Malek settles for $250,000 in fines

Prospective baseball team owner Fred Malek and his District-based investment firm, Thayer Capital Partners, yesterday received $250,000 in fines as part of a settlement with the U.S. Securities & Exchange Commission to resolve a series of fraud charges involving the Connecticut state pension plan.

The SEC said Malek and his firm did not disclose the 1998 hiring of a consultant, William A. DiBella, to assist with the investment of $75million from the Connecticut Retirement and Trust Funds into a private equity fund managed by Thayer. Such hirings must be disclosed by SEC rule to original fund investors, in this case the Connecticut pension plan.

Malek received a $100,000 fine and Thayer a $150,000 fine.

The SEC also said DiBella did no meaningful work in the consulting, for which he was paid $374,500 by Thayer, and that his hiring was a political favor from Paul Silvester, then the Connecticut state treasurer and a friend and ally of DiBella's.

The fines to Thayer and Malek represent a small part of a much larger investigation into a corruption scandal involving Silvester.

"We've been looking at all the financial houses that Silvester did business with, and this was egregious enough behavior that we had to move forward," said John Dugan, assistant administrator for the SEC's Boston District office.

As part of the settlement, Malek and Thayer have agreed to cooperate in an SEC civil fraud lawsuit against DiBella. Malek and Thayer did not admit or deny wrongdoing.

"This issue is really quite old and we're happy to have it settled so we can move on, as are our investors," said Barry Johnson, Thayer chief financial officer.

Johnson did say Thayer and Malek expected DiBella would perform legitimate consulting work with the pension fund investment. But SEC filings indicate Malek and Thayer "should have taken further steps to consider whether [Silvester's] request that Thayer hire [DiBella] may have been part of a corrupt agreement."

The state of Connecticut still has $53.5million invested in Thayer funds.

For the past five years, Malek has led the Washington Baseball Club, which has been active in trying to get Major League Baseball to move a club to the District. Malek's baseball investor group has also held a memorandum of understanding with the D.C. Sports & Entertainment Commission since early 2002 to share some costs in the pursuit of baseball and grant Malek's group preferred access to RFK Stadium. Malek is also a former owner of the Texas Rangers and an influential figure in the Republican Party.