Riley: Taveras, Mancini & Wainwright Investment Counsel, LLC

Tuesday, August 05, 2014

Michael G. Riley, GoLocalProv MINDSETTER™

 

As they say, “you can’t even make this stuff up.” In my investigation of the city of Providence, Rhode Island finances and its history of deception and mismanagement, I have come upon yet another improper relationship that extends 20 years or so. More troubling, though, is the fact that this relationship with Wainwright Investment Counsel still exists today.  

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After reading the second part of the Institutional Investor articles devoted to pensions in Providence and other cities in Rhode Island, I realized that the same disclosure issues that have dogged the State of Rhode Island Pension System under Gina Raimondo also apply to Providence and Mayor Taveras.

The difference is, that the State has answered those issues and Providence has not. Finance Director Larry Mancini sits on a six-member Board of Investment Commissioners Chaired by Mayor Angel Taveras and co-chaired by James Lombardi III. Ostensibly, Wainwright Investment Counsel, LLC is their Investment Adviser, though no records exist or explanation of the relationship with Providence- including fees. I’ve contacted Providence through Mancini’s office. Done waiting for responses, I went on investigating on my own.

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The Providence, Wainwright relationship is long mysterious and murky

Eric Bertonazzi is the person that presents Wainwright Investment Counsel, LLC on occasion in Providence before the Investment Board. This makes sense because SEC filings show that he owns between 5% and 25% of the Wainwright Investment Counsel LLC. My guess is, he owns closer to 25%. Eric was last listed as President on one website and CIE, CEO on another. According to ZoomInfo, here is Company Description: 

“Wainwright Investment Counsel is an independent, full-service investment consulting firm based in Boston, Massachusetts. Since 1994, we have served defined benefit and defined contribution plans, endowments, foundations, family offices, and high-net-worth investors. As of December 31st, 2012, Wainwright Investment Counsel currently serves approximately 130 institutional and private clients. We are comprised of a complementary team of 20 investment professionals committed to helping investors meet their financial objectives and fiduciary responsibilities with objective, expert advice. Our consultant’s average over 21 years of experience and our senior research staff have advanced degrees. Our mission to provide superior investment consulting services is evidenced by a remarkably stable organization and client base. Our highly qualified team of consultants, research analysts, operations specialists, and administrative staff are supported by state-of-the-art technology and computer systems.”

Another search site says this:  

“Eric Bertonazzi is an executive and is a minority owner of Wainwright Investment Counsel LLC, a $4B RIA based in Dorchester, MA. Eric is also registered with WFS, LLC, a broker-dealer with 17 registered representatives nationwide. Eric has held an industry securities registration for 14 years and is subject to SEC and FINRA oversight.”

When I checked out Wainwright Investment Counsels website I was confused. It looked very much like an amateurish fake website that offered little or no information at all. No management team with photos, no bios, no portfolio managers. No testimonials. No Eric Bertonazzi. Really an awful website. I compared that to their competitors in Massachusetts.   

Wainwright Investment Counsel, LLC  Competