L.A. City News · @lacitynews
9th Feb 2011 from Twitlonger
PENSION FRAUD - The BIGGEST tweet in HISTORY on HENRY CISENROS & Connect-The-Dots to Villaraiogsa/Garcetti's CityView "Workforce Housing." LACERS administrators say the number one reason/project that city lost BILLIONS of LACERS pension money is because of, "Henry Cisneros' Workforce Housing projects." (Check the record!) IF BILLIONS WERE LOST, AND WHEN YOU LOOK INTO CISNEROS' PAST -- WE NEED TO LOOK A LOT DEEPER. Here is what I would be reading if I were a Federal Deputy on Wilshire Blvd:
May 27, 2009 11:15 PM
Hey, did you hear that Los Angeles City Council was talking about Henry Cisneros and how he donated money to Villaraigosa,then Villaragiosa donated LACERS pension money to Henry's housing projects.
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https://www.alturacap.com/board.php?memberid=4
Altura Board of Advisors
Senior investment professionals and business executives with a point of view
Henry Cisneros
Executive Chairman, CityView
Henry Cisneros is Executive Chairman of the CityView companies, which work with the nation’s leading homebuilders to create homes priced within the range of average families. CityView is a partner in building 40 communities in 12 states, incorporating more than 7,000 homes with a home value of over $2 billion.
Mr. Cisneros’ community-building career began at the local level. After serving three terms as a City Councilmember, in 1981, Mr. Cisneros became the first Hispanic-American mayor of a major U.S. city, San Antonio, Texas. During his four terms as Mayor, he helped rebuild the city’s economic base and spurred the creation of jobs through massive infrastructure and downtown improvements, marking San Antonio as one of the nation’s most progressive cities. In 1984, Mr. Cisneros was interviewed by the Democratic Presidential nominee as a possible candidate for Vice President of the United States and in 1986 was selected as the “Outstanding Mayor” in the nation by City and State Magazine. A scholarly study of America’s Mayors, The American Mayor, ranked Mr. Cisneros as one of the fifteen best mayors in the nation in a period that spanned the 20th Century.
After completing four terms as Mayor, Mr. Cisneros formed Cisneros Asset Management Company, a fixed income management firm operating nationally and ranked at the time as the second fastest growing money manager in the nation.
In 1992, President Clinton appointed Mr. Cisneros to be Secretary of the U.S. Department of Housing and Urban Development. As a member of President Clinton’s Cabinet, Secretary Cisneros was credited with initiating the revitalization of many of the nation’s public housing developments and with formulating policies which contributed to achieving the nation’s highest ever homeownership rate. In his role as the President’s chief representative to the nation’s cities, Mr. Cisneros personally worked in more than 200 U.S. cities in every one of the 50 states.
After leaving HUD in 1997, Mr. Cisneros was president and chief operating officer of Univision Communications, the Spanish-language broadcaster which has become the fifth-most-watched television network in the nation. Mr. Cisneros currently serves on Univision’s Board of Directors.
Mr. Cisneros has been active in non-profit and civic leadership. He has served as President of the National League of Cities, as Deputy Chair of the Federal Reserve Bank of Dallas and as National Chairman of the After-School All-Stars, founded by California Governor Arnold Schwarzenegger. Mr. Cisneros remains active in San Antonio’s leadership where he is Chairman of BioMed S.A., an effort to accelerate the City’s healthcare and biosciences sector. He is currently a member of the advisory boards of the Bill and Melinda Gates Foundation and the Broad Foundation.
In June 2007 Mr. Cisneros was inducted into the National Association of Homebuilders (NAHB) “Builders Hall of Fame” and honored by the National Housing Conference as the “Housing Person of the Year.”
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Multifamily Housing: Former HUD Secretary Cisneros Sees Promising Future for Multifamily
Former U.S. Department of Housing and Urban Development Secretary Henry Cisneros, now the executive chairman of an institutional investment firm that finances and builds workforce housing, recently told the nation’s real estate editors that the future looks promising for multi-family housing.
Speaking recently in Austin, Texas, at a conference held by the National Association of Real Estate Editors, Cisneros said the consensus among industry leaders is that there is pent-up demand for apartments from people who want to form new households but cannot yet afford to take that step.
He noted that very little apartment stock has been built in the last few years and said the nation’s declining homeownership rate will contribute to demand for multifamily rental housing.
The homeownership rate peaked at almost 70% several years ago but is now nearer to 65%, said Cisneros, who headed HUD from 1993 to 1997. Every 1% decline in the homeownership rate translates into an additional 1.5 million households that need a place to live, he said.
He added that Trammell Crow Residential, a leading multifamily builder and developer, built “zero apartments in 2009.”
He also quoted Ron Terwilliger, the former CEO of Trammell Crow and the former chair of NAHB’s Multifamily Leadership Board, who said that “as occupancy rates begin to rise in 2010, rent levels should stabilize. Thereafter, record-setting rental demand at a time of zero net completions should drive effective rents sharply higher — up about 6% in 2011 and 9% in 2012.”
Cisneros noted a general “sense of optimism” concerning multifamily housing. He added that CityView, the firm he now heads, sees opportunities particularly in gateway cities with large concentrations of immigrants, especially those where the work force is growing and where there is currently little construction of workforce housing.
Cisneros added that he sees some improvement in single-family housing but said the sector still “is not as robust as it should be.” He cited credit restrictions, high employment levels and current and expected foreclosures as the factors that are holding back single-family housing.
He also pointed out that investors are considering the hotel sector because it also has seen little new construction of late, and that there will be demand in the downtown core of major urban areas.
He said that many investors, such as pension funds, are looking at investing in infrastructure: ports, transportation terminals and hubs, toll roads, communications systems, smart electrical grid projects and the like.
While not real estate, such investment will support residential development, Cisneros said.
Click Here for the Source of the Information.
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http://ronkayela.com/2010/04/the-6-million-mystery-clues-to.html
Antonio's $6 Million Folly: Clues to the Mystery of the DWP Rate Hike Fiasco
By
Ron Kaye
on April 5, 2010 6:42 AM | Permalink | Comments (10) | TrackBacks (0)
Life is a mystery and the only certainty is change -- those are beliefs I live by as I try to figure out what the hell is going on from the scraps of clues that are left lying around.
There's a lot of scraps for an inquiring mind to play around with from Antonio's bungled attempt to rip off the public to the tune of nearly $700 million a year supposedly to get rid of LA's coal-burning power plants, build new gas plants, nearly triple the green energy portfolio, rebuild the electrical grid, erase the general fund deficit and enrich his cronies -- all by 2020!
By my math, 700 million times 10 equals 7 billion which wouldn't even pay half the cost of just fulfilling the Integrated Resources Plan that DWP claims it doesn't have -- a claim defies all probability given its best and brightest have been working on it as part of their yet-to-be-adopted strategic plan for years.
So why would Antonio reject union bully boy Brian D'Arcy's advice, send his Three Mediocrities -- Carson, Carr and Szabo -- to destroy the last vestige of credibility of the DWP Commission by taking over its climactic meeting last Wednesday, call a recess for 45 minutes and order the sinister CEO Raman Raj to claim the utility would go bottoms up if it didn't get $6 million more than the City Council was willing to approve?
Think about it: $6 million for just three months or just six-tenths of one percent of what the DWP rakes in per quarter when the board is prepared to spend tens of millions, if not hundreds of millions, of dollars at its meeting Tuesday.
It doesn't make sense unless a lot more is at stake, especially when you consider the Council will roll over in three months and approve far bigger increases unless there is a popular uprising.
Could it be he needed the money so jobs czar Austin Beutner can use it as play dough to subsidize job creation to justify his dollar-a-year salary and the $100,000-plus it cost the city to figure out how to give him free health benefits?
Could it be he needs the money to put hundreds of "green doctors" on the permanent DWP payroll to get gang members off the streets and into your homes to keep crime from soaring?
Could it be his party pals Keith Brackpool and Ari Swiller among others have so much money tied up in power and water speculative ventures they are desperate for cash the DWP can send their way?
There are so many possibilities and so many connected interests like the "green-washers" feeding off the environmental movement that believes we need to go green even if it bankrupts the city's residents and businesses
And then there are the green profiteers.
Swiller, for instance, drives Antonio's numerous fund-raising operations that channel favors for cash to various special interests. Before he got rich himself and set up Renewable Resources Group to profit from alternative energy and Hydrogen Now with partner David Freeman, now the interim DWP general manager, he used to work for supermarket tycoon Ron Burkle, who put Antonio on his payroll when he was out of work and now invests heavily in green energy and completes a circle that connects to such figures as Bill Clinton, Henry Cisneros and Stephen Bing to name a few..
He also managed to out-duel the DWP for the Rudnick property in Kern County which is perfect for a wind farm with DWP power lines running through it, a deal he instantly made a handsome profit on by selling half the land to the city of Vernon and while keeping the other half available to sell to the DWP should the opportunity arise someday.
Brackpool.jpg
Then, there's Brackpool, the Cadiz water project "visionary" who also had Antonio on his payroll as well as Susan Kennedy, the governor's chief of staff who previously played a key role for Grey Davis, another best pal of Brackpool's..
Last June, Michael Hiltzik in the LA Times wrote a brilliant article tracing the Kennedy connection to Gov. Schwarzenegger's startling decision to revive Brackpool's Mojave Desert water project, noting the British promoter "continues to attract political sycophants happy to attest to his wisdom in the ways of water policy -- while they accept campaign contributions and consulting fees from him and his company."
Hiltzik concluded that Brackpool's maneuvers show "how to mix politics and water: For a catalyst, try liberal amounts of cash."
Throw in all the money he bestowed on Kennedy and Antonio, all the campaign cash he throws around to various politicians, his tight connections to Davis, his role as Antonio's closest adviser and provider of his vacations to Iceland where he has a large estate, and you have a guy with clout and perhaps the foresight to join Burkle, Swiller and his longtime partner, DWP General Manager David Freeman in the solar energy market.
You can believe, as some do, that Antonio is simply so stressed out and over his head that he's lost his mind or you can wonder about what deals have been cooked behind the scenes that might explain his desperation to soak the public for as much as he can get in rate hikes while calling himself a bold and courageous "new idea" leader.
I, for one, tend to see the dark side of things when there's so much evidence that belies the notion that dramatic increases in power rates that will destroy jobs at a time commercial property is in the tank and millions of residents are having trouble paying their bills.
It is a mystery, no doubt, but given the history of the games these people have played in the past, it appears the more things change, the more they stay the same.
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http://ronkayela.com/2008/10/ho-hum-city-halls-so-corrupt-i.html
Ho hum, City Hall's so corrupt that insiders can get away with anything
By
Ron Kaye
on October 3, 2008 7:46 AM | Permalink | Comments (15) | TrackBacks (0)
"The more I learn, the more troubled I am. It's clear that people feel obligated to give to charities when there are people in positions of power who are asking for the money."
I wish everybody was getting that "troubled" feeling like Robert Stern, president of the nonprofit Center for Governmental Studies, is. There's a lot to be troubled about in all aspects of the way City Hall does business and Dave Zahniser in the Times uncovered a fragment of what is going on all the time.
His story, actually played on P. 1 of all places, connects the names of mayoral pals and moneyed big shots Henry Cisneroscisneros.jpg and George Pla GeorgeLPla.pngamong others to the ethics investigation of Robert Aguallo Jr., who retired as general manager of the city's $10 billion employee pension fund in May.
Arguallo took a job in April with Cardinal Americas, Pla's firm that had received help from his agency only two months earlier. And he was shameless about personally dunning beneficiaries or wannabe beneficiaries of investments from Los Angeles City Employees' Retirement System (LACERS) for contributions up to $10,000 for his March 17 retirement party at the exclusive California Club downtown.
The 400 emails obtained by Zahniser "show LACERS employees performing an array of party-related tasks, such as choosing the menu and reviewing the inscription planned for a commemorative 'whisper cut' crystal bowl."
The event raised $150,000 with two-thirds going to a "Robert Aguallo Jr." scholarship to be administered by the Robert Toigo Foundation, a nonprofit that helps minorities get jobs in finance.
At least 16 companies bought tables that benefited or stood to benefit from LACERS, particularly from a program Arguallo developed to help minority and other companies that normally can't raise the kind of $10 million investments that he helped provide.
Among those paying the $10,000 for tables was Palladium Equity Partners, which got a $10 million LACERS commitment for its efforts to capitalize on "the overall Hispanization of the U.S. society;" the real estate fund CityView run by mayoral pal and fund-raiser Henry Cisneros, the former Housing and Urban Development Secretary who got a $25 million LACERS commitment; Cordoba Corp., the George Pla company that runs Cardinal Americas, the start-up fund that got a commitment of $10 million through Aguallo's initiative and now employs him.
