Monday, October 27, 2014

Crow Holdings Capital Partners LLC and Pay to Play with NC Treasurer Janet Cowell

"Crow Holdings, a management group for at least 6 private hedge funds investing in real estate, is owned by Harlan Crow, an heir to the Trammell Crow estate of Dallas, TX.

Crow ...contributed to the campaigns of ...North Carolina’s most recent treasurers, Richard Moore and Janet Cowell.

A 2007 article from the Charlotte Observer exposed a potential pay-to-play relationship between Harlan Crow and NC’s then-treasurer Richard Moore.

...Crow Holdings had received two commitments from NC’s pension fund by 2006: Crow’s Fund IV receiving a commitment of $80 million and Fund IV-A receiving a commitment of $20 million.

...from the Observer article: “Less than a year later, Crow and six others tied to the firm gave $28,000 to Moore’s campaign on the same day.”

According to management fee documents obtained from the Treasurer’s office during a State Employees Association (SEA-NC) forensic investigation of the Teachers’ and State Employees’ pension fund, Crow Holdings received $384,339 in management fees from NC’s pension during the 2006/2007 fiscal year. The relationship was not shown on NC Treasurer’s report to the public covering the 2006/2007 fiscal year, but Moore’s report of fy2007/2008 shows the market value of NC pension money managed by the two funds at $67.6 million. Crow Holdings received an additional $238,852 in management fees from NC’s pension during the 2007/2008 fiscal year.

During the 2008 election cycle, NC’s now-treasurer Janet Cowell received maximum contributions from Crow family members Harlan, Katherine, Shirley, Margaret D., and Trammell S. Crow, as well as from Trammell Crow Company, totaling $24,000.

During the 4th quarter of 2008, Crow Holdings called upon additional NC pension money through a new fund (Fund V), which is indicated by the initiation of new management fees during that quarter...

...The contributions from the Crow family to NC treasurers ceased with the 2010 introduction of an SEC rule declaring that an advisory firm is prohibited from managing funds from a public retirement account if the firm’s associates have provided financial contributions to the public fund’s controllers during the 2 years prior.

...North Carolina remains one of only 4 states still operating as a sole fiduciary system, with State Treasurer Janet Cowell functioning as the fund’s trustee. This means that Cowell is the sole authority over the fund’s investment decisions, without hindrance from an outside approval process. There are very few people in this world who can make the claim that they exercise unilateral control over $91 billion belonging to the taxpayers. This makes Janet Cowell a very important person in a world of countless fund managers eager to invest on behalf of North Carolina future pensioners, in return receiving on average 1-2% management fees and further profits in the range of 20% off of any gains.

...North Carolina General Statutes restrict how much of our state’s retirement accounts may be invested in alternatives and, according to a 2010 report from North Carolina Auditor Beth Wood, that cap has been exceeded by Treasurer Cowell on multiple occasions. 2013, Treasurer Cowell made an additional $85 million commitment to a new hedge fund established by Harlan Crow’s real estate investment group (Fund VI)...

Management fee documents obtained by SEA-NC show that $531,250 in fees were paid on the new Crow Fund VI during the first and second quarters of 2013. Though the market value for the amount called upon by Crow’s Fund VI should have appeared on North Carolina’s 2012/2013 Annual Investment Report, which states that it covers “investment advisors and fund relationships as of June 30, 2013,” NC’s investment in Fund VI was not disclosed within the report.

The same year, Cowell requested the passage of legislation to further increase the allotment for alternatives investments.

...The investments that Crow makes on behalf of North Carolina are further protected as a “trade secret” under North Carolina’s current laws, which do not require the disclosure. This means that once Crow Holdings takes possession of funding from North Carolina pension, what is done with the money from there is unknown to anybody outside of the offices of Crow and Cowell.

...Future Pensioners Given No Choice, Limited Disclosure

...One can’t help but note the irony in the fact that while one Crow Holdings executive argued that public resources should not be placed on the line for funding a risky real estate venture without allowing the taxpayers a voice in the matter, Crow Holdings Capital was doing exactly that with funds from North Carolina’s pension account.

Not only were the taxpayers of North Carolina, contributors to the state pension account, given no vote in Crow’s investments – they are kept completely in the dark about which private developments the money is funding. Perhaps North Carolina’s pension fund is invested in a hotel owned by Crow Holdings Capital, located just down the street from the proposed “taxpayer-owned” hotel. Or, perhaps NC pension funding has assisted Crow in the acquisition of development property off of I-77 here in North Carolina.

That information remains among North Carolina’s most expensive and best-kept secrets."
NC Treasurer Janet Cowell "Investors as contributors"

NC Treasurer Janet Cowell Contributions; "Law Firms Seek Cut of State Pension Litigation" and Pay to Play

Public Information Request for the State of North Carolina's Treasurer

George Hartzman, presented to Guilford County's School Board, 10/23/2014