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Deals & People June 18, 2010
Adviser Who Misused Pension Funds Sentenced to Nine Years
John Orecchio, a former investment adviser accused of misusing funds from six union pension plans, was sentenced to nine years and four months in prison and ordered to pay $26.4 million in restitution.
Reported by Rebecca Moore
The DoL filed a lawsuit on April 10, 2008 against AA Capital Partners, its co-owner and president Orecchio, chief financial officer Mary Elizabeth Stevens, and affiliate AA Capital Liquidity Management, LLC for allegedly misusing plan assets and charging the plans excessive fees on investments. The suit claims that at various times from 2002 to 2006, the defendants improperly used $25.9 million of the plans’ assets to pay for, among other things, the operating expenses of the firm, renovations to a horse farm, and a strip club owned by Orecchio.
In addition, the DoL said they caused the plans to pay unauthorized fees to AA Capital.
In August 2009, the U.S. Department of Labor obtained a consent judgment and order requiring Orecchio to restore $50 million in losses to five Michigan pension funds as restitution for misuse of the plans’ assets (see Former AA Capital Partners President to Pay $50M to Pension Funds).
In 2006, the Securities and Exchange Commission filed a complaint against AA Capital Partners Inc. and Orecchio, accusing him of misspending $10.7 million of investments by Detroit area pension funds, on things such as political donations and sporting events.