1 SULLIVAN, HILL, LEWIN, REZ & ENGEL A Professional Law Corporation

2 Jeffrey D. Lewin, SBN 68202

Cynthia A. Fissel, SBN 164153

J. 550 West "C" Street, Suite 1500 San Diego, California 92101

4 Telephone: (619) 233-4100

Fax Number: (619) 231-4372

5

Attomeys for Pacific Corporate Group Holdings, LLC

·6 ·and Christopher J. Bower . _ .

7

Cross-Defendants.

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FILED . .~.

CIVIL BUSINESS OFFICE 13 CENTP',!\L D!VIS!m1

2010 MAr '·2 A fO: 05

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SA~J DIEGO COUNTY. CA

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SUPERIOR COURT OF THE STA,TE OF CALIFORNIA FOR THE COUNTY OF SAN DIEGO

) CASE NO. 37-2010-00084760-CU-BC-CTL

)

) Complaint Filed: February 2, 201Q

)

) AMENDED CROSS-COMPLAINT

) FOR

)

) CIVIL RICO - VIOLATION OF

) 18 U.S.C. § 1962(c),

)

) BREACHES OF FIDUCIARY

) DUTIES,

)

) FRAUD,

) ) ) ) )

) VIOLATION OF CALIFORNIA

20 v. ) lJNFAIR. COl\QETITION LAW

) INCLUDING CALIFORNIA

._. '_·--··'-21 . 'STEPHENl'~MOSELEYaiiaROEs-r----T- BUSIl'I"ESS·AND PROFESSIONg------

100, ) CODE.§§ 17200 ET SEQ.; AND )

) DEMAND FOR TRIAL BY JURY

~

10 STEPHEN J. MOSELEY,

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Plaintiff,

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v.

13· PACIFIC CORPORA1E GROUP HOLDINGS, LLC. (a limited liability 14 company), CHRlSTOPHER J. BOWER and DOES 1-30,

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Defendants.

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PACIFIC CORPORA1E GROUP 18 HOLDINGS, LLC.

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Cross-Complainant,

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23

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INTENTIONAL INTERFERENCE WITH ECONOMIC· RELATIONSHIPS, AND

25 Cross-Complainant Pacific Corporate Group Holdings LLC, including its subsidiaries and

26 affiliates, ("PCGH") alleges as follows:

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::OPMA\P.CDQ~DOCS\309948\2 1

AMENDED CROSS~COMPLAiNT; -ANrrDEMAND·FORiRli\J:;;-BY-JUR'Y·' -"-"- --" _ -.. .. . .

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19 Since 1979, PCGHhas specialized in advising some of the world's largest and most sophisticated 20 public pension funds and other institutional investors with respect to Private Equitr Investments.

----------21 PC-~Hprovi4es adViSoiy servIces-fOi-mare-i6an adijzeIi-diStiiiCt"U_S:-publlc-pensiolqimCiaecountS--- ---

22 with approximately $20 billion in assets invested for the benefit of more than four million members

23 and beneficiaries. PCGH has achieved an independently verified annual net internal rate of return

24 exceeding 16% on more than $20 billion in investments for 20 years over several economic cycles

25 (see Exhibit 7 hereto and , 9( e) below). As a result, PCGH is a trusted advisor which has not only

26 retained its existiilg clients but also added new clients. PCGH protects the interests of its public

27 pension ftmd clients by fulfilling its fiduciary duties to them and by adopting practices to provide

28 enhanced accountability and investor protection. In 1984, PCGH was one of the :first private equity

2.

PCGH is a respected International Private Equity investment manager and advisor. .

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L -INTRODUCTION

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1.

This case arises from the corruption of a public pension fund. In the United States

4 public pension funds hold 1rillions of dollars in trust.to provide retirement income and security for

5 their members and beneficiaries - millions of people who will retire or who have retired from public

6 service •. Public pension ftmds fulfilUheir _dt¢el? to ·their_lI!:emb~_ andJ~~efiC?i~~: b:r ~yesting '._ 7 money wisely and honestly with the expectation that the investments will grow in value. Members

8 and beneficiaries place th~ trust and confidence in public pension funds, and public pension funds

9 in tum place their trust and confidence in their staff, their advisors and their fund managers. The

10 success of public pension funds depends upon the honesty and trustworthiness of the staff, advisors 11 and fund managers, as well as superior investment performance by fund managers to ensure

12 sufficient investment returns to fund the members' retirements. However, because public pension 13 ftmds have been entrusted with such considerable funds, they are occasionally _a.ttractivetargets for 14 unscrupulous persons who want to exploit the funds for their own benefit at the expense of the

15 members, beneficiaries and others. This case illustrates how some unscrupulous persons have

16 illegally' exploited a public pension fund for their own benefit and in the process caused financial 17 injury to PCGH.

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___ . . ~:ODW!.W.~_C09.~09948\2 2 ,

AMENDED CROSS-COMPLAINT; AND DEMAN1:fFORTltUL-:SY-JURY- ._--

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The New York State Common Retirement Fund ("NYSCRFj is one of the world's

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1 :firms to register as 'an investment advisor with the SEC and, as such, PCGH majntains appropriate 2 compliance policies and codes of conduct

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PCGR's .successful investment performance for public pension funds has made it a

4 target for some competitors, former Members and' others. Knowing that private .equity investment

5 managers for public pension funds are assessed, in large part, on their reputations for trustworthiness 6. in addition to the success of th~ investments, some persons who cannot compete fairly with

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7 PCGH's successful investment performance have sought to harm PCGH and benefit themselves by

8 .artacking its trustworthiness both publicly and privately. When PCGH's reputation for

9 trustworthiness has been. threatened, or its dedication to its strict execution of its fiduciary duties bas 10 been challenged. it has thoroughly reviewed any such allegations and, when appropriate, retained

11 independent consultants to inv~ga.te them. Each such review or investigation has concluded. that 12 the allegations ~e spuri<:l1.lS.

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4.

The lawsuit by Stephen J. Moseley ("Moseley") is the most recent example of a

14 PCGH competitor and former Member seeking to harm PCGH and benefit bimselfby makjng false 15 and defamatory allegarions about PCGH's trustworthiness. Moseley's allegations must be evaluated

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16 in the context of the raciceteerin& illegal kickbacks, betrayal and deceit that he and his co-

17 conspiraIors perpetrated.

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19 largest pension funds. Unbeknownst to PCGH~ in 2004, Hemy Morris ("Morris"), a corrupt de facto 20 NYSCRF chief investment officer, I David Loglisci ("Loglisci''), a corrupt official NYSCRF Chief

'. - --_. __ ._ 21 ·fuves1:ment Officer; 8iid others "(tne··''M"oms ··Group")" foIined·asecret ·CIirnjiiaI consp~:·-Tlie--··-··· --

22 purpose of this conspiracy was to enrich the Morris Group by ~g some investment managers

23 to make payments to the Morris Group as a condition of doing business with NYSCRF (the "illegal

24 Kickback Scheme''). The illegal Kickback Scheme involved some payments which were disguised

25 as legitimate business transactions. However, as evidence of the Morris Group's conscious

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27 1 Exhibit 2, paragraphs 16-17.

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1 awareness of its own wrongdoing, some payments were concealed from unwitting parties who would ·2 have otherwise not knowingly participated in the scheme. Between 2004 and 2007, the illegal

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3 . Kickback Scheme generated tens of millions of dollars for the Morris Group.

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In 2001, before the Morris Group formed the Illegal Kickback Scheme, NYSCRF had

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5 allocated $150· million to PCGH for private equity investments. By 2005, PCGH had elevated. .6 . Moseley to the highly trusted position ofM~nlbeI: an~ had as~i~¢. ~ tQ be ~ts con~ with . 7 NYSCRF. However, unbeknownst to PCGH, in early 2006, Moseley exploited PCGH's trust to 8 conspire secretly with the Morris Group to give Morris a bidden 5% interest in Strategic Co-

9 Investment Partners, L.P. ("SeIP"). SClF was a prospective joint venture that was being formed by 10 PCGH and others to make private equity investmentS for NYSCRF. Morris would perform no

11 services for SCIP, attend no meetings for SCIP, undertake no activity for SCIP, or do anything else 12 to earn. his secret 5% interest in SeIP. Moseley concealed from PCGH his own kno~edge of and 13 participation in the Illegal Kickback Scheme and Morris' secret interest in SCIP. .

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In 2007, the New York Attomey General C"NYAGj began to investigate the illegal

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15 Kickback Scheme. AJs a result of Moseley's participation in the illegal conspiracy, the NY AG

16 included PCGH in its investigation. In March of 2009, the NYAG filed Indictm.entNo. 25/2009 17 ("Indictment") against Morris and Loglisci which described the illegal Kickback Scheme in detail 18 (Exhibit 1 hereto). The NY AG subsequently filed criminal charges against other co-conspirators, 19 and obtained felony guilty pleas from several of them, including Loglisci.z

20 8. In June of2009, the investigation related. to peGH was resolved by an Assurance of

.-.-----.- 21 . Ijrs~iitiD:i:ince'·(CCA(JD;~:(EXliibit :2liereto j. ··FCGHliad fully· cooperatecf:wiffittieN¥AG!'wlio-· - ... --

22 specifically found that Moseley knew about the secret kickback to Morris, agreed to conceal it, and

23 concealed it from PCGH and others," The NYAG also found no wrongdoing by anyone at PCGH

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25 2 peGH is informed and believes that Moseley provided informa.tion about his co-conspirators to the NY AG, that the NY AG is continuing to investigate, and that the NY AG has yet to file criminal charges against Moseley.

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3 Exhibit 2, page 3.

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4 Exhibit 2, paragraphs 25-28.

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AMENDED CROSS-COMPLAINT; AND DEMAND FOR TRIAL BY JURY .. .._... ._ ...

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IS from PCGR oyer governance issues, the fact is th~ Moseley did not resign. from

16 PCGH over governance issues. The fact is that Moseley threatened to resign from PCGH at

17 a critical time for the Company, In the end, Moseley resigned from PCGH because his

18 demands for additional compensation were not met. Moseley's threat to resign from PCGR

19 was part of his plan to enrich hiIn.self at the expense ofPCGH. Earlier in 2006, Moseley

20 and other Members had successfully negotiated. enbanced economic and zevemance

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-- .. --- ._- . -21 . - - -_. rightS-whiCh .were·agreed to'ana dociiti:fented· in- an amenaea"PCGH"liD:rited liaJjility company- '-

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8 except Moseley, and the NY AG specifically found that Bower had no knowledge of Morris' participation in SClP. S Pursuant to the legal theory of Vicarious liability, an innocent employer may be held liable for the misconduct of its rogue employee, even if the employer did not know about it. As a result of Moseley's participation in the illegal KickbacK Scheme while a Member ofPCGH, ~t . agreed to make restitution to NYSCRF of $2.1 MM in fees which it had earned from NYSCRF.6 Moseley'S participationin the Illegal Kickback Scheme also caused P~GR to ~~ ~ of millions of dollars of damages resulting from the reduction ofPCGH's interest in SCIP, profits lost on other contracts or prospective economic relationships, and attomeys' fees incurred in connection with the

'9 NY AG investigation.

10

9.

Although Moseley sued PCGH before it sued him, PCGH is the true plaintiff in this

11 case. 7 Moreover, as explained in greater detail below, Moseley's allegations about PCGH and

12 Bower are demonstrably false and lack any merit whatsoever, and PCGH and Bower unequivocally 13 deny them.

14

(a)

Contrary to the allegation in paragraph 9 of the FAC that Moseley resigned

23 s Exhibit 2, 'paragraph 28.

24\ . IS PCGH also agreed not to seek reimbursement of that sum from Mdseley or anyone else. I

'5! 7 This case shares similarities with Oaktree Capital Managemetil, L.P. v. Bernard, 182 CaI.App.4th 60 (l01O). In that . case Bernard breached his fiduciary duties to Oaktree while he was its employee to enable himself to compete with it

26 after his resignation. When Oaktree learned about his breaches, it refused to pay him monies to which he claimed to bll . entitled, and, like Moseley, he filed a claim. Although Bernard was the claimant, he received nothing and Oaktree was :

27 awarded $12.3 million in damages caused by Bernard's breach plus $6.7 million in attorneys' fees and costs. .

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...... '.' AME~D:E.~.~R~Ss..:c6MPLArnT;·ANDDE~;AND FOR~AL~!~':'" .

