice raises some concerns. Pam Wilmot, executive director of Common Cause/Massachusetts, a nonprofit group, said she would be less worried by Cahill's conferences if there were a broader range of sponsors - not just companies that reap millions of dollars in fees from the treasurer's office.
"If the solicitation was to every single company in Massachusetts, regardless of their relationship with the department, it might be different," she said.
Treasury officials say they avoid any potential problems by having a nonprofit association, the YWCA of New England, collect the money and pay expenses. But it is Cahill's own political fund-raisers, which help fill his campaign coffers, that also solicit the conference donations from businesses, according to information provided by the YWCA.
From the proceeds of the conference sponsorships, the fund-raisers were paid more than $45,000 a year in 2007 and 2008, according to financial statements provided by the YWCA.
Virtually all of the donors do business with the treasury, which would not provide the total amount of fees paid to each company. But none of the businesses contacted by the Globe said they gave for any reason other than to help women, support the community, or win new customers.
Can't they just be honset about it?
Barclays was a first-time donor this year after taking over most of Lehman Bros., which gave $25,000 in previous years. Barclays's Boston office employs former House Ways and Means chairman Paul Haley and former state representative and treasury employee Patrick F. Landers III. The company has been an underwriter in several major state bond deals.
Your bailout money at work!
At one of the conferences held at Western New England College in 2006, Haley helped kick off the event by introducing Cahill. "Barclays Capital has been an active supporter of The Money Conference for several years and is a firm believer in its mission," wrote spokesman Brandon Ashcraft in an e-mailed statement. "We are committed to good corporate citizenship and giving back to the communities where we and our clients work and live."
Anne Pace, spokeswoman for Bank of America, said the bank sponsors the event to attract and serve customers. "For us it's about the customers," she said. "This is an opportunity to engage either with existing customers or potential customers. Not only are we trying to help educate consumers, the ultimate goal is that they will do their business with us."
Former state treasurer Shannon O'Brien, who launched the conferences a decade ago, said the treasury partnered with the YWCA and formed a separate fund-raising committee to avoid the appearance of impropriety. "When I came in, there had been a lot of scrutiny around 'pay to play' and municipal finance," she said. "We made it clear the fund-raising was separate and apart. We wanted to make sure no one was under any obligation."
As the practice continued under Cahill's oversight, the banks and investment firms have kicked in between $5,000 and $25,000 a year to sponsor the conferences, which were held this year in Framingham and Springfield. Last year two conferences were held - in Boston and Springfield. In 2007, there were three - in Springfield, Boston, and Worcester.
Most of the businesses handle the issuing of state bonds, which enable Massachusetts to borrow money for school construction and other capital projects. Typically businesses that handle bond issues earn $5 per $1,000 of bonds sold. A $300 million bond offering, for example, would generate fees of $1.5 million, divided among the underwriters.
I thought you might find this interesting: Barney Frank Benefited From State Debts
Some of the businesses invest money for the state's $37 billion Pension Reserves Investment Trust Fund, which funds state workers' pensions, or the treasurer's Deferred Compensation Plan, which allows state workers to save and invest a portion of their earnings. Those businesses earn management fees based on the amount they manage. Many hold state funds in money markets or both.
Some companies that had not done business with the treasury until recently just began sponsoring the event, according to records provided by the YWCA....
Because if you don't.... no contracts!
Andrew Gully, senior vice president of Sovereign Bank, which has contributed $15,000 a year, said in a statement that the bank has supported the conferences since 2003. "Over the years, thousands of women have had the opportunity to learn about issues ranging from mortgage and credit applications to investment and retirement strategies. We view it as a public service even that has been a great help to people working on their personal finances."
Then how about cutting some breaks on the foreclosures?
Okay, that's two strikes, Timmy.
And here's the pitch....
"Cahill voted to double supporter's pension" by Sean P. Murphy and Frank Phillips, Globe Staff | June 10, 2009
A longtime political supporter and fund-raiser for state Treasurer Timothy P. Cahill is collecting the kind of lucrative pension typically reserved for public safety personnel such as police and prison guards, even though she held administrative jobs in the Norfolk County sheriff's office.
Cahill voted to approve the hazardous duty pension for Josephine E. Shea in 2000, while he was still Norfolk County treasurer and chairman of the Norfolk County Retirement Board, according to public records. Shea, who retired that year at age 49, has been collecting a pension now worth $47,000 a year, plus health-care insurance, paid by Norfolk county taxpayers....
That wouldn't be the SAME Josephine Shea that is one of his CHIEF FUND-RAISERS, would it (it is)?
Cahill declined to be interviewed. In a statement, he said he did not remember his July 26, 2000, vote approving Shea's retirement. "It was almost a decade ago, and I don't remember the specifics of the case," Cahill said in the statement.
Should you even be the treasurer then?
Shea has since embarked on a second career as a broker for firms seeking to invest state and county pension funds; her firm earned what is estimated to be a substantial fee for helping to arrange a deal for an investment management firm to handle $250 million from the Massachusetts pension fund, which is overseen by Cahill....
Oh, the INCESTUOUS STENCH of Massachushitts politics!! Ugh!
A Group 4 public safety pension of the type Shea received is one of the most lucrative prizes under state pension law, delivering hundreds of thousands of dollars in extra lifetime payments to retiring public employees who put their lives on the line every day. Police officers, firefighters, and prison guards are entitled to it.
Not her.
Many of them retire with weakened hearts or bad backs and stress borne of hazard on the job. Actuaries predict shorter life expectancy for them, compared to white-collar workers....
The five-member Norfolk County Retirement Board approved Shea's pension with no questions asked, minutes show. At the time, Cahill was chairman, and Shea was also a member of the board (and still is). Neither Cahill nor Shea recused themselves from the July 2000 vote, according to minutes of the meeting, which state that the vote was unanimous to approve a batch of pension requests, including Shea's.
Shea did not respond to written questions about her participation in the vote on her retirement. State conflict-of-interest law generally prohibits officials from voting on matters that affect their own financial interests....
Since when did Massachushitts politicians ever follow their own laws?
After she stopped working at the sheriff's office, Shea began work as a pension investment consultant for Connors & Co., a Georgia company that earns fees by matching investment companies with state and local pension funds. Shea is the firm's director of sales and marketing for New England.
In a 2000 letter to Cahill and her other colleagues on the Norfolk Retirement Board, Shea described her desire to continue working after her tenure with the sheriff's office. "Not one to sit idly, I subsequently became a consultant," she wrote.
And STARTED DOUBLE-DIPPING!!!!!
Paul F. Connors Jr. and his wife have been longtime contributors to Cahill's campaign committee, dating back to when he was first elected county treasurer.... Connors could not be reached yesterday; he has previously not responded to requests for comment about his firm's dealings in Massachusetts.
In October 2005, the state retirement board chose EARNEST Partners, an Atlanta-based financial firm, to manage $250 million in pension money. EARNEST used Connors & Co. as a broker on the deal. Cahill also chaired the selection committee that reviewed the proposals....
See above article.
Cahill served on the state pension board selection committee that recommended EARNEST and also voted for final approval. He has said he does not excuse himself from participating, even if his political supporters are involved, because he is not told which third-party brokers helped arrange an investment.
Oh, so everything is all right then? Pfffffttt!
Connors & Co. was the third-party marketer when money management firm Invesco was chosen by the Norfolk County Retirement Board to handle $3 million of its funds in 2005. The agreement called for Connors to get 25 percent of Invesco's advisory fee, which, if industry standards were followed, would be been as much as $90,000. Shea abstained from the vote.
--more--"Of course, there is a little goodness in everyone:
"Cahill: Another bad gamble
Treasurer Timothy Cahill might have expected that the state’s bid to join the multistate Powerball lottery consortium would be rejected. After all, when he begged the Legislature for permission to join Powerball, he admitted that five competing New England states had nixed the proposal on a previous try. But Cahill, who touted the plan as a revenue-raiser worth $25 million to $40 million, neglected to notify the Legislature that a majority of the 30 participating states had voted down the bid May 27, according to the Boston Herald.
What, you also miss that one, Globe?
Then, there was still time to amend the state budget and remove the $25 million lawmakers had included in anticipated revenues. Now, the budget sitting on the governor’s desk is $25 million out of balance. Isn’t attention to such fiscal details just what we elect a treasurer to do?
--more--"
Well, if the Globe is criticizing you, you can't be all bad.