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Citing personal obligations that include meeting the financial needs of a child in college and another in law school, U.S. Department of Housing and Urban Development (HUD) Secretary Henry Cisneros resigned his post effective January.
1996 > Monday, December 9
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The Cisneros Indictment
Complete, unedited text of Independent Counsel David M. Barrett's Dec. 11, 1997, indictment against former housing secretary Henry G. Cisneros and three co-defendants. The 66-page document is presented below in five parts.
Note: Typographical errors from the original document are preserved. Others may have been introduced by the scanning process.
Part One
Cover Page
Background to All Counts
# Principal Entities
# The Clinton-Gore Transition Team and the Background Investigation Process
Part Two
Background (continued)
# Cisneros's Extramarital Affair With Medlar
# Cisneros's Payments to Medlar
# Cisneros's Nomination and Confirmation as Secretary of HUD
# Cisneros's Position of Public Trust
Part Three
Background (continued)
# Medlar's Lawsuit Against Cisneros for Breach of Contract and Fraud and Cisneros's Press Release
# The Inside Edition Episode
# Subsequent Investigations of Cisneros; Medlar's Violation of Her Immunity Agreement
# The Defendants
# Other Individuals and Entities
Part Four
The Counts
# One: Conspiracy to Defraud the United States; Conspiracy to Commit Offenses Against the United States
Part Five
The Counts (continued)
# Two: False, Fictitious and Fraudulent Statement and Representation on Dec. 14, 1992
# Three Through Five: False, Fictitious and Fraudulent Statements and Representations on Dec. 30, 1992
# Six Through Nine: Scheme to Falsify, Conceal and Cover Up a Material Fact by Trick, Scheme and Device
# Ten Through 16: False, Fictitious and Fraudulent Statements and Representations on Jan. 7, 1993
# Seventeen: Scheme to Falsify, Conceal and Cover Up a Material Fact by Trick, Scheme and Device
# Eighteen: Obstruction of Justice
# Nineteen: False, Fictitious and Fraudulent Statement and Representation on Feb. 13, 1995
# Twenty: False, Fictitious and Fraudulent Statement and Representation on Aug. 21, 1996
# Twenty-one: False, Fictitious and Fraudulent Statement and Representation on Sept. 17, 1996
Full Document
The Complete 66-Page Indictment (may take awhile to download)
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http://topics.wsj.com/organization/H/hud/4709
By Kris Hudson
AUSTIN, Texas — Former HUD Secretary Henry Cisneros placed the blame for the recent housing crisis on “unscrupulous interests” that fueled reckless lending and weak regulation rather than housing policies of the past two decades.
Mr. Cisneros, now a 62-year-old developer based in San Antonio, served as secretary of the Department of Housing and Urban Development from 1993 to 1997 during the Clinton Administration. He was known as a champion of boosting homeownership levels, particularly among minorities. During his term, HUD loosened some lending requirements for lenders providing HUD-backed loans. Still, in a speech to the National Association of Real Estate Editors in Austin on Thursday, Mr. Cisneros blamed the housing crisis on a mix of interests looking to profit from the housing boom of last decade. Among them: Wall Street firms that created exotic instruments like collateralized debt obligations that eventually failed, rating agencies that graded those instruments too leniently and overzealous mortgage lenders such as Ameriquest Mortgage Co.
“The real problem occurred not out of a governmental push, but out of a hijacking of the homeownership process by some unscrupulous interests,” Mr. Cisneros said to an audience of roughly 50 at the Hilton Austin hotel.
Mr. Cisneros did acknowledge some fault with federal housing policies of the 1990s and 2000s. There wasn’t enough willingness to regulate, he said. Specifically, the feds missed opportunities in the 1990s to consider regulating risky financial instruments such as derivatives and complicated hedging strategies. “It was bipartisan,” he said of the bias against regulation. “Both the Clinton and Bush Administration chose not to do it.”
He also noted that the federal emphasis in recent decades on boosting homeownership neglected the rental market. Previous policies to encourage apartment construction for working class housing “were allowed to lapse,” he said. “The country needs a balance of policy,” he said. “And we probably haven’t traditionally put enough emphasis on rental because homeownership is the embodiment of the American dream.” Mr. Cisneros noted that a gap still exists between Caucasian homeownership (roughly 75%) and that among African Americans and Latinos (roughly 49%).