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1 agreement that was fully executed by all parties as of August 24,2006. Despite PCGH's

2 concessions in that new agreement, and instead of Moseley and other Members performing

3 under that new agreement, they immediately threa;tened to resign if additional economic and

4 governance concessions, beyond those th2.t they had just received, were not granted. As a

5 result of their threats, peGH met with. Moseley and the other Members and an informal

6 ... - -. mediator.selected_by_Moseley-and~e pthe)'M~lLers~_The_m~op.~_~sf¢in

7 resolving Moseley's and the other Members' governance demands. The only remainjng open

8 issue by early September of 2006 was Moseley's and the other Members' demands for

9 increased compensation. Moseley and the other Members demanded that they receive huge

10 increases in their compensation. Their demands represented a significant multiple over what

11 they were currently being paid and an amount well in excess of the indicated compensation

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level for comparable professionals as evidenced by several Private Equity Industry

13 compensation reports. Nevertheless, on September 12, 2006, peGH offered Moseley and the

14 other Members a substantial increase in compensation, but they rejected the offer. PCGH

15 refused to.make abigher off~ to.:p;le~ their d~ds_~CC!-~e __ 1J?-e _iI;creas~ ~~~ ~ not

16 justified. 8

(b)

Contrary to the false allegations in paragraph 10 of the F AC that PCGH

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18 unconditionally and forever released Moseley from any and all claims, the fact is that the

19 September 25, 2006'release was intended to be limited. The release does not apply, and was

20 not intended to apply, to claims such as the claims asserted by PCGH against Moseley in this

- ----. ~- 21 - ----·--case·Whlch P"CGH- did~iiot kIiow aboufor even'~pea' ifth-e- me: rn- ad(fi1io~ tlie'reIease-- -;-

22 was obtained by Moseley's. fraud because Moseley had concealed his role in the illegal

~3 . Kickback Scheme, IfPCGH bad known about Moseley's participation in the illegal

24 Kickback Scheme it would not have given him any release at all.

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26 • Immediately after their departure from peGH, Moseley and the other" Members breached their duties to PCGH by causing peGH's public relations fum to drop PCGH as a client. Moseley and the other Members then hired the public 27 relations firm to represent them in their combined business interests.

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_,.;..I\1~@_~D .~ROS~-COMP~AINT; AND.DEMAND FORTRiAL BYJtJRY-

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(c)

Contrary to the false allegations in paragraph 12 of the F AC that rcoa sent

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2 its December 30, 2009 letter (Exhibit 4 hereto) to Moseley to avoid blame and financial

3 obligations, the fact is that the letter asserted claims against Moseley to prevent him from

4 further profiting from his participation in the illegal Kickback Scheme at PCGH's expense

5 and to recover a portion of the damages he caused. PCGH's December 30, 2009 letter to

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.. .. Moseley. is a proper .. exercise.of.Its legal .. right to_Qff~~t _ _. _. _. .._ _. . _ _.

(d)

Contrary to the false allegations of paragraph 13 oftheFAC thatPCGH

8 falsely accuses departing Members of wrongful conduct to avoid payjn.g money to them., the

9 fact is that PCGH always honors its obligations to departing Members. PCGH has withheld

10 'distributions to departing Members only when it has bad substantial independently verified

11 claims to support its legal right to offset. PCGH recently withheld distributions to Monte

12 Brem ("Brem'') and Tara Blackburn ("Blackburn''), because, among other reasons,

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Moseley's secret participation in the illegal Kickback Scheme w~e he.was a Member

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14 created a Iiability for PCyH and its oth.er ~"bm. g the time, li;ke Brem and Blackburn.

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15 PCGH did not know about or account for this liability when it made subsequent payments to

16 . Brem and Blackburn, resulting in significant overpayments to them. PCGH also had

17 substantial independently verified claims against Walter Fitzsi.I:omons and Scott Vollmer. At

18 this time. PCGH has more such claims against Scott V ollmer,

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19 (e) Contrary to' the false allegations of paragraph 14 of the FAC that personnel

20 changes have impaired PCGH's investment performance, the fact is that personnel changes

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clients on the more than $20 billion that it has invested globally for approximately 20 years through several economic cycles. 'PCGH, like a winning professional sports team, does not tolerate less than superior performance. Many PCGH personnel changes have been designed to produce and have produced superior investment performance. For each year between 1990 and 2008 independent auditor Deloitte & Touche LLP has verified. PCGH's investment performance pursuant to Global Investment Performance Standards. The independent report

for the years 1990 through 2008'(Exhibit 7 hereto) evidences that PCGH has an annual net

AMENDED CROSS-COMPLAINT· A~""D DEMAND FOR TRIAL BY JURY .. .. - - .

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1 internal rate of return exceeding 16% on more than $20 billion of investments. Further

2 illustrating the falsity of Moseley's claims regarding a link between personnel turnover and

3 performance, on October 19,2006, after resigning from PCGH, Moseley sent an email to

4 PCGH (Exhibit 8 hereto) admitting that he had told a client that the recent departures of

5 PCGH's Class B Members, including himself: would create short term negative market

6 perception which.~'wo:uld constrain.capital raising_(I .. e, n~Y.{ ~li~~~y~t:~, n~~ ~d [ie., ...

7 investment] performance.,,9

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of the F AC that PCGH had offered financial incentives to Moseley and other Members to _._

remain at PCGH, the fact is that PCGH refused to capitulate to their exorbitant compensation demands (see 19(a) above).

(g) Contrary to the false allegations of paragraph 18 of the F AC that Bower

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(f)

Contrary to the false allegations of paragraphs 15 through 17 of the F AC that

PCGH has concealed material facts from clients and investors, the fact is that over its 30 year history, PCGH has continuously adopted practices to provide for enhanced transparency and. investor rights and it has kept its clients and investors informed of relevant material facts. PCGH never knowingly made any misrepresentations to CalPERS or other clients with respect to personnel issues. In particular, CalPERS was fully aware ofPCGH's personnel issues, including the fact that Moseley and other Members had resigned from PCGH at a criticaI time. To illustrate the falsity of Moseley's claims, NYSCRF was not only fully aware ofPCGH's personnel issues, but also, in fact ·contributed to them, because Loglisci had continually urged Moseley.to join. the hedge fund manager over an extended period of time before Moseley resigned from PCGH. Moreover, NYSCRF did not formal1~ commit to invest in SCIP until October of 2006, the month after Moseley and other Members had publicly resigned from PCGH. In addition, contrary to the false allegations of paragraph 17

25 placed his personal interests ahead of the interests ofPCGH or its clients, the fact is that the

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~NDEI) GROSS:-CQMPLAINT; AN~ DEMA~ .F9R i:'R.lAL BY JuRy ..

10 concealed its relationship with board members, placement agents and intermediaries, the fact

11 is that, consistent with PCGH's commitment to full disclosure and transparency, it is

12 PCGH's practice to Inform its clients of its relatioDShips and any appearances ot or the

13 potential for, conflicts of interest. For example, with respect to Alfred J. Villalobos, a letter

14 dated June 8, 2007 (Exhibit 9 hereto) is an example of the type of disclosure that PCGH

15 . practices with its clients. Contrary to the false allegations of paragraph 25 of the F AC that

16 "all partners in peG Asset Management, including Plaintiff" resigned because they

17 discovered that PCGH had concealed material facts from clients, the fact is that "all partners

18 in PCG Asset Management, includlD.g Plaintiff" resigned from PCGH because PCGR bad

19 refused to capitulate to their excessive compensation demands (see' 9(a) above).

20 G) Contrary to the false allegations ofparagrapbs 30·through 33 and 49 of the

... _ ..... __ .-._. - i 1 . --- IfA:C"fuafpCGR1i2S iiot pmd"Mo'seleywhit lie'is owed, the" fact" is that PCGH baS not' onIy .... -- ._--

22 paid Moseley all s.ums to which it believed he was due. but PCGH has overpaid him.

23 Moseley's participation in the mega! Kickback Scheme caused PCGH to suffer tens of

24 millions of dollars of damages resulting from the reduction of PCGH' s interest in 8CIP,

25 profits lost on other contracts or prospective economic relationships, and attomeys' fees

26 incurred in connection with. the NY AG investigation. PCGH seeks to recover these damages

27 from Moseley.

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1 PCGH LLC Agreement made it clear that Bower's interests were aligned with, and not

2 inconsistent with, the interests ofPCGR and its clients, making any argument to the contrary

3 not supportable.

4

(h)

Contrary to the false allegations of paragraph 19 of the F AC that peGH -

5 . artificially inflated the valuation of investments such as Primus Financial Products, the fact is

6 . that Primus Financial ~J'od~~ts pad.a superior 2.3x net investment multiple and a superior

• . ...... ._ .0 __ • _ ,_,_0 " •• • _. _. _ _ _.

7 2()+l'1o annual net internal rate of return. Moseley's selection of this example illustrat.es the

8 spuriousness ofhis claims. PCGH does not inflate valuations.

(i)

Contrary to the false allegations of paragraph 25 of the F AC that PCGH has

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PARTIES

3 10. PCGH is a Delaware limited liability company qualified to do business and doing

4 business in the State of Caut'omia 'with its principal place of business in San Diego county,

5 California.

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26 ll. _ B~:werjs the fQ.1lUd.!'I Qf PG9E!. anq. ~ ~.~d~t o(S~.:O%e.go .901l_!lty •. ~o~ ._

12. At all times relevant hereto Moseley was a resident of La Jolla, California or

Pennington, New Jersey. Between April of2004 and September of 2006, Moseley was a Class B Member ofPCGH. As a result, Moseley owed to P<;!GH the fiduciary duties of undivided loyalty

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and full disclosure, From October of2006 until February of 2008, when Moseley was employed by

PCGR's joint venture partner in SCIP, he also owed the fiduciary duties of undivided loyalty and full disclosure to PCGH. Moseley conspired to perform, perfon:ned, aided and abetted, authorized or ratified the illegal. misconduct that is at the core ofPCGH's claims against him.

13. The true names and capacities. whether individual, corporate (including officers and

directors thereof), associate or otherwise of Cross-Defe.ndants sued herein as ROES 1 tbrougb,100, inclusive. are unknown to PCGa which therefore· sues these Cross-Defendants by such fictitious names. PCGH is informed and believes and alleges that each Cross-Defendant designated as a ROE is involved in or is in some manner responsible as a principal, beneficiary, agent, co-conspirator,

joint venturer, alter ego, third party beneficiary, or otherwise, for the agreements, transactions,

events and/or acts hereinafter described-and thereby proximately caused injuries and damages to peGH:· ··peGE: Will seek leave to' amend tliis 'Cioss:'CompIallit tc show the trUe-DameS ~(rcapaCitfes .. . of these ROE Cross-Defendants when they have been ascertained,

14. PCGH is informed and believes that at all relevant times herein, each of the Cross-

Defendants was the agent, employee, affiliate, aider, abettor, successor, predecessor, principal and/or alter ego, or co-conspirator with, of some or all of the other Cross-Defendants, and that in connection with the acts, practices, omissions and breaches set forth below, was acting v.jthin the

27 scope of such relationship.

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._.A~~ED CROSS:-CO~LA~~? ~i> DEMA;Nl5~'O~lALBYJ"(JRY-···-- .

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Ill.

BACKGROUND FACTS APPLICABLE TO ALL CAUSES OF ACTION

3 15. NYSCRF is·one of the. world's largestpublicpensionfimds. NYSCRF's Chief

4 Investment Officer and investment Staff owe the fiduciary duty of undivided loyalty to NYSCRF and 5 its members and beneficiaries, so they are required to make investment decisions solely in

.6 NYSCRF's_b.est interest and not fox: p~o~_g$. _Ho~~, b~gi.Dping_ in ~OO-!~ coEUE!_ deJac!f!. 7 NYSCRF .chief investment officer Morris, corrupt official NYSCRF ChlefInvestmeot Officer

8 Loglisci and others engaged in a series of investment transactions at NYSCRF in which they placed 9 their personal interests ahead of the interests ofNYSCRF and its members and beneficiaries. In

10 particular, Morris, Loglisci and their co-conspirators fonned investment deals in whlchMorris 11 received fees, even though he never, at any time; performed services, a.tt:eilded any meetings, nor 12 undertook any activity to earn those fees. More importantly, as evidence of the Moms Group's

13 conscious awareness of its own -wrongdoing, it concealed its receipt of fees in some deals, like SCIP, 14 from unwitting participants, like PCGH and others.

15 16. . In approximately February of2001, PCGH b8.d obtained a $150 MM: commitment

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16 from NYSCRF to manage a co-investment vehicle known as the New York State Retirement Co-

17 Investment Fund (''Fund I"), By the fall of 2005, PCGH had deployed substantially all of the capital 18 committed by NYSCRF to Fund I and had produced a superior investment performance of

19 approximately 30%. Because NYSCRF owed its members and beneficiaries the fiduciary duty to 20 eam investment returns to fund retirement benefits arid because PCGH had produced superior

.- .. - -_.- ··21 mvestm.entietUniS for FiUid t;PC-QH anticlpate(f t1ii.i: Ifwo-iilcfreCCve· an additionarancicanon or--·- ._-

22 funds from NYSCRF. Accordingly. PCGH initiated discussions with NYSCRF to obtain such an _

23 additional allocation. To that end, PCGH assigned Moseley as its contact with NYSCRF and placed

24 full trust and confidence in him to perform as PCGH's fiduciary. In that capacity Moseley had direct

25 communications with Loglisci about obtaining the additional allocation.

