Private Equity Firm Emerges Triumphant

Civil charges against Triumph Capital Group and others in connection with management of the private equity investment fund Triumph-Connecticut II LP, have been dismissed “with prejudice” by the U.S. Attorney for Connecticut, the firm announced. In addition, a temporary restraining order granted by a federal judge last October, which had been extended through a series of agreements with Triumph, has been lifted.

“The action was entirely unnecessary and should never have been brought,” said John F. Sylvia, a partner in the law firm of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C., which represented Triumph. “The government initially brought this matter before the Court in a highly unusual ?ex parte? proceeding held at night asserting specious allegations regarding nonexisting risks to the portfolio. In truth, Connecticut?s funds were being prudently and professionally managed, and continue to be so to this day.”

In agreeing to the settlement, Triumph denied all liability and wrongdoing. “We are pleased to get this legal issue behind us,” the company said in a statement. “We now can continue to focus on managing our investment funds and move forward.”

Under terms of the newly formed agreement concerning Triumph, Tri-Conn II Advisors LP will continue to serve as general partner of Tri-Conn II; and TCI-II Advisors LP will continue to serve as general partner of Triumph Capital Investors II LP, a small private equity fund. Triumph CBO Advisors LLC will continue as investment manager of Triumph Capital CBO I Ltd., a collateralized bond fund established in 1999 with a capitalization of $675 million. Harch Capital Management will continue to act as sub-adviser in the management of this fund.

As part of the agreement, Tri-Conn II has distributed more than $125 million in cash and securities to the State of Connecticut, bringing its total distributions to partners during 2000 and 2001 to more than $150 million. These funds had been earmarked for investment in future CBOs, which are not readily marketable under current conditions.

The allegations against Triumph and others first gained attention from the press in 1998, when former Connecticut Treasurer Paul Silvester committed $845 million from the state pension fund to alternative assets in his final three months in office, which he later admitted was to secure future employment for himself and his associates.

In an October 2000 litigation release (See PEW 11/6/00), the SEC alleges that “the defendants participated in a scheme where Silvester awarded investments of hundreds of millions of dollars of state pension fund money in exchange for lucrative fees paid by the private equity firms to Silvester?s friends and political associates” during Silvester?s term as Treasurer of Connecticut from July 1997 to January 1999.

Named in the civil action were Landmark Partners, Landmark?s chairman Stanley Alfeld; Triumph Capital, Triumph officials Charles Spadoni and Frederick McCarthy; Silvester; a consultant to Landmark Jerome Wilson; Silvester?s associates, Ben Andrews Jr. and Christopher Stack; Stack?s consulting firm KCATS; and former aide to Silvester Lisa Thiesfeld.

When the charges were made, Triumph immediately released a statement that denied the charges against the firm and its officials.

Landmark Partners settled the charges against it and its chairman in December. The Simsbury, Conn.-based firm agreed to pay $100,000 in civil penalties and Alfeld agreed to pay $50,000 in a settlement where neither party admitted nor denied the charges, according to a release from the SEC.

Contact Ken Ryan: Kenneth.Ryan@tfn.com