Some of the policies he spearheaded at HUD were aimed at narrowing that gap. While the government shouldn’t neglect the rental market, it also should continue striving to close that gap, he said. “If we believe that homeownership is an essential vehicle for creating a middle class, then a 26% gap isn’t a good policy long-term,” he said. Outside of his HUD role, Mr. Cisneros served on the board of maligned subprime lender Countrywide Financial and builder KB Home. He now serves as executive chairman of CityView, a Los Angeles-based institutional investor focused on urban real estate.
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Serving Two Masters
City pension boards plan to pour a king’s ransom into urban real estate pushed by insiders like Henry Cisneros
David Zahniser
published: April 05, 2007
When Mayor Antonio Villaraigosa and the Los Angeles City Council announced plans last year for a $1 billion bond measure to pay for affordable housing, developers and lobbyists from all over Los Angeles flocked to the campaign to lend their support. And few companies were more eager than CityView, a company that finances the construction of homes for entry-level buyers.
CityView’s founder, former secretary of the federal Department of Housing and Urban Development Henry Cisneros, signed up as one of the two chairmen of the Proposition H campaign, telephoning business leaders across the city for contributions. The company’s chief operating officer, Sean Burton, became the campaign’s treasurer, signing off on contribution reports to the Ethics Commission.
And CityView’s retinue of developers, lawyers and partners gave nearly $200,000 to win voter approval of the measure, which would have hiked Los Angeles property taxes to build 10,000 new homes and apartments.
Prop. H went down to defeat on November 8, falling four percentage points shy of victory. But now, CityView has teamed up with city officials on a new home-building initiative — securing up to $40 million in municipal pension funds to build housing for families who earn $52,000 and up.
The Los Angeles City Employee Retirement System, or LACERS, voted last week to invest up to $25 million in CityView. And a second retirement system, which covers L.A.’s police officers and firefighters, is slated to invest another $15 million this week (the vote is scheduled for Thursday, the day the L.A. Weekly hits the streets).
The funding for CityView is only the latest example of the city’s primary pension fund, where four of seven seats are controlled by Villaraigosa, pouring millions of dollars into the construction of condos, apartments and shopping centers, many of them in Southern California. Since Villaraigosa’s election in 2005, the pension fund has invested $160 million in “urban infill” — eight times as much as the amount invested during the prior two-year period.
That shift in pension funds stands to dramatically rework the basic arithmetic of city politics. Under the old system — one that already tended to make voters a bit queasy — politicians at City Hall got elected with contributions from real estate developers, who in turn asked them to approve their construction projects. Under the new system, city government is even more directly involved, becoming not only the gatekeeper, but the financial backer, for many of the city’s biggest development projects being pursued by their contributors.
“It’s a conflict of interest,” says Richard Close, president of the Sherman Oaks Homeowner Association. “When the mayor and council are deciding whether or not to approve these projects, whose interests are they looking at? Are they looking at whether the project is beneficial to the community, or whether the project will be beneficial to the pension plan?”
Villaraigosa spokesman Matt Szabo says the mayor enthusiastically embraced the concept of the “double bottom line” — asking public pension funds to achieve societal goals, like the construction of housing, while seeking a solid return on their investments. But he insists that Villaraigosa never instructs his pension-board appointees on investment strategies.
“He doesn’t dictate policy or how they should vote,” Szabo says.
CityView’s 69-page investment pitch to LACERS, which represents nearly 42,000 working and retired municipal employees, name-dropped the mayor, pointing to Villaraigosa’s support for Proposition H and his belief that public agencies should help build housing. The booklet, which includes a photo of Villaraigosa at a housing conference, also bragged about CityView’s work with the mayor in securing a zoning change for one of its loft projects.
Still, Cisneros insists he has never spoken to the mayor about his company’s request for city pension funds. “We’re going on the merits,” he says. “And the merits are, you can use pension resources to solve problems, including the production of work force housing.”