26 17. In or about the faIl of2005, Moseley told PCGH that Loglisci wanted PCGH to invest 27 more money for NYSC~. but that he also wanted PCGH to joint venture with a specific hedge fund 28 manager to create a new and larger co-investment vehicle that would invest NYSCRF funds in

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~MENDED CR9SS-C;OMPLAINT; ANDbE~~NDrOR.T1_UAL-BYJl.1RY-: ._._-- ':': .. ~. -~-._-. ~

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1 private equity transactions: Moseley led PCGR to believe that NYSCRF's reason for the proposed 2 joint venture was to allow NYSCRF to benefit from the hedge fund manager's additional resources 3 that would be useful in an investment :fund that would be larger than Fund 1. At that time, PCGH

4 o believed the reason provided by Moseley to be true and it relied on his representations. ~CGH did 5 not have a private investigative services fum conduct a background search With respect to the hedge

. .' .... ~. ~ ';, '... _- - - - .

6 'p.md manager ~ecauseoPCGH believed)"h~t it al1.e.~v h¢,sufficieD,t ii:u:o~Q~ ab9U!.*~h¢g~ 00

f' 0 , 0 0-

711 fund ~anager. '

f1- ",' .

b' i c. On or about February 25, 2006, Moseley traveled to Napa, California, to meet with a

representative of the hedge fund manager and a person who was-described as an monna! advisor to Loglisci. At that meeting, the informal advisor told Moseley that Loglisci intended to include the informal advisor as a publicly known participant in the joint venture between peGH and the hedge fund manager, that Morris would be a secret participant in the joint venture through the informal advisor, and that the informal advisor would secretly split his share of the joint venture with Morris. The informal advisor also told Moseley that NYSCR.F would not invest in the proposed joint venture unless Manis and the informal advisor were included in the joint venture. 10 Moseley agreed to these secret terms and specifically agreed that Morris would receive an undisclosed 5% economic interest in SClP even though he did nothing to earn it. At that time, PCGH was not aware of either what the informal advisor had told 'Moseley or to what Moseley had agreed.

19. °After returning from Napa, Moseley concealed from PCGH what the informal advisor

had told him and their secret agreement. Instead, Moseley reported to PCGH only that Lcglisci

wanted °the icl"ormaf ~Visor to 'be'obroUght IntO' tlie}omt venture°to serve- uOOan- addhloiial voiceO oiitfie- 00 __

investment committee and to assist with client relations and additional fund-raising. 0 PCGH was not familiar with the informal advisor, so it retained an Independent Investigative, Services fum - the

James Mintz Group - to conduct a background search on the informal advisor. In March of 2006, the independent investigative services firm reported back to peGR that it had discovered that the

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1 informal advisor had business relationships withone or more of Loglisci's immediate relatives. 2 PCGH asked Moseley about those relationships. At that time, Moseley not only knew about the

. .

3 secret 5% kickback to Morris, but Moseley had also exchanged emails with. the infonnaI advisor

4 which documented Moseley's knowledge and agreement to the kickback.II Nevertheless, Moseley 5 breached his fiduciary duties and misled PCGH to understand that those relationships were no cause

. 6 for concerD..... .,. .

20. PCGH wanted all parties to be made aware of the Independent Investigative Services

fum's discovery of the relationships between the informal advisor and Loglisci's relatives. So, notwithstanding Moseley's representations, and in an abundance of caution, PCGH instructed NYSCRF's due diligence agent to so inform all parties. More importantly, PCGH also wanted to ensure that neither its client, NYSCRF, nor PCGR would be unwittingly involved in any inappropriate activities before PCGR was willing to proceed with the proposed joint venture. One of the bighest fonns of protection a party to a contract can obtain in conducting due diligence is a written representation as to a material fact, Therefore, PCGH also demanded that it and the due diligence agent receive written certification from all parties to the proposed joint venture that there were no undisclosed payments to any third parties and that there were no undisclosed :facts or information that could reasonably be expected to be material to the making of an investment decision. Accordingly, PCGH insisted that NYSCRF's due diligence agent obtain from all parties to the proposed joint venture- PCGR, the hedge fund manager and the informal advisor - signed Officer's Certificates representing that there were no such undisclosed payments to any third parties

and that there were no such imdiSdosecffiCts-odnt'oimaticiii tllai c6uldreaSonaoly be· expectecf to 'fie .. - - -_. material to the making of an investment decision, Moseley knew that PCGH would rely upon the Officer'S Certificates to form the joint venture. Moseley signed and gave to NYSCRF?s·due

diligence agent and PCGH his June 28, 2006 Officer's Certificate (Exhibit 3 hereto) which stated

that no one on behalf ofPCGR or any of its affiliates had agreed to make any payment to anyone in

26

27 II PCGH first learned about those emails in 2009.

28

::ODMA\PCDOCS\PCDOCS\309948\2 13

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1 connection with NYSCRF's investment in SCIP and. that there were IlO undisclosed facts or 2 . information that could reasonably be expected to be material to the making of an investment

3 decision. Moseley also informed PCGH that representatives of the .hedge fund manager and the 4 Informal advisor had also signed similar Officer'S Certificates. Moseley knew thathis oraland

5 written statements to PCGH were false when he made them, and he knew that PCGH relied upon 6 them.-.

7 21. PCGH did not know that Moseley's oral and written statements to it were false, and it

8 relied on them to proceed with the joint venture with the hedge fund manager and the informal

9 advisor. PCGH's reliance OIl Moseley's false.statements was justified because Moseley was a

10 Member ofPCGH who owed fiduciary duties to it, and PCGH placed trust and confidence. in 11 Moseley and believed his oral and written statements were true. Moseley's oral. and written

12 statements were critical to PCGH. IfPCGH had not received Moseley's oral and written statements, 13 including the statement that representatives of the hedge fund manager and the informal advisor had 14 also signed Officer's Certificates, PCGH would not have finally agreed to form the joip.t venture.

15 22. In approximately June or July of2006, NYSCRF informed the prospective members 16 of SCIP that it planned to invest $750 MM with SCIP ("Fund II"). peGR, the hedge fund manager 17 and the informal advisor then agreed to form SClP and that PCGH and the hedge fund manager

18 would each hold 45% economic interests in the manager of Fund II and the informal advisor would 19 hold a 10% interest in it.

20 23. PCGH accepted Moseley's resignation on September 12,2006. for reasons which are

- .--' --"'-21 . ·expl8.iiicifiiparagraph9(a) above. PC'GH'bougbioutMo'seiey;smembei-Shiji'iiiteresdiiPCGH -

22 based on his capital account when he resigned, and PCGH made subsequent distributions to him,

23 because it was not then aware of his participation in the illegal Kickback Scheme and the liability

24 and potential damages he had caused to PCGH while he was a Member. At the direction of Loglisci, 25 Moseley was almost immediately hired by the hedge fund manager to work in connection with

26 27 28

.•.. _ _ _ .....• ;;QQMA~glQ~Q~09948\2. 14

.. ' _.. . .. A~rIDE;o.CROSS:COMPLMNr; AN;QPEMA~jioifTRf~-B.Y !URY'--'-:- - ~ .

1 NYSCRF's investment in seIP. Subsequently, at Loglisci's direction, 12 PCGH Was informed that 2 the economics on SeIP had changed and that the hedge f\md manager's interest in SeIP was

3 increased from 45% to 70% and PCGR's interest in SCIP was reduced from 45% to 20%.

4 . 24. In February of2008, Moseley left the hedge fund manager andjoined a PCGH

5 competitor where he remained until May of 2009 , when his role in the illegal Kickback Scheme was 6 publicized .. Between.2006. and the present, Moseley. and his co-conspirators have ~P_CG:g ..... 7 opportunities for themselves, have stolen confidential PCGH information, and have spread false

8 information about PCGH to its clients and others.

9 25. Moseley's participation in the illegal Kickback Scheme caused PCGH to suffer tens

10 of millions of dollars of damages resulting from the reduction ofPCGH's interest in SClF, profits 11 lost on other contracts or prospective economic relationships, and attorneys' fees incurred in

12 connection with the NY AG investigation.

13 26. On December 30, 2009, PCGH sent Moseley a letter (Exhibit 4 hereto) which

14 informed him that as a result of'his illegal misconduct, PCGH would not distribute to him funds to 15 which he would otherwise be entitled. ·PCGH bad previously bought out Moseley's membership

16 interest in PCGH based on his capital account when he resigned from PCGH in September of2006. 17 PCGH bad also made subsequent distributions to Moseley. PCGH made these payments to Moseley 18 because PCGH was not then aware of his participation in the illegal Kickback Scheme and the

19 liability and potential. damages he had caused to PCGH while he was a Member. Moseley responded 20 by threatening PCGH with adverse publicity and injury to its reputation if the funds were not

._. _ ... _- ·2i reieased tcdlmi:· when'PCGEI"iefuSed to ·capltuJ.ite to Mosefey;s·tbi"ea.-ts: lie .Iiled1iiSIaWSui[-·· ._ .. - .-.-

22

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27 12 Exhibit 2. paragraph 30.

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. . .. h~~1lP. CROSS-C()MP~~~NT_; A~ P.~~ F6it ·TRIAL BY JURY'-- .. · ... - ": ~ .~ ... ::~~ : L :. ....

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1 2 3 4

IV.

THEORIES OF LIABILITY FIRST CAUSE OF ACTION

(Civil RICO - Violation of 18 U.S.C. § 1962(c»13

5 27. PCGH incorporates herein by reference each and every allegation contained in

6 .paragraphs 1 through 26 .. above ...

7 28. Moseley and his co-conspirators are all "persons" as defined under 18 U.S.C. §

8 1961(3). The Morris Group is an "enterprise" as defined under 18 U.S.C. § 1961(4).

9 29. At all times relevant hereto Moseley and his co-conspirators were employed by

10 and/or associated and affiliated with the Morris Group, a criminal enterprise based.in New York

11 State, which was used to solicit illegal kickbacks in interstate commerce, using interstate mall and

12 wire, from persons, like PCGH in San Diego, California and throughout the United States seeking to 13 manage funds for NYSCRF. Loglisci and Morris have been indicted by the NYAG 01;1123 counts of 14 Enterprise Corruption, and Loglisci, the informal advisor and several other persons have pleaded

15 guilty to those or related felony charges.

16 30. Moseley and his co-conspirators operated, managed, participated in or were employed

17 by or associated with the Morris Group, and conducted or participated. directly or indirectly, in the 18 conduct of the affairs of the Morris Group, including, but not limited to, perpetuating the mega!

19 Kickback Scheme.

20 31. . Between approximately 2004 and 2001, Moseley and his co-conspirators engaged in

.. - .. , -- 21 -ali ongomgpatteni oi'i-8Cketeerulg actiVitY: as defuiecfbyt8-U.S·.c:-ff961(1}~ oyWilliillfy"aii<f-'-- --_ ...

22 knowingly devising the Illegal Kickback Scheme to enrich the Morris Group by tens of millions of

23

13 In appropriate cases. employers have sued disloyal former employees - fonner employees who had breached their

24 fiduciary duties to their employer - under RICO and won substantial sums. In Lerman v. J(1)It:e Inter-natioruzl, Inc., 10 F.3d 106 (3rd Cir. 1993). the Court, in an opinion by now United States Supreme Court Justice Samuel AUto, upheld an 25 employer's RICO claim against a disloyal former employee who had breached his fiduciary duties and' awarded the employer $1,445,987.77 in trebled damages and interest plus an additional sum of $1.133,863.68 in attorneys fees and 26 costs. In Inter-pool Limited v. Patterson; 874 F.Supp 6J 6 (S.D.N.Y. 1995). ajury found that former employees had breached their fiduciary duties to their employer and violated RICO, and the jury awarded the employer $4,370,000 in 27 compensatory damages, plus punitive damages, plus attorneys fees and prejudgment interest.

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.. . .. ... ;:.QQ.~6,!j:QOCS\PCD0CS\309!l48\2 16

.M1E~PE~ CROSS-COMPLAI~T; ~. *EM~@' FOI{. f~T4BY ~Y . .,..~ ...... -.-~~ - .. ' .

1 dollars in undeserved secret kickbackS at the expense ofNYSCRF and fund managers Such as

2 PCGR, and by using instrumentalities of interstate commerce, specifically interstate wire and mail, 3 to do so. Details of the illegal Kickback Scheme are set forth in the Indictment (Exhibit I hereto), 4 related charges to which Loglisci and the informal advisor have pled guilty,:the AOD (Exhibit 2

5 hereto), Loglisci's Allocution (Exhibit 5 hereto) and emails to and from Moseley that the NY AG

6 brought.to the attention.ofPCGH duringthe inv-es1lgation. ._. _..... '.

7 32. The conduct of Moseley and his co-conspirators in perpetrating the illegal Kickback 8 Scheme constitutes mail and wire fraud under 18 U.S.C. § 1341 and 18 U.S.C. § 1342, respectively, 9 as well as apattem of racketeering activity under 18 U.S.C. § 1961 (1) and (5). Thekeypredicate

10 acts in the Illegal Kickback Scheme :were (1) the secret kickback of an undisclosed 5% interest in

11 SCIP to Morris, 'who performed no services, attended no meetings. and undertook no activity to earn 12 it, through the infonnal. advisor; and (2) the secret payment of funds to Morris through the lDformal 13 advisor pursuant to Morris's secret interest. Although the Indictment sets forth a number of the .

14 predicate acts of Moseley and his co-conspirators in terms of securities fraud, ~e securities fraud

15 exception to RICO does not apply (1) to an action against any person who has been criminally

16 convicted in connection with the fraud, and in this case Loglisci. the informal advisor and others

17 'have been so convicted; (2) to an action against any person who did not.make the false .

18 iepresentation but is a mere aider or abettor, and in this case Moseley's co-conspirators did not make 19 the false oral and written misrepresentations to PCGH that he made, including those made in his

20 Officer's Certificate (Exhibit 3 hereto), and (3) to an action where the sale of securities is incidental

-- .- --.- ._- . '21 'ie'the "ti~ ancfiii tbls case the"saleS ofsecuniieS alleged m the Indictment are mcicfental to the-' ._._ .. -"'-

22 Illegal Kickback Scheme.

23 33. Moseley knowingly and with the specific intent to engage in the illegal Kickback

24 Scheme, aided and abetted in the violations of RICO described above.

25 34. peGR has suffered tens of millions of dollars in damages as a result of the RICO

26 violations, including the illegal Kickback Scheme. perpetrated by Moseley and his co-conspirators, 27 in an amountto be proven attrial and trebled under 18 U.S.C. § 1964(c). PCGH is also entitled to 28 an award of its attorneys' fees under 18 U.S.C. § 1964(c), in an amount to be proven at trial.

:~QD.M~\f.CP"O~~~09948'.2 17 o. , .. _._ •. _ .. £. __ . _

AM;ENDED CRO.SS:CO~J,_.AINT; .AND DEM~ FOR TRIAL BY J:UR~

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1 2·

SECOND CAUSE OF ACTION

(Breaches of Fiduciary Duties)

3 35.· PCGH incorporates herein by reference each and every allegation contained in

4 paragraphs 1 through 34 above.

36. Between February and September of 2006, Moseley was a Class B Member ofPC~H

and owed it the fiduciary.duties.ofundivided !oy:a1ty and full disclosure. Moseley. also owed _. . fiduciary duties to PCGR between October of 2006 and February of 2008 when he was employed by the hedge fund which was peGH's joint venture partner in SCIP. Between. approximately the summer of2006 and the present, Moseley and some ofbis co-conspirators were co-joint venturers of PCGH in SCIP and owed PCGH the fiduciary duties of undivided loyalty and full disclosure. Beginning in appro~ly February of2006 in Napa, California, in New York City, New York, and elsewhere, Moseley breached his fiduciary duties to PCGH by secretly conspiring to give Morris a concealed 5% interest in SCIP in exchange for receiving NYS CRF , s commitment to allocate $750 MM to SCIP in violation of the law and to steal NYSCRF and other clients from peGH and by making false public statements about PCGH's internal business affairs and client relations.

37: Moseley and his co-conspirators never infonned PCGH that they had agreed to give

or had. given Morris a concealed. 5% interest in SCIP in exchange for.receiving NYSCRF's commitment to allocate $750 MM to SCIP as part of the illegal Kickback Scheme, or that they had conspired to take NYSCRF and other clients from PCGa· Instead; Moseley and his co-conspirators not only intentionally failed to disclose these important facts, which would have revealed the Illegal ·Kickb"8.ck Scheme to peG-H. -they also aC!lveiy ConCealed theniftoiD. PCGR Moreover, on or iibOlif· June 28,2006, Moseley falsely represented to PCGH inbis Officer's Certificate (Exhibit 3 hereto), knowing that PCGH would rely on it, that no one on behalf ofPCGH or any of its affiliates had agreed to make any payment to anyone in connection with NYSCRF's investment in SeIP and that there were no undisclosed facts or information that could reasonably be expected to be material to the making of an investment decision. Moseley also represented to PCGH that representatives of the hedge fund manager and the informal advisor had signed similar Officer's Certificates. PCGH's reliance on Moseley's false Officer's Certificate and his false statement were justified because

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.... M\ofENDED CR-OSS-.COMPL~T; ANItQEM~ ~(>R TRIAL Br JURY.

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28 Moseley was a PCGH Member who owed fiduciary duties to PCGH, and it placed trust and confidence in him and believed that his statements were true. The important facts that Moseley and his co-conspirators intentionally failed to disclose or concealed were known only to them.

38. PCGH in the exercise of due diligence could not have discovered the 'important facts

concealed by Moseley and his co-conspirators, and PCGH reasonably relied on their deception. P.cGH.didnot learn.that Moseley and. his co-conspirators ha4. concealed these important facts. ~~ . after March of2009 when the NY AG indicted Morris and Loglisci,

39. .As a direct and proximate result ofMoseley's and his co-conspirators' breaches of

their fiduciary duties to PCGH. PCGH has suffered monetary damages, and it continues to suffer 10 monetary damages, according to proof at trial.

11 40. The misconduct of Moseley and his co-conspirators was intentionally undertaken

12 with fraud, malice, oppression and a conscious and reckless disregard for PCGH's rights. Such

13 conduct thus constitutes despicable conduct and PCGH is entitled to recover punitive and exemplaIy 14 damages, in an amount according to proof at trial.

15 16

THIRD CAUSE OF ACTION . (Fraud)

17 41. PCGH incorporates herein by reference each and every allegation contained in

18 paragraphs 1 through 40 above.

42. Beginning in approximately February of 2006 in Napa, California, in New York City,

New York, and elsewhere Moseley and his co-conspirators secretly conspired to give Morris a Conce21ecfS% mieresf iii SCIfi_m'excliange for receiVing NYSCRF"'s commitment fo81I6Cs1e-S7S<J' 11M to SCIP in violation of the law and to steal NYSCRF and other clients from PCGH.

43. Moseley and his co-conspirators never informed PCGH that they had agreed to give

or bad given Monis a concealed 5% interest in SCIP in exchange for receiving NYSCRF's commitment to allocate $750 MM to SCIP or that they had conspired to steal NYSCRF and other clients from PCGH. Instead, Moseley and his co-conspirators intentionally failed to disclose or actively concealed these important facts from PCGH. Moreover, on or about June 28, 2006, in San Diego, California, Moseley falsely represented to PCGH in his Officer's Certificate (Exhibit 3

.:;ODMA\PCDOCS\PCDOCS\309948\l 19

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1 hereto) •. knowingthat PCGH would rely upon it, that no one on behalf ofPCGH or any of its

2 affiliates had agreed to make any payment to anyone in connection with NYSCRF's investment in

3 SCIP arid that there were rio undisclosed facts or information that could reasonably be expected to be 4 material to the making of an investment decision. Moseley also represented to PCGH and Bower

5 that representatives of the hedge fund manager and the informal advisor had signed similar Officer's 6 Certificates. P.CGH's reliance on Moseley's. false Officer'sCertificate and.hisfalse sta.te.ment,s were 7 justified. because Moseley was a PCGH Member who owed fiduciary duties to PCGH, and it placed 8 trust and confidence in him and believed his statements were true. The important facts that Moseley 9 and his co-conspirators intentionally failed to disclose or concealed were known only to them.

10 44. Moseley and his co-conspirators intended to deceive PCGH by concealing these facts 11 and by falsely representing in writing to PCGH that no one on behalf ofPCGH or any of its affiliates 12 had agreed to make any payment to anyone in connection with NYSCRF's investment in SCIP.

13 45. . PCGH in the exercise of due diligence could not have discovered the important facts

14 concealed by Moseley and his co-conspirators, and PCGH reasoDably relied on their deception.

15 peaH did not learn that Moseley and his co-conspirators had concealed these important facts until 16 after March of2009 when the NY AG indicted. Morris and Loglisci.

17 46. A13 a directand proximate result of Moseley' s and his co-conspirators' conspiracy to 18 defraud. peGH has suffered monetary damages. and it continues to suffer monetary damages, in an 19 amount according to proof at trial

20 47. The misconduct of Moseley and his co-conspirators was intentionally undertaken

_.. . .. -_ .. 21 With fraucfInalice; oppression and i·cons"Clous and reckless diSregard· for PCGH's·nghts:· ·sUch··- - .. -_.

22 conduct thus constitutes despicable conduct and PCGH is entitled to recover punitive and exemplary

23 damages, in an amount according to proof at triaL

24 25

FOURTH CAUSE OF ACTION

(Intentional Interference with Economic Relationships)

26 48. PCGH incorporates herein by reference each and every allegation contained in

27 paragraphs 1 through 47 above.

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....... _.. AMENDED CROSS~OM:P~A~T; ANp. DEM~_FO~TRT~L BY JUR,¥ ....

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1 49. Before the fall of2005, PCGH had established relationships With clients for their

2 investment services and products. Those clients included NYSCRF and Califomia Public

3 Employees' Retirement System ("CalPERS'j for whom PCGRwas managing funds and for whom it 4 had the prospect of managing additional funds.

5 50. Moseley and his co-conspirators knew about peGH's relationships with its clients.

·6 51., BegiIming at.least as early.as February of2006, Moseley and his. co-conspirators

7 intentionally developed and implemented a scheme to deprive PCGR of the benefit of its economic 8. relationships by engaging in intentional and willful bad faith. conduct including but not limited to the 9 illegal Kickback Scheme set forth: above. Moseley's and his co-conspirators' .intentional

10 interference with PCGH's economic relationships was wroagful, inter alia, because it constituted 11 breaches of fiduciary duties, fraud, public conuption, felony violation of the New York General

. 12 Business Law § 352-0(6) (to which Loglisci and others have already pleaded guilty), and an unfair 13 trade practice in violation of California Business and Professions Code § 17200.

, '

14 52. PCGH is informed and believes that Moseley and his co-conspirators also disrupted

15 PCGH's economic relationships with its clients in other ways, the nature and extent of which remain 16 concealed from PCGH.

17 53. AJJ a direct and proximate result of the interference with peGH's economic

18 relationships by Moseley and his co-conspirators, PCGH has suffered monetary damages and 19 continues to suffer monetary damages, in an amount according to proof at trial.

20 '54. The misconduct by Moseley and his co-conspirators was intentionally undertaken

. .

- ,-- -_.. 21 Witii'fraud;mau6C, oppression alia a 'COnsCIOUS and reckless diSregard for PCGH; s-aghiS. SUCh _.- --,

22 conduct thus constitutes despicable conduct and PCGH is entitled to recover punitive and exemplary 23 damages, in an amount according to proof at trial.

24 En"IH CAUSE OF ACTION

25 (Violation of California Unfair Competition Law Including California Business and

26 Professions Code §§ 17200 et seq.)

27 55. PCGH incorporates herein by reference each and every allegation contained in.

" ,_. '., .. , ... _ ... _ .. ,:~ODMA\P..CDOCS~C~QmN_, ., __ ._ 21

A.MENDED CROSS-CO~LMN:r;,AJliD DEMAND ¥O~ TRIA+. BY JURY

. ... .... ".

10 58. PCGH incorporates herein by reference each and fNery allegation contained in

11 paragraphsl through 57 above.

59. PCGH and Moseley entered into the Amended and Restated Limited Liability

Company Agreement of Pacific Corporate Group Holdings, LLC as of August 24, 2006 ("PCGH LLC Agreement"), Article 12 of the PCGH LLC Agreement (Exhibit 6 hereto) requires the parties' to ''first endeavor to settle [any] dispute in an amicable manner by mediation before resorting to arbitratio~" Article 12 also requires' any dispute not resolved by mediation to be submitted to biDding arbitration. Article 13.15 of the PCGH LLC Agreement provides that the preva.ilingparty shall be entitled to the payment of reasonable attorneys' fees.

60. PCGH has performed all ofits obligations to be performed under the terms of the

PCGH LLC Agreement. In particular, PCGH made numerous and ongoing efforts in support of its ~nd~vor to seitie Moseley's claims in an 8Imcabie manner' as re'iuired by-p8.nigraph ti'ofthe -. --. - - --_.

22 PCGR LLC Agreement.

23 61. In an apparent attempt to obtain the perceived leverage created by a public hearing of

24 a private dispute, Moseley has materially breached the PCGH LLC Agreement by filing and

25 prosecuting this lawsuit without first endeavoring to settle this dispute by mediation and then

26 submitting it to binding arbitration.

27 62. Moseley's breach of Article 12 of the PCGH LLC Agreement has caused injury to

28 peGR in an amount to be proven at trial .

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1 56. Moseley and his co-conspirators have engaged in unlawful, fraudulent and/or unfair

2 business practices which (1) are calculated to deceive the general public; (2) present a continuing

3 threat to members of the public in that institutional investors will be misled about the trustworthiness 4 ofPCGH and its ability to advise institutional investors and manage their investments; and (3)

5 offend established public policy and are immoral and/or unethical in violation of California law.

- - , 6

, 57. -, -As a result. Moseley- and his. eo-conspirators should be.ordered to make restitution of .

7 all benefits and disgorge all profits they have received from their unfair competition.

8 9

SIXTH CAUSE OF ACTION

(Breach of Contract)

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AMENDED CROSS-COMPLAINT; A.ffl> _DEMA~.P FOR TRl.AL.~Y JURy ,

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2 DEMAND FOR DAMAGES AND PRAYER FOR RELIEF

3 WHEREFORE, PCGH requests that the Court grant judgment on its Cross-Complaint against

4 Moseley as follows:

5 6

1. Awarding PCOH its economic damages according to proof including, but not limited . to, lost profits; .

7 2. Awarding PCGH treble damages pursuant to 18 U.S.C. § 1964(c);

8 3. Awarding PCGH punitive damages;

9 4. Awarding PCGH restitution of all benefits conveyed;

10 5 . Awarding PCGH disgorgement of all profits earned from Moseley's unlawful or

11 unfajr practices;

12 6. Awarding PCGHinjunctive relief;

13 7. Awarding rcoa interest as allowed by law;

14 8. AwardingPCOHitscostsofsuit;

15 9. Awarding PCGH its reasonable attorneys' fees;

16 10. Declaring that PCGH bas no legal obligation to pay monetary compensation to

17 . Moseley pursuant to the terms of the parties' agreements and that Moseley is not entitled

18 to be defended and indezmrified by PCGH for any reason; and

19 11.. Granting PCOH such other and furtb.er relief as the Court may deem just and proper,

20 VI.

22 : peOH hereby demands a trial by jury on all issues triable by a jury.

DEMAND'FOR;JURY-TR:IAI:;- _._._ .... - .. --.- .. - --------. -- .. _

._ .. --- .. 21 --.-.----- .. - .....

SULLIVAN, am, LEWIN, REZ & ENGEL A Professional Law Corporation

23 Dated: May 12.2010

24

25

26

27

By:

28

EXHIBIT "I"

.~

.,::':\ ,_J.

. '.

1 SULLIVAN, HILL; LEWIN; REZ & ENGEL A Professional Law Corporation

·2 Jeffrey D. Lewin, SBN 68202

Cynthia A. Fissel, SBN 1641 S3

3 550 West "C" Street, Suite 1500

San Diego, Califomia 92101

4 Telephone: (619) 233-4100

Fax Number: (619) 231-4372

"IV'" fILED ; . v 1.. ...B\LSINESS OFFICE 13' Cc.N r RAC D!VIS!ON

, ZaID HA-Y , 2 A 10: O~

5

Attorneys for Pacific Corporate Group Holdings, LLC

6 and Christopher J. Bower

7

8 9

10 STEPHEN J. MOSELEY,

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF SAN DIEGO

) CASE NO. 37-2010:.o0084760-CU-BC-ClL

)

) AMENDED ANSWER TO FIRST

) AMENDED CO:MPLAINT; AND

)

) DEMAND FOR TRIAL BY JURy

)

)

) Complaint Filed: February 2, 2010

)

) ) )

11 12

Plaintiff,

v.

13 PACIFIC CORPORA1E GROUP HOLDINGS, LLC, (a limited liability 14 company), CHRISTOPHER J. BOWER

15- and DOES 1-30,

Defendants.

16 17

18 Defendants Pacific Corporate Group Holdings LLC (''PCGH'') and Christopher J. Bower

19 ("Bower") answer the First Amended Complaint ("F AC") as follows:

20

L

22

1.

This case arises from the corruption of a public pension fund, In the United States

--- 21 _. -_._--_ .. _. _'------'--'--- ------1NTRUDUCTION-- ------ --------- .. - .. -

23 public pension funds hold trillions of dollars in trust to provide retirement income and security for

. .

24 their members and beneficiaries - millions of people who will retire or who have retired from p~lic

25 service. Public pension funds fulfill their duties to their members and beneficiaries by investing

. .

26 money wisely and honestly with the expectation that the investments will grow in value. Members

27 and beneficiaries place their trust and confidence in public pension funds, and public pension funds 28 in tum placetheir trust and confidence in their staff, their advisors and their fund managers. The

/~

....... '

1 success .of public pension funds depends upon the honesty and trustworthiness of the ~ advisors. 2 and fund managers, as well as superior investment performance by fund managers to ensure

3 sufficient investment returns to fund the members' retirements. However, because public pension 4 funds have been entrusted with such considerable funds, they are occasionally attractive targets for 5 unscrupulous persons who want to exploit the funds for their own benefit at the expense of the

6 members, beneficiaries and others. This case illustrates how some unscrupulous persons have

7 illegally exploited a public pension fimd for their own benefit and in the process caused financial 8 injury to PCGH~

9

2.

PCGH is a ~spected Intemational Private Equity investment manager and advisor.

10 Since 1979, PCGH has specialized in advising some of the world's largest and most sophisticated

11 public pension funds and other institutional investors with respect to Privette, Equity Investments.

12 PCGH provides advisory services for more than a dozen distinct U.S. public pension :fund accounts. 13 -with approximately $20 billion in assets invested for the benefit of more than four million members' 14 and beneficiaries, PCGH has achieved an independently verified annual net internal rate of return 15 exceeding 16% on more than $20 billion in investments for 20 years over several economic cycles 16 (see , 15 below and Exhibit 4 hereto). As a result, PCGH is a trusted advisor which bas not only

17 retained. its existing clients but also added new clients. PCGH protec~ the interests of its public

18 pension fund clients by fulfilling its fiduciary duties to them and by adopting practices to provide

19 enhanced accountability and investor protection. In 1984, PCGH was one' of the :first private equity 20 firms to register as an investment advisor with the SEC and, as such, PCGH maintains appropriate

------. '21' -compliifricepoliciesand cones-of"cOnduct:" .. ---- .. --.- ..

3.

PCGH'~ successful inves~ent perfo~~~_~or public pension ftm:d~ has made it a

22

23 target for some competitors, former Members and others. Knowing that private equity investment 24 managers for public pension funds are assessed, in large part, on their reputations for trustworthiness 25 in addition to the success of their investments, some persons who cannot compete fairly with

26 PCGH's successful investment performance have sought to harm PCGH and benefit themselves by 27 attacking its trustworthiness both publicly and privately. When PCGH's reputation for

28 trustworthiness has been threatened, or its dedication to its strict execution of its fiduciary duties has

::ODMA\PCDOCS\PCDOCS\309949\2 2

--_._._ ..... --_ ... _ .. _-- . 'os AMENDED ANSWER TO FIRST'AMENDED C(')MPLAlN'F;"AND-uEMAND FOR IRlAI;nYJURY"'-'--- -.-

•. . • • _. .. .• . o_ 0-0 _ • •• • - _. •••• .... ',. ..

---- -"'"21 - allocitecf USU"iIiillfcin ·roPCGH-for-privaftn~qiiitY ·mveStffi.ems: ·By 200S,· PCGH1iad-elevarecr----·· _. _._ 22 Moseley to the highly trusted position of Member and had assigned him to be its contact with

23 NYSCRF. However, unbeknownst to PCGH, in early 2006, Moseley exploited PCGH's trust to

24 conspire secretly with the Morris Group to give Morris a hidden 5% interest in Strategic Co-

25 Investment Partners, L.P. ("SCIP"). SCIP was a prospective joint venture that was being formed by 26

27 I Exhibit 2, paragraphs 16-17 ..

."

t.)

1 been challenged, it bas thoroughly reviewed any such allegations and, when appropriate, retained 2 independent consultants to investigate them. Each such review or investigation bas concluded that 3 the allegations were spurious.

4

4.

The lawsuit by Stephen J. Moseley ("Moseley'') is the most recent example of a

5 PCGH competitor and former Member seeking to harm. PCGH and benefit bimselfby making false 6 .and defamatory allegations about peGH's trustworthiness. Moseley's allegations must be evaluated 7 in the context of the racketeering. illegal kickbacks, betrayal and deceit that he and his c0-

g conspirators perpetrated.

9

5 .

The New York State Common Retirement Fund C'NYSCRF',) is one of the world's

.1 0 largest pension funds. Unbeknownst to PCGH, in 2004, Henry Morris ("Morris"), a corrupt de facto 11 NYSCRF chief investment officer,' David Loglisci ("Loglisci''), a corrupt official NYSCRF Chief 12 Investment Officer, and others (the "Morris Group'') formed a secret criminal conspiracy. The

13 purpose of this conspiracy was to enrich the Morris Group by reqWring some investment managers 14 to make payments to the Morris· Group as a condition of doing business with NYSCRF (the "illegal 15 Kickback Scheme''). The illegal Kickback Scheme involved some payments which were disguised 16 as legitimate business transactions. However, as evidence of the Morris Group's conscious

17 awareness of its own wrongdoing, some payments were concealed from unwitting parties who would 18 have otherwise not knowingly participated in the scheme. Between 2004 and 2007, the illegal

19 Kickback Scheme generated tens of millions of dollars for the Morris Group.

20

6.

In. 2001, before the Morris Group formed the illegal Kickback Scheme, NYSCRF had

28

::oDMA\PCDOCS\PCO0CS\309949\l 3

. _ .... _ .-.---- .. - . AMENDED ANSWER TO FIRST AMENDED~ON1"PLAlR"T;ANIfD'E~FOR'TRTAnY~RY--" .- _ .. _,.---

1 PCGH and others to make private equity investments for NYSCRF. Morris would perform no

2 services for SCIP, attend no meetings for SCIP, undertake no activity for SCIP, or do anything else 3 to earn his secret 5% interest in SCIP. Moseley concealed from PCGH his own knowledge of and 4 participation in the illegal Kickback Scheme and Morris' secret interest in SelF.

7.

In 2007, the New York Attomey General (''NY AG'') began to investigate the illegal

5

6 Kickback Scheme. As a result of Moseley' s participation in the illegal conspiracy, the NYAG

7 included PCGH in its investigation. In March of 2009, the NY AG filed Indictment No. 2512009

8 (''Indictment'') against Morris and Loglisci which described the illegal Kickback Scheme in detail 9 (Exhibit 1 hereto). The NY AG subsequently filed criminal charges against other co-conspirators,

10 and obtained felony guilty pleas from several of them, including Loglisci.1

11 8. In June of2009, the investigation related to PCGH was resolved by an Assurance of

12 Discontinuance ·C" AOD'') (Exhibit 2 hereto), PCGH had fully-cooperated with the NY AG,3 who

13 specifically found that Moseley knew about the secret kickback to Morris, agreed to conceal it, and 14 concealed it from PCGH and others," The NY AG also found no wrongdoing by anyone at peGH 15 except Moseley, and the NYAG specifically found tbatBower had no knowledge of Morris'

16 participation in SCIP.5· Pursuant to the legal theory of vicarious liability, ~ innocent employer may 17 be held liable for the misconduct of its rogue employee, even if the employer did not know about it. 18 As a result of Moseley's participation in the Illegal Kickback Scheme while a Member ofPCGH, it 19 agreed to make restitution to NYSCRF ofS2.1 :MM in fees which it had eamedfrom NYSCRF.6

20 Moseley's participation in the illegal Kickback Scheme also caused PCGH to suffer tens of millions

-··_·-"---···2r- - - .. -."--"- _.-._ .. _ _ --.- . - - .. - - - .. -.- .. - ' -._ .. _-. - .- _,_ - - -_ .. _- -.----.

22 2 peGH is informed and believes that Moseley provided information about his co-conspirators to the NY AG, that the 23 NY AG is continuing to investigate, and that the NY AG has yet to file criminal charges against Moseley.

24 l Exhibit 2, page 3.

25 4 Exhibit 2, paragraphs 25-28. 26 s Exhibit 2, paragraph'28.

27 -r, 6 PCGH also agreed not to seek reimbursement of that sum from Moseley ar anyone else.

28

::ODMA\Pcoocs\pCDOCS\309949\l 4

···-·-·-·----·----··~...:.::~:!!A::!..M:::E:::::ND:::::!ED~A~N:::::.SW~E~R~T~O~F .... I-Rsr-=- ... A'MEN-:""~D!!ED:::==::C!'!!·O~MP~L~AIN===:T=";'=;AND"==:::;D;;;E:;M:;;:A=nN;::;;D~FOxR;;;::;;T;;;R:;:IA;:;;L;:::;B;;;Y;;:-JU:;;;;Rwr;:=-=-::--·-- .. - .

... _. .,. - . - .. ., .,

.' ____

. )

", ! ".J

_.'

1 of dollars of damages resulting from the reduction ofPCGH's interest in SCIP, profits lost on other 2 contracts or prospective economic relationships, and attomeys' fees incurred in connection with the 3 NY AG investigation.

9.

