Pension boss was offered favors

Firms doing business with the state offered favors to North Carolina's chief pension investment officer such as helping her daughter with a job search, internship and résumé-writing.

The head of one investment firm passed along a free airline ticket so that Pat Gerrick's daughter, Meredith, could attend the Bermuda International Love Festival in February, a celebrity-packed weekend.

Treasurer Janet Cowell fired Gerrick in August from her job overseeing the $60billion-plus pension fund. She since has imposed reforms aimed at disclosing relationships with and fees to investment firms.

The information about the favors was included in e-mails released under public records requests.

Gerrick said the favors were offered but not accepted. Her daughter didn't take the internship, received job advice but not a job and didn't use all the résumé tips. The investment firm CEO who provided the airline ticket didn't pay for it, just passed it along.

She said the investment industry is a "relationship" business, but she never improperly benefitted from her friendships with agents and managers for companies that manage parts of the pension fund.

She said she disclosed to then-State Treasurer Richard Moore friendships with agents and managers before doing business with them.

Moore did not return a telephone call Thursday.

"There's not one firm that was hired that didn't go through the due diligence process," Gerrick said. "And I know I can't have any manager give my daughter a job or give my daughter money. All of the decisions I made were based on what would help the fund perform."

Placement agents

The disclosures thrust North Carolina into a national controversy over the use of placement agents -- middlemen who help line up investment firms to handle hundreds of millions of dollars in state pension money. Federal officials are examining how to regulate this relatively new Wall Street niche.

Agencies such as the Securities and Exchange Commission and New York's attorney general are investigating pay-to-play schemes in which investment managers and placement agents used political connections to get business. New Mexico's chief investment officer resigned Thursday amid such an inquiry.

The Treasurer's Office under Cowell has not used placement agents. "I need to know where every dollar of this fund is going and who is earning fees," said Cowell, a Democrat elected in 2008.

She said Thursday she will impose the same gift ban on her department that Gov. Beverly Perdue has placed on agencies she controls. Cowell this week dispatched a letter to firms doing business with the state explaining that gifts are forbidden.

One placement agent used by the Treasurer's Office when Gerrick worked there was Lloyd Bridge Advisory Corp., whose CEO is the first lady of Bermuda, Wanda Henton Brown, a friend of Gerrick's. Brown passed the airline ticket to the Love Festival to Gerrick, but Gerrick said someone else paid for the ticket. The ticket was intended for a musician who fell ill, and the purchaser, whom Gerrick could not remember, wanted Gerrick's daughter to have it.

The assistance for Gerrick's daughter came from placement agents and investment firms alike.

In January 2008, Gerrick e-mailed Daniel Weiss, managing partner at the Angeleno Group, investment managers whom the Treasurer's Office paid $1.4 million in fees last year. Weiss sent an e-mail to a colleague with the subject line, "Conversation with Pat Gerrick's Daughter Re Real Estate." Weiss explains that he just got off the phone with "Pat Gerrick in NC" and her daughter was interested in a real estate job. "I thought you would be a great conversation partner for her in thinking about job opportunities and the real estate landscape more generally. I gave Pat your number so you may hear from Meredith directly."

In November 2007, Gerrick traded e-mails with Bill Rogers, a founder of the Halifax Group, money managers who were paid $229,000 by the treasurer's office that year. Rogers wrote that he hoped Gerrick "will accept my offer of [a top Halifax official's] help for the kids; and if you will send me a copy of their résumé, I'll try some other job sources too." Gerrick thanked him and said she will "forward the appropriate information to" her son and daughter.

In August 2007, Gerricke-mailed her daughter that Nina Lesavoy wanted to look over her résumé. Lesavoy headed Cue Capital, which served as a placement agent for the treasurer's office in both 2006 and 2008.

In January 2007, an official at Credit Suisse, which received $2million in fees from the treasurer's office that year and twice as much the next year, wrote to Gerrick, "Below please find an e-mail from our Madrid office confirming Meredith's unpaid internship. We will be excited to have her for the summer."

Gerrick said her daughter never accepted the internship.

Nadim Barakat, a managing director at Credit Suisse, helped Gerrick's daughter edit her résumé in July 2007, according to the e-mails. The next summer, when Gerrick's daughter was moving to New York City, Barakat provided Web links to a real-estate agency and reassured Gerrick a colleague "is also following up on a real estate broker."

Cara Priestley of Credit Suisse's Alternative Investments sent the company's relocation guide in response to a request from Gerrick in June 2008 for help with her daughter's move.

Gerrick said her daughter found her own apartment.

"Just because you see people being helpful doesn't mean she used that help," Gerrick said. "Yes, people offered to talk to her, counseling, what you need to do to get into real estate. All people were doing was giving her background information."

Good relationships

Gerrick said her relationships in the industry, which predated her 2004 arrival in North Carolina, helped her get pension money invested in high-performance funds that otherwise wouldn't use public money, she said.

Cowell announced last week that the pension fund remains 99.3 percent funded, which means it is just shy of having enough money to pay its projected obligations. The average for public for pension plans, wracked by the recession like other investments, is 80 percent.

Staff researcher Marian Paynter contributed to this report.

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