By 2009, LACERS will expand its investment in urban real estate even more, moving it from 4 percent to 7 percent of its $10.5 billion portfolio — a move that could pour at least $300 million into real estate development. Robert Aguallo Jr., the city official who runs LACERS, says the shift toward “work force” housing — one step above subsidized apartments — is the result of sound investment policy, not any political agenda. Aguallo also downplays worries about the increasingly jittery housing market.
“When you do real estate, there’s always a housing-bubble concern,” he says. “But given the demand for housing” among workers who have to commute long distances, “it makes sense to [invest in] housing that’s closer to downtown or the city’s urban areas.”
While LACERS voted unanimously to invest in CityView, a second city-related pension board initially balked — not out of concern over the real estate market, but because of a decade-old investigation involving Cisneros. Commissioner George Aliano, who serves on the Los Angeles Police and Fire Pension board, said CityView is a risky investment, since Cisneros pleaded guilty in 1999 to one misdemeanor count of lying to the FBI about money he paid to a former mistress.
“It doesn’t look good,” Aliano told his colleagues. “Yes, he was the youngest city councilman ever elected and the mayor of San Antonio. But he was caught up in something, and he was stopped short.”
Aliano and Commissioner Donald Keith, the commission’s two police representatives, voted against CityView last week, causing the proposal to fall one vote shy of passage. Commissioner Sean Harrigan, the man selected by mayor to head the board, promised to bring the proposal back this week, saying Aliano had found smoke — but no fire.
And Villaraigosa appointee Steve Juarez, who voted in favor of CityView, argued that the pension board has no history of checking to see if a principal in an investment fund is involved in “moral turpitude.”
Cisneros, for his part, said his only crime was telling the FBI, which was conducting a background check on him in the weeks before he joined the Clinton administration, the wrong amount that he paid to his mistress in San Antonio. The guilty plea was followed by a pardon from Clinton, Cisneros added. “That investigation, that went on for over 10 years and cost $22 million, closed out last year with no further allegations or charges,” he said. “Every aspect of my life was scrubbed, and they concluded that I provided erroneous information on a financial amount.”
A onetime executive with Univision, Cisneros now spends a majority of his time in San Antonio, where his wife is currently running for his old City Council seat. But in its pitch to LACERS, Cisneros’ company touted its political connections in Los Angeles, saying it worked with Villaraigosa and Councilman Bill Rosendahl to secure approval for the 84-unit Tennessee Lofts in West Los Angeles.
CityView said in its written presentation that the developer was unable to get the residential zoning needed for its project, until CityView became a partner. Once the planning commission approved the new zoning, the value of the project increased from $11.5 million to $18.75 million, the brochure states.
While CityView was a major force behind Proposition H, other pension funds also pushed for passage of last year’s failed housing bond and property-tax increase. The campaign received $25,000 from the Southern California Smart Growth Fund, which received $10 million from LACERS three years ago. The campaign received $10,000 from Phoenix Realty Group — whose real estate investment fund recently collected a combined $65 million from three city and county pension funds.
One week after Proposition H was defeated, Villaraigosa held a press conference to applaud those pension agencies for investing in the Phoenix fund, formally known as Genesis II. While he voiced disappointment about the bond measure, Villaraigosa said the city can play a bigger role in building housing.
“We can do it by maximizing every public dollar, by working harder to find ‘win-win’ investments with our pension systems,” the mayor said in his prepared remarks, which were later published in The Planning Report, a newsletter focused on development.
Szabo, the mayor’s spokesman, said such remarks should not be interpreted as any kind of signal to the city’s pension boards on how to invest. “There’s a difference between voicing support for investment that benefits the community after the decision had been made, and directing the investment, which the mayor does not do,” he said.
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1.
Top California Pension Funds to Host California Investment ...
Sep 12, 2007 ... Henry Cisneros, Chairman of CityView, a real estate investment and ... investing,” said Robert Aguallo, General Manager of the LACERS. ...
www.calpers.ca.gov › ... › September 2007 Press Releases - Cached
2.
CityView Brings New Housing Opportunities to LA County. | North ...
4 posts - Last post: Sep 26, 2007
... System (LACERS) and the Los Angeles County Employee Retirement ... Former U.S. Housing and Urban Development Secretary Henry Cisneros, ...
www.allbusiness.com/government/...local/5259575-1.html - Cached - Similar
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http://www.allbusiness.com/north-america/united-states-california-metro-areas/479113-1.html
Wetherly Capital emerging as leading fund placement firm.