As explained in greater detail below, Moseley's allegations' about PCGH and Bower

4

5 are demonstrably false and lack any merit whatsoever, and PCGH and Bower unequivocally deny 6 them.. For example, Moseley resigned from PCQH at a critical time for peGH solely as part ofhis 7 plan to enrich himself at the expense ofPCGH, not because he disagreed with PCGH's governance 8 (see" 11 below). When Moseley resigned from PCG~ it released him only for a limited purpose, 9 not generally for all purposes (see' 12 below). PCGH has withheld distributions to departing

10 Members only when it has had substantial claims to support-its legal right to offset, not as part of a 11 "business scheme." PCGH withheld distributions to Moseley only to recover a portion of the

12 damages he caused, not to avoid blame and its financial obligations. PCGH bas not only paid

13 Moseley all sums to which he was due, but, in fact, has overpaid him, PCGH bought out Moseley's 14 membership interest in PCGH based on his capital account when he resigned from PCGH in

15 September of2006, and PCGR made subsequent distributions to hlm, because it was not then aware 16 of his participation in the illegal Kickback Scheme and the liability and potential damages he had 17 caused to PCGH while he was a Member (see ,.,. 13-14 below). For 20 years :pCGH bas produced 18 independently verified superior investment performance for its clients, and many PCGH personnel 19 changes have strengthened its team and its performance (see 'if 15 below). PCGH does not inflate 20 valuations (see,. 18 below). For more than 30 years PCGH has adopted practices to provide

... ----.- "·--21 . - eiiliariced' aCcountaEiIfiY 8ridTiivestor·prcitecuori; and'it baS Kept its'cliehtS and investors ":fully_ ... - .---- . - .. -

22 informed of its personnel issues (see ,16 below). PCGH has disclosed to its clients and investors its

23 relationships with placement agents and intermediaries, not concealed them (see ,.19 below).

24 Bower's interests are aligned with the interests ofPCGH and its clients, not inconsistent with them 25

26

27

28

._. __ ..... _. __ . .. ~:Q.DMA\PCDOCS\PCD~09949\2 5

AME~ED ANsWER Tq FIRST AMENJ;>ED c~~P~jNT; ~ DEMAND FOR ~RJ.u.;-:sy ~~~ ..

12 PCGH over governance issues, the fact is that Moseley did not resign from PCGH over governance 13 issues. The fact is that Moseley threatened to resign from PCGH at a critical time for the Company. 14 In the end, Moseley resigned from PCGH because hiS demands for additional compensation were

15 not met. Moseley's threat to resign from peGH was part ofhis plan to enrich himself at the. expense 16 ofPCGH. Earlier in 2006, Moseley and other Members had successfully negotiated enhanced

17 economic and governance rights which were agreed to and documented in an .amended PCGH

18 limited liability company agreement that was fully executed by all parties as of August 24, 2006.

19 Despite PCGH's concessions in that new agreement, and instead of Moseley and other Members

20 performing under that new agreement, they immediately threatened to resign if additional economic

--- ... _ '11 . and' govemance'conceSSio:iiS;'15eyond' those thal they had jusrteceived. were not grantec1 . Ali 'arwC - -- .. -.

22 of their threats, PCGH met with Moseley and. the other Members and an informal mediator selected

23 by Moseley and the other Members. The mediation was successful in resolving' Moseley's and the

o

1 (see" 17 below), Although Moseley sued PCGH before it sued him, PCGH is the true plaintiff in, 2 this case,"

II.

DENIALS

3 4 5

10.

Pursuant to Code of Civil Procedure § 431.30, PCGH and Bower deny generally and

6 specifically each and every allegation and cause of action in the.F AC. PCGH and Bower also deny 7 that Moseley has been damaged in any sum of money, or at all, by reason of any of their acts,

8 omissions or other conduct, and further deny that Moseley is entitled to any damages by way of this 9 case in any amount whatsoever. However, in the following paragraphs PCGH and Bower will

lO highlight the faIsi,ty of some of Moseley' s more spurious allegations.

11.

Contrary to the allegation inparagraph 9 of the F AC that Moseley resigned from

11

24

25 7 This case shares similarities with Oaktree Capital Management, L.P_ v_ Bernard, 182 Cal.App.4'" 60 (2010). In that case Bernard breached his fiducial}' duties to Oaktree while he was its employee to enable himself to compete with it 26 after his resignation. When Oaktree learned about his breaches, it refused to pay him monies to which he claimed to be entitled, arid, like Moseley, he filed a claim. Although Bernard was the claimailt, he received nothing and Oa.kt:ree was 27 awarded $12.3 million in damages caused by Bernard's breach plus $6_7 million in attorneys' fees and costs.

28

. ... __ ... _'._ .... ::ODMA\PCDOCS\PCOOCS\309949\2 6

. . .. ' _ .. AMENDED ANSWER TO ~IRSTAMEN~ED COMPLAINT; ~])'E:M'Al"fD!OIITRIAr;13YJURY -~_ ... --,'_ ._-

1 other Members' governance demands. The only remaining open issue by early September of2006 2 was Moseley's .and the other Members' demands for increased compensation. Moseley and the

3 other Members demanded that they receive huge increases in their compensation. Their demands 4 represented a significant multiple over what they were currently being paid and an amount well in 5 excess of the indicated compensation level for comparable professionals as evidenced by several' 6 Private Equity Industry compensation reports. Nevertheless, on September 12, 2006, PCGH

7 offered Moseley and the other Members a substantial increase in compensation, but they rejected the 8 offer. PCGH refused to make a higher offer to meet their demands because the increased expense

9 was not justified. 8

10 12. Contrary to the false allegations in paragraph 10 of the FACtbatPCGH

11 unconditionally and forever released Moseley from any and all claims, the fact is that the September 12 25,2006 release was intended to be limited. The release does not apply, and was not intended to

13 apply, to claims such as the-claims asserted by PCGH against Moseley in this case which PCGH did 14 not know about or even suspect at the time. In addition, the release was obtained by Moseley's fraud 15 because Moseley had concealed his role in the Illega; Kickback Scheme. IfPCGH had known about

, -

16 Moseley's participation in the illegal Kickback Scheme it would not have given him any release at

17 all.

18 13. Contrary to the false allegations in paragraph 12 of the FAC thatPCGH sent its

19 December 30~ 2009 letter (Exhibit 3 hereto) to Moseley to avoid blame and financial obligations, the 20 fact is that the letter asserted claims against Moseley to prevent him from further profiting from his

-----.- ·-'-21" p·amcipanon in fliemegaI KickbiclC Sclleme-'~ PCGHrs expense ana to· recover'apomon:ofthe--'- - - - -

22 damages he caused. PCGH's December 30, 2009 letter to Moseley is a proper exercise of its legal

23 right to offset.

24

25

8 Immediately after their departure from PC(jH, Moseley and the other Members breached their duties to PCGH by 26 causing PCGH's public relations firm to drop PCGH as a client. Moseley and the other Members then hired the public 27 relations firm to represent them in their combined business interests.

28

_ .. • ::ODMA\PCDOCS\PCDOCS\309949\2 7

AMEND;ED ~~S~~ TO FIRST AMENDED COMPLAINT_; AND ~MA'RU 'FOR TRIA'LlJY'JURY-'·' ~- --, -.'

1
2
3
4
5
6
7
·8
.' 9
10
11
12
13
14
IS
16
17
18
19
20
--_.- 21
22
·23
24
25
26
27
28 :~

. .

cycles. PCGH, like a winning professional sports team, does not tolerate less than superior

performance. Many PCGH personnel changes.have .been designed to produce and have produced

superior investment performance. For each year between 1990 and 2008 independent auditor .

Deloitte & Touche LLP has verified PCGH's investment performance pursuant to Global Investment Performance Standards. The independent report for the years 1990 through 2008 (Exhibit 4 hereto) eVidences ·that PCGH".liiS an -annUal net iritenial rate ·of"Ietlini exceeamg 1"6% oiimore tDin SZO·· __ ·- - -.

billion of investments. Further illustrating the falsity of Moseley's claims regarding a link between personnel turnover and perfermaace, on October 19,2006, after resigning from PCGl{, Moseley sent

an email to PCGH (Exhibit 5 hereto) admitting that he had told a client that the recent departures of PCGH's Class B Members, including himself" would create short term negative market perception

14. Contrary to the false allegations of paragraph 13 of the F AC that PCGH falsely

accuses departing Members of wrongful conduct to avoid paying money to them, the fact is that PCGH always honors its obligations to departing Members. PCGH has withheld distributions to departing Members only when it has had substantial independently verified claims to support its

legal right to offset PCGH recently withheld distributions to Monte Brem ("BreIll") and Tara Blackburn ("Blackburn"), because, among other reasons, Moseley's secret participation in the Illegal , Kickback Scheme while he was a Member created a liability for PCGH and its other Members at-the time, like Brem. and Blackburn. PCGH did not know about or account for this liability "When it made . subsequent payments to Brem and Blackburn, resulting in significant overpayments to them. PCGH also had substantial independently verified claims against Walter Fitzsimmons and Scott Vollmer.

At this time, PCGH has more such claims against Scott Vollmer.

15. Contrary to the false allegations of paragraph 14 of the F AC that personnel changes

have impaired PCGH's investment peiformance, the fact is that personnel changes have not impacted the ability ofPCGH to produce superior investment performance for its clients on the more fum $20 billion that it has invested globally for approximately 20 years through several economic

. ::OOMA\PCOOCS\PC00CS\309949\2 8

.- - ~ .• :~--. ,. = AMENDED ANSWER TO FIRST AMENDED COMPLAINT; AND DEMAND FOR TRJALB~!. .... - ... = .~ ,-_-

4 has concealed material facts from clients and investors, the fact is that over its 30 year history,

5 PCGH bas continuously adopted practices to provide for enhanced transparency and investor rights 6 and it has kept its clients and investors informed of relevant material facts. ~PCGH never knowingly 7 made any misrepresentations to CalPERS or other clients with respect to personnel issues. In

8 particular, CalPERS was fully aware ofPCGH's personnel issues, including the fact that Moseley

9 and other Members bad resigned from PCGH at a critical time. To illustrate the falsity of Moseley's 10 claims, NYSCRF was not only fully aware ofPCGH's personnel issues, but also, in fact contributed 11 to them, because Loglisci bad continually urged Moseley to join the hedge fund manager over an

12 extended period of time before Moseley resigned from PCGR. Moreover, NYSCRF did not

13 formally commit to invest in SCIP until October of2006, the month after Moseley and other

14 Members had publicly resigned from PCGH. In addition, contrary to :the false allegations of

15 paragraph 17 of the F AC that PCGH bad offered financial incentives to Moseley and other Members 16 to remain at PCGH, the fact is that PCGR refused to capitulate to their exorbitant compensation

17 demands (see '.11 above). .

17. Contrary to the false allegations of paragraph 18 of the F AC that Bower placed his

personal interests ahead of the interests ofPCGH or its clients, the fact is that the PCGH LLC Agreement made it clear that Bower's interests were aligned with, and not inconsistent with, the

Interests- o{PCGff ana: f1iclieri:t:S~-makjii~i any argument -to-tlie oontrar:Y"not supporl:a.Ole. .-- .. - - -_.- - . - _.-

18. Contrary to the false allegations of paragraph 19 of the FAC that PCGH artificially

inflated the valuation of investments such as Primus Financial Products, the fact is that Primus Financial Products had a superior 2.3x net investment multiple and a superior 20+% annual net

r·',

: . -)

,- .. '

1" .

; )

..... '

1 which "would constrain capital raising (i.e., new clients/investors), not fund [i.e., investment] . 2 performance.,,9

16. Contrary to the false allegations of para graphs 15 through 17 of the FAC thatPCGH

3

18
19
20
-_ ... _ .•. -- '21
22
23
24
25 26

9 Bold added. 27

28

. ~

;;ODMA\I'COOCS\PC00CS\30994912 9

AMENDED ANSWER T<?FIRST AMENDED COMPLA~NT;}~r:lD DE.MAND FO~ TR~L BY JURY·- .... _ ... - ~--- ..

. ..

1 internal rate ofretum. Moseley's selection of this example illustrates the spuriousness ofhis claims. 2 PCGH does not inflate valuations.

3 19. Contrary to the false allegations of paragraph 25 of the F AC that PCGH has

4 concealed its relationship with board members, placement agents and intermediaries, the fact is that, 5 consistent with. PCGH's commitment to full disclosure and transparency, it is PCGR's practice to

6 infonn its clients of its relationships and any appearances of, or the potential for, conflicts of interest. 7 For example, with respect to Alfred J. Villalobos, a letter dated June 8,2007 (Exhibit 6 hereto) is an 8 example of the type of disclosure that.PCGH practices with its clients. Contrary to the false

9 allegations of paragraph 25 of the F AC that "all partners in PCG Asset Management, including

10 Plaintiff' resigned because they discovered that PCGH had concealed material facts from clients, the 11 fact is that "all partners in PCG Asset Management, including PIamtiff" resigned from PCGR

12 because PCGR had refused to capitulate to their excessive compensation demands (see ~ 11 above). 13 20. Contrary to the false allegations of paragraphs 30 through 33 and 49 of the FAC that 14 PCGH has not paid Moseley what he is owed, the fact is that PCGH has not only paid Moseley all 15 sums to which it believed he was due, but peGH has overpaid him. Moseley's participation in the 16 illegal Kickback Scheme caused PCGH to suffer tens of millions of dollars of damages resulting

17 from the reduction ofPCGH's interest in SClP, profits lost on other contracts or prospective

18 economic relationships, and attomeys' fees incurred in connection with the NY AG investigation. 19 PCGH seeks to recover these damages from Moseley.