By Berry, Kate
Publication: Los Angeles Business Journal
Date: Monday, July 4 2005
You are viewing page 1
The intersection of business and politics has been a profitable one for Dan Weinstein, managing director of Wetherly Capital Group.
The Brentwood firm has emerged as one of the top 10 placement agents in the United States, raising $1.5 billion from large pension funds like the California Public Employees' Retirement System.
Placement agents are politically connected matchmakers who help hedge funds, private equity firms and real estate funds attract investments from public and private pension funds.
Weinstein, one of three managing partners at Wetherly, has raised money for nearly a dozen private funds, including Ares Capital Management, Freeman Spogli & Co., billionaire Ron Burkle's Yucaipa Cos. and Aurora Capital Partners, whose founder, Gerald Parsky, led President Bush's reelection campaign in California.
Weinstein has been a longtime Democratic fundraiser, working for former Gov. Gray Davis and former dtate Treasurer Kathleen Brown. But he says he's strictly non-partisan.
"If we think a firm has a strong team and an impressive track record and investment strategy, then we can believe in them," he said. "With so much competition out there, all of these funds are competing for money and they need someone who is going to advocate on their behalf."
Independent placement agents are the underdogs in a field long dominated by investment banks such as Merrill Lynch & Co. and Credit Suisse First Boston. But they have made progress in the past five years, as pension funds change their investment mix. The funds are reducing their exposure to stocks, where Wall Street firms have an advantage, while increasing investments in alternative asset classes like real estate.
A survey of 125 global pension fund managers by consulting firm Watson Wyatt found that investments in private equity, which includes real estate and hedge funds, jumped 14 percent last year to $17 billion. Private equity funds now account for $193 billion of pension fund assets, or 19 percent of the total $1 trillion invested in alternative asset classes.
Sean Harrigan, who was ousted as president of Calpers' board last year, said placement agents have taken over the job of marketing private equity funds, leaving the critical work of investing the assets to the general partners. "They can be an asset for the (pension) staff who are doing due diligence and screening various proposals," he said.
Weinstein says he had "an epiphany" after the 1992 Los Angeles riots, when he was working as a political director for the United Food and Commercial Workers union in Los Angeles. At the time, a supermarket in South Central had nearly burned to the ground and Burkle was part of a team that rebuilt the shopping center with union and community labor.
"I realized then that there was a way to rebuild the community by creating jobs and bringing capital to an area that was starved for it," said Weinstein.
Burkle hired him as an advocate to help bring investments to Yucaipa. After a few years, Weinstein gained other well-heeled clients such as Mike Steed, a former Democratic National Committee official who is managing director at Paladin Capital Group in Washington. Steed, a former executive at Ullico Inc., was an early investor in Gary Winnick's Global Crossing Ltd. Steed and labor officials came under fire for profiting from stock sales before Global Crossing went bankrupt.
Mario Giannini, chief executive of Philadelphia-based money management firm Hamilton Lane, said placement agents like Wetherly Capital provide an extra layer of due diligence.
Calpers launched an investment program in 2002 to make investments aimed at revitalizing underserved urban and rural markets. To that end, Wetherly Capital worked to tailor the pitch of Henry Cisneros' American CityVista and City View, a joint venture with Santa Monica-based Saybrook Capital that wants to build affordable housing for the working class.
Wetherly has 12 employees and is opening an office in New York with the intention of courting the corporate pension funds of General Electric Co., DuPont Co. and others. The firm earns money by taking a percentage of the amount raised for each client.
The partners still keep a foot in politics. Weinstein was finance chair for Bob Hertzberg's mayoral campaign, and was a Davis appointee to the California State University Board of Trustees before Gov. Arnold Schwarzenegger removed him as one of his first official acts.
Another managing director at Wetherly, Vicki Schiff, is a commissioner of the Los Angeles City Employees' Retirement System, and Wetherly Director Peter Borges is on the board of Genesis L.A. Economic Development Growth Corp.
As with so many issues involving money and politics, there may be no way to separate relationships from party affiliation.
"You have to be connected on both sides of the aisles," said Borges, former president of Retail Initiative Inc., which pioneered shopping center development in urban markets during the 1990s. "When you're dealing with public funds, first and foremost, you're looking for someone who can actually get the job done."