20

_-- .... -----. zr

22

Ill.

---._.- ... - .-- ..... _ .... --- .. -.--- ··-···"AFFlRMATIVE·DEFENSES--··--

FIRST AFFIRMATIVE DEFENSE

23 21. Plaintiff's claims are barred because Plaintiff failed to perform under the terms of his

24 . agreements with. Defendants.

SECOND AFFIRMATIVE DEFENSE

25

26 22. Plainti.frs claims are barred because Plaintiff materially breached his agreements with.

27 Defendants.

28

_._ •. _ ... '. _.. .__ ::ODMA\PCDOCS\PCDOCS\309949\2 10

~~~D~~ ~SWER TO FIRST AMENDEDCO~LAINf; AND ~ANln'OR"~~~~ ~Y'-!URY'--' .- -.~ ... -

::OOMA\PC00CS\PCD0CS\30994912 11

-- __ '_'0 - -1";;';;'~AME7:::=ND=E=D~AN~S=W=oE~R~-T~-O:"::FIRS==:::T==A:;:':M::=::END~E;;;;D;:::C:;:::O;;::MP::;=LA~o ;:";lNi=· -;"::-A~ND=l1::::E::::::MA::::- :::::NIJ"==FO=J:={-=lRlA==:-'::g=y:-:JUR=Y-===_:-:o_=-------- 0- 0

".' .. ..... " _.. -

(~

.. "

1

THIRD AFFIRMATIVE DEFENSE

2 23. Plaintiff's claims are barred because Plaintiffbrea.ched the covenant of good faith and

3 :fair dealing implied in his agreements with Defendants.

4

FOURTH AFFIRMATIVE DEFENSE

5 24. Plaintiff's claims are barred because Defendants were justified in engaging in any

6 and/or all of the acts alleged in the FAC.

7

FIFTH AFFIRMATIVE DEFENSE

8 25. Plaintiff's claims are barred because Defendants acted in good faith at all times.

9

SIXTH AFFIRMATIVE DEFENSE

10 26. The PAC, and each and every purported cause of action alleged therein, is barred by

11 the doctrine of estoppel.

12

SEVENTH AFFIRMATIVE DEFENSE

13 27. The F AC, and each and every pmported cause of action alleged therein, is barred by

14 the doctrine of waiver.

15

EIGHTH AFFIRMATIVE DEFENSE

16 280• The F AC, and each and every purported cause of action alleged therein, is barred. by

17 the doctrine of unclean hands.

18

NINTH AFFIRMATIVE DEFENSE

19 29. The PAC, and each and ~ery purported cause of action alleged therein, is barred by

20 Plaintiff's misconduct as alleged in the accompanying cross-complaint, including violations of 18

-21 -u.S:C:- § 1-96Z(c); bieaclieS-6f fiduciary-duties, fraUd;°intentibnaI°mtenereIfc:!-witli °economic" 0

22 relationships and violations of Cal. Bus. & Prof. Code §§ 17200 et seq.

23

TENTH AFFIRMATIVE DEFENSE

24 3~. Defendants have caused. no damage to Plaintiff.

25

ELEVENTH AFFIRMATIVE DEFENSE

26 31. Any damages suffered by Plaintiff were proximately caused by Plaintiffhimself.

27

28

20 38. The PAC. and each and every cause of action contained therein, fails to state facts

- .. - .---. - _ .. 21 -stiffiCieilftifcoiiStlliffefacause-of acnoii··agairiSt DefeiidahfS: -.. -.-. -.. - .- - ---- .. -.-- - - - .. ------ --.-

(~ A

••••. .1 ,.

1 TWELFTH AFFIRMATIVE DEFENSE

;

2 32. Any damages suffered by Plaintiff were proximately caused by third parties other

3. than Defendants.

4

THIRTEENTH AFFIRMATIVE DEFENSE

5 33. Plaintiffhas failed to mitigate his damages, ifany.

6

FOURTEENTH AFFIRMATIVE DEFENSE

7 34. Plaintiff is not entitled to injunctive relief because Plaintiffhas no reasonable

8 likelihood of success on the merits.

9

F'IF"IEENTH AFFIRMATIVE DEFENSE

10 35. Plaintiff is not entitled to injunctive relief because Plaintiffhas not suffered any

11 irreparable injury.

12

SIXTEENTH AFFIRMATIVE DEFENSE

13 . 36. Plaintiffis not entitled to injunctive relief because a balance of the equities favors

14 Defendants.

15

SEVENTEENTH AFFIRMATIVE DEFENSE

16 37. Defendants are not able to ascertain whether they may have additional, as yet

17 unstated, defenses. Accordingly, Defendants hereby reserve the right to assert additional defenses in 18 the event that it becomes apparent that such defenses are appropriate.

19

EIGHTEENTH AFFIRMATIVE"DEFENSE

NINETEENTH AFFIRMATIVE DEFENSE

22

23 39. Any damages allegedly caused by Defendants are subject to offset either partially or

24 in the full amount of the alleged damages.

25 26 27 28

::OOMA\PCOOCS\PC00CS\309949\2 12 .

- .. -- .. n. .. __ . AMENDED ANSWER TC'=FIRST=AMENDEDCOMPLAINTj ~NDnmARIrFUR:~·~~~.-. - -~ .. -.- ..

.. . -.. - . -... . . - . .

1 2 3

IV.

PRAYER FOR RELIEF

WHEREFORE, PCGH and Bower request that the Court grant judgment on Moseley's

4 First Amended Complaint as follows:

1. Against Moseley and in favor ofPCGH and Bower;

2. Awarding Moseley nothing;

3. A warding PCGH and Bower their costs of suit;

4. Awarding PCGH and Bower their reasonable attorneys' fees; and

. 5. Granting PCGH and Bower such other and further relief as the Court may deem just .

5
6
7
8
9
10
11
12
13
14
15 Dated:
16
17
18
19
20 and proper.

V.

DEMAND FOR JURY TRIAL

PCGH and Bower hereby demand a mal by jury on all issues triable by a jury.

May 12,2010

SULLIVAN, HILL, LEWIN, REZ & ENGEL A Professional Law Corporation

- ----- "21 .,-- .- ----.--.---.-- - .. _-_.- -- -.-_.-_ - - - -._ -._. -., -----.------ .. _--

22 23 24 25 26 27 28

By:

::ODMA\PCDOCS\PCD0CS\309949\2 13

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AMENDED ANSWER TO FIRST AMENDED' COMPLAINT; AND DEMAND FOR"'I'lUALBYJUInI"··-····· - .

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25 1 'M.P. S,:CULLY (SBN; 1358S3J THOMAS s. STQPDAlID (SBN: 136299) 2 GORDON &: REES LLP

101 WestBt()adw~y~.sUUe;2f)OO 3 San Diego, CA 92101

·Telephone.: (619) 696-6700 4 Facsimile: (619) 696-7124

5 J\ttomeys for Plaintiff

STEPHEN J. MOSELEY

SUPERIOR COURT OF CALIFORNlA COUNTY QFSAN PIBOO

SrEPHEN J. MOSELEY,

Defendants.

Plaintiff Stephen J. ,~cy, by and .tbrougJi his,~ counseI~aneges as fullows; PMTmS:ANJ) YEelWE

1. S~hen J. Moseley t'Mosetey") is an ~yidual ~ is a resident of New Jersey.

In 2001, M~ley joined ,Defendant Pacific Corpozate·GrQt,tp Holdings, LLC' as an officer, B:eginning:in, '200 l. M:oseley was an Qfiicer in Defcm&mt Pa¢iflc .CoIpota,te, 0Tqup Holdings, LLC. Between. approximately April ZOO4 and Septemf?et2006, MOS¢ley was a member of

26 'Defendant Pacific CpIporate Group Holdings, LtC.

27

.,

-.

Pacific Corporate Gro~p Holdings, LLC. tpCG") is, and'at all relevant times

28 was, a Delaware limited liability company with its princi~ place of bus mess in La Jolla,

, ' -1-

\ COMPLAINT; DEMAND FOR JURy TRIAL

1 Califomia.

2 3. ~h.er J. Bower ("'B()~~, JPld at ~ r~evant timeswas, a ~t or San

3 Diego CoUlity, Califor.tiia, aDd the CEO and manap&. member of Defendant Pacific Corporate

4· Gro.o,p Ho~~gs~. LLC~ dOillg bus$ess in La JoUa, CaHf~

5

4.

6 as DOES 1-3.0, inclusive. and therefore. 'sues these 4efendant$ t,Y S!lc.h fi~ nantes. :Plaintiff 7' will ~en<l his oomplainu~ ~ge their true names. and capacities when. ascertiined. In the

8 meantime, Plaintiff is infonntJ4 and believes that~~ of the fiCtiUQl1S named defendants· is

9 legally responsible in some manner for the OCC~ herein alleged, ~g, su~ t9 and liable lO . fur the reliefprayed for be~w.

Ii

s.

12 . defendants sued in thenamc of DOE, were ~~,:~~ and emPloyees· of$eir co-

13 defen~ and' in. ~i'Q.g 1he.~ herein.aftet meationed, W$ acting within the scope of their

.

V.~i$~~;Saa.Di~··C~·is.tlt~~of~ten~.an.d

PAm COMMON TO ALL Comrrs

19 1. Between approximately April 2004 -md S~'2006, Moseley was a member

20. of Defendant Pacific CotpoIate Group HoI~, LtC. M~y, Bower ~ others entered into 21 an~ and ~ted :ynut~ Liabiljtyc~y ~t daiedNovembe.t 26., Zoo3,

22 (the ~~ent"A ~ A~ FM4~ in_tu alia? (ort;he'~Qn of the buslness·of 23 peG. ahd set forth the rights ami responsibilities pfthe m<;m~~ Moseley ~"desi~ as a 24 "Class B Membe( ofPCG, and 'Bower was ·designated as a "Class C~· Member" ofPCG,

2S

8.

The' Agreem~t established certain rigbts and responsibilities relating to

26 members' Capital Accounts. Specifically, the Agreementestablisbed m obligation on the part 'Z7 ofPCG to repurc~ a Class B Member's interest. in bis Capital Account and 1:9 make other

~8 dj$ibutions an~.payments to the C~B Members. ineluQing Moseley, upon the witlldtawal or

2

9 .

1 removal of the member for any reason.

.3 di~ents r~ the proper way to goVern a service.organization, seiect.investmentst ·4 il'lanage conflicts of interest and support client intere$S. Pqo:·sub~tly·coniirmed and

5 represented to Moseley on lnultiple occasioIJS that pea Wf;)U:ld meet its Qbligations to iepurchase 6 Mosel~'s ~bersbip interes; that PeG would deliver the.proceeds·of certain accounts held in 7 Mosel~~s name to MQ$e1ey; &pd. t;bat peG wo~4 D.l8ke·otber penQingdistrlbutiGns to Mosel~y, 8 asPCa w.l~Y·Qbtigated. to·do. F·or example, on·or·al?out ~~be( 4, 2007. peG·sent

9 .. w.ri~C.Q~ndtnCe.tQ MO$eley which cOnfirmed "tbe.obUga.t,i(>.:Q. of~~ Co~ Group to Holding$ •.. m~ha,se your mem~·jp~ •.. ".

11 10. Onor about September· 2-5,2006, PeG UltCQaditionaUY and ·forever agreed. t()

1~ release and d,iScharge Mos~ey from any and all c~ and!or·ca,uses·Qfaction orany type or

13· seope, whether at law or at equity,. which J,>CG may have against Moseley rdatmg to ~r and all

11.

16: tb,e ~ts which PC-G was obligated to pay to Moseley-

17 t2. By (:On'eSpOndence datec;l ~ 30, 2@:" PCG coii'iDnmieated·to Moseley

18 that Moseley had .~ed in unspecified and unidentmed. ~ actiyities:which had

19 .~~ ~ PCG·to incur damaees. Such allegations by PeG were ~ only to avoid 20· ·blameeonn~ ~ long-standing an4 dO.C~fed~~ ofinstitl¢i.O.md..c.on4u.,ct •. PCG 21 :~ Wr the·pnrpose Qi at=npting to.avoid PeG's ~icil obIigatiOliS to Moseley. .By ~ 22 correspondense-, peG also communi-catedto Mos~ley that. PeG 1.ri1l not :niake .y further

·23 distributions to Moseley, in contravention ofPCG~s.lega1.obligati~ to.· do .~.

24 13. Such wrongful conduct by peG has been directed by Defendant Bower, and

25retlects a business scheme orchestrated by Bower to deny departing members ofPCG the money 26 . ·owed.to,~ of tlHml,. ·including Moseley: . Moseley isinfonned·at)d believes tlmt Defendant

27 Bower employed simU.ar schemes to deny coInpenS"ationdue to former memh~ incl_g but

Hi 17 18.' 1'· 20· 21 22

COMPLAINT; DEMAND FOIUURY TlUAL

1. TO.4!JL PARTIES ANJ)TIIEllt.ATTQB.NEY$ OF RECORD:

2 p~ tak~ noucethat p~S~ Mqs.eJey ~y ~8l.1ds trial by. j.-y in·this

3' action.

4

5 Dated: February 2, 2010

6

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GORDON & RBES UP

23

24 ~5 .26 27 28

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ATTORNEY GENERAL OF THE STATE OF NEW YORK

_______ J X

! .

IN THE MAITER OF

sco C010RATE PARTNERS ADVISORS II, ~

_______ J X

i

!

!

.

Investigation No. 2009-101

ASSURANCE OF DISCONTINUANCE PURSUANT TO EXECUTIVE LAW § 63(151

In ¥arch 2007, the O.ffj.ce of the Attomey General' of the State of New York (the !

... Attomey General',), comm~Ceci an industry-wide investigation (th~ "Investigation',),

! ... .

pursuant, Article 23-A of the General Business Law (the -M~ Actj, into allegations

of ~'pay-to-rlay" practices and undisclosed. conflicts of interest at ~blic pension £imds, including te Ne~ York State C~mmon Retirement Fund. This Assurance of Disconmnrce (CO ~ce'~) contains the findings of the Attorney General's

Investisatirn and the relief ign:ed ~ ~.y ~e Attomey Gen~ and PCG Corporate

, .

Partners Mvisors Il, u.,C rpCGCPj .

. I ..

~, the ~ttomey General finds ~ trillions of dollars in pub1ic pension

fundS in thr United States are held in trust for millions ofretirees and their families and !

----. -----.----~As s- the~ttomey.Gene@l.~ds.~.P1lbli~.p.ensipn.fun.d .. l!.S.s~~l1~_~~ ~:-.-----

invested s91elY.iri the best interests of the benefieiarie~ of the public pension fimd;

~S, the Attorney General finds that the New York State Common

!

these f4n; must be protected from manipulation fur personal or ~olitica1 gain;

!

Retiremen~ Fund in particular is the largest asset of the State and, having been valued at 5150 billion at the time of the events described iIi this Assurance, was larger than the

! ..

entire Stat; budget this year;

..... -.- I- ... _', .. - .... - .. -.: ....

.. _ • •• _._ •• ~ __ ••• _ __ ._._ •••••• u _ ._ •• _ _

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PACIFIC CORPORATE GROU~ HOLOiNGS7 LLC fIiIIIii

. PacifIc CDrporate GrQup LLC.~·

,.

December 3D, 2009

Steve Moseley

15 Benjamin Trail Pennington, NJ 08534

Dear Mr. Moseley, .

As a former member of Padflc Corporate Group Holdings, LLC and tts affiliates ("PCG'I) you owed and.centinue to owe peG various contractual and other legal duties.

I

1

1

~

{

,

i

PCG has learned that both before and after your separation you engaged in wrongful activities which caused PCG to incur millions of dollars in damages.

As a result, PCG has valid claims against you and others for fraud, other torts and breach of contract to recover these damages.

PCG has received investment distributions that, under some circumstances, may be available to be distributed to some former peG members. However, as a result of the. damages caused by your wrongful activities peG Will not make any further dtstrfbuttons to you.

Instead, PCG demands that you disgorie the sums distributed to you by peG since your resignation. PCG is willing to discuss the terms of disgorgement in order to achieve an amicable resolution.

If you have any questions about this letter you may contact me or peG's lawyer for this matter, Jeffrey D. Lewin, by phone at (619) 595-3ZZ2 or oyemail at [ewin@shlaw.com.

_. ~ __ . __ . __ . Si~3¥/,;-- -._-_-. __ -_-_.- .. - __ -._- __ - .. - __ -. _-._-. _ .. _._-.- - _-. _-_---._~. _-_-_-. _ ....

::=== .===== -- ~ - _- ---.- ----- .. - .. -~_,.

Pacific Corporate Group Holdings, LLC

~.

Robert D_ Conca

Sr. Vice President, Legal Affairs

CC: Jeffrey o. lewin, .Esq •

. ---:....-----------

12.00 PIIOSHCT STREET, SUITE 100' .__, ... ~~-*""9"i--e;.7-~8.'4li6 600.0 - En &sa 456 6018

__ .\

.. __ .. ----., - -

-- _ - _ .. - ~ . .:..

_=- • .•.• _o •••• _. : •••• :._~.:.._ ~ == .... '::,;.

EXHIBIT "4"

1 I

."\ : I

Pacific Corporate GroupLl.C

Schedules of Rates of Return for the Dfrect Investments Composite and the Partnership 1nvest:rilent5 Composfte and Buyout Investments, Venture. Captta~ Investments, Intematfonallnvestments and

North American Inv~ Composttes, which are sub-composites of the Partnershfp Investments Compostte

For Each of the.Vintage Years Presented for the Perfod from January 1, 1'990 to December 31, 2008,

and Independent Al!dftors' Report

I

-----1·· ._

.. 1. ...

..... _ ..•.• :- ...

_... . .. _ .. _- _- - .... _ - -- - .... _ - ---

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Deloltte.

Oelalt12 6 Touche LLP Suite 1900

701 ". SlrMt

S., Olegq C"A 92101-8lgt USA

Tel: +j 619232.4S00 Fax: +1619 231 1755 www.delCittB.c3m

INDEPENDENT AUDITORS' REPORT

Pacific Corporate Group LLC;

We have examined Pacific Corporate Group u.c's (the "AI'm") (1) cornplfance with the composite amstruction requirements of the Global Investment Performance Standards (-GIPS· Standards") on a flrm-wtde·baS1s for the period from January 1, 1990 to December 31,2008, and (2) design of its processes and procedures to calculate and present performance results in compliance wfth the GIPS· Standards as of December 31, 2008. We have also examfned the accompall}'ing Schedules of Rates· of Return (the "Schedules"), in which the Finn's dients invested for each of the vfntage years presented for the Direct Invemnents Composlte (period from January 1, 1993 to December 31, 2008), Partnership Investments Composite (period from January 1,1990 to December 31,2008) and Buyout Investments (perfod from January 1,1990 to December 31,2008, Venture Capftallnvestments (perfod from January 1, 199Z to Dec:ember 31, 2008), International Investments (pertod from January 1, 1990 to December 31. 2008) and North American Investments Composites (period from January 1, 1990 to December J 1, 2008), which are sub-composites of the Partnership Investments Composite. The Firm's management is responsible for compliance with the GIPS· Standards and the design of 1ts processes and proeedures and for the Schedules. Our responsibility fs to express an opinion based on our

exarrrlnadon. .

Our examination was conducted in accordance with. attestation standards est2lbtfshed by the American Institute of Certffied Public Accountants and accordingly, included examining, on a test basis, evidence about the Flrm's compliance With the above-mentioned requirements, evaluating the design of the Firm's processes and procedures referred to above, examining. on a test basis, evidence supporting the accompanying composlte performance presentatfon, and performing the procedures for a verificatfon and a performance examfnatlon set forth by the GIPS· Standards and such other procedures as we considered necessary fn the drcumstances. We believe that our examination provides a reasonable basis for our optmon .

. -_-=--.-.'=-=-"':" ~ ~-.:. In our opil'lion, the Flrm has, in all material respects:

• Complied wfth all the composite construction requirements of the GIPS- Standards on a firm-wide basis for the period from January 1, 1990 to December 31, 2008; and

Designed its processes and procedures to calQJ(ate. and present performance results in compliance with the GIPS· Standards as of December 31, 2008

Also, in our opinfon, the Schedules for each of the vfntage years presented for the period from January 1, 1990 to December 31, 2008, are presented, in all material respects, in conformity with the GIPS· Standards.

As explained' tn Notes 2 and 3 to the Schedules, the computation of rates of return for the Partnership Investments Composite and its Sub-Composites are based on the partnerships'.

Niatl'Wlil

D~IDit!~ 1bud>e To""'"""

·'·'·1

1 j

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-

. _.,

I I

.... , )

I ),

investment securities whose values liave been estimated by the general partners and reviewed and revised, where appropriate, by: the Ffrm's management in the absence of readily ascertainable market values. 11'Ie rates of return for the Dfreet Investments Composfte have been estimated by the Finn's management. However, because of the inherent uncertainty related to such valuations by the general partners' and the Ffrm's management, estimated values and the resulting reported rates of return may differ signfficantly from the values that woutd have been used and the rates of retum that.would have been reported had a 'ready market existed for the securltfes. Such unknown differences cculd have a material effect on the rate~ of return •

i

. r

..

J

This report does not relate to any composite presentation of the Ann other than the Finn's Direct Investments Composite, Partnership Investments Composfte, and Buyout Investments, Venture Capital Investments, International Investments and North American Investments Sub-

Composites. .

I

I

i

i

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..

October 16,2009

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PACIFIC CORPORATE GROUP l.LC

Schedule of Ram of Return for the Direct Investments Composfte

and the Partnership Investments Composite for each a( the Vintage Years Presented for the Period from January i, 1990 to December 31,2008

(All Dollar Amounts in US $OOOs)

tampallte J.aat V.fuaat 121'1/01J

DIRECT IHVESTMEHTS

1993 2 $ 26Z,968 $ 266,2QZ S l83,D3S S 18.9 S 1lL1 S 1.44 x

1994 2 310,000 315,257 779,r1Z# 19.7. 19.4. I.Q

1995 1 23,000 23,m 40,537 54'.9 53.6 1.7,(

1997 5 82,m 87,1"" 85,782 1.0 (U.s) 0.98

1998 -4 513,003 172,637 375,338 69.6 67.5 1.17

1999 5 6.(,.(50 65,541 22,9504 2,189 (17.8) ("flU) 0.38

2000 .. 76,935 77,346 ,(0,.2S0 (1z.4) (12..5) 0.51

2001 3 61,500 67,7~ .(1(,159 (7.2) (9.6) 0.65

20112 .( 62.000 73,592 1~DZ7 7,958 33.5 29.0 2.17

2003 6 6B,~ 76,861 87,990 13,759 19.6 13.8 1.37.

20004 2 110,000 121,0 6,650 111,277 1.5 (U.6) 0.97

2005 2 96,500 70,589 30,531 5,835 11.5 7.9 1.2Z

2006 .. 107,129 113,676 as,393 5,950 (7.7) (U) 0.80

2007 3 49,579 ~,m 5,955 72,031 15.9 1<4.9 1.11

200:::,8,---,-..-- __ ...:.:'0~ __ .1~,~ __ __l~'!?:L---E. __ 1!1J'2!,_J~.!L __ i1!.!J.._ _.0:92_ . sUPPlamental

Infonnatlon Total

VInCI,. Yaar

I

,

•

,

I

$1,761,&51

Sl,139,715

PAImIEII5HIP IHVESTMEHTS

1990 .. $ 125,300 $ l25,563 $ 282,192 $ 15.6 S

1991. .. 117,100 2Oa,621 531,651 2!.O

1992 5 160,000 157,719 360,m 2~.1

1993 5 340,698 <CII1,o404 907,861 29.3

1994 10 517,301 412,583 672,C08 25.1

1995 8 675,800 658,886 1,045,397 19 23.1

1996 16 808,000 7<10.648 1,193.E 1,602 25.1

1997 19 835,500 S93,7Z8 818,956 19,381 16.'1

1991 18 392,714 408,746 533,136 67,2«1 10.0

1999 11 581,5«1 581,324 634,1104 141,288 8.9

2000 13 -444.290 ffl.m 41.933 177,0111 7.5

2001 16 1,326.276 1,278.495 1.875,324 216,107 26.3

2002 12 1,257,040 1,178,6704 1,4OJl,m 2<14,958 29.0

200] 19 1.958.287 1,S(T,76"1 1.53.(,230 587.7«1 2<1.1

f I

J

Amual

Hilt lramal RaleGf Return

1S.3S

1..ex

15.3 S 2.25 X

27.7 z.sa

23.9 U,

19.1 U6

25.0 1.63

D.o 1.~

249 1.61

16.5 1.41

f.5 1.47

8,6 1.33

7.0 1.21

26.1 1.6.(

lIf.7 1.40

23.8 1.37

2llO4 ._ ............... -- ·32' .~, 3,744,~--:, 2,160.6ZZ-1.613,149"'!:- ...... 993,616"-·~ 15;1~"""

2005 40 6,0511,098 3,183,013 951,48 1,955.<104 (6.0)

lD06 70 8.1~,6'8 4.592,078 416,105" 3,095,143 (2M)

2007 55 6,m,0704 2,565,885 90,618 1,944,948 (25.n

2008 56 79!8,30S- 1.270,805 15.422. 1,010,457 (.(7.6)

'Supplemental j

Information Total

413

Suppl..mental Information OVERALL TCi'ALS

S 24.303,921 ' S 17,456,158 S 10.87<1,957

16.81

S 4(,364,061

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(6.1) 0.91

{21.0} 0.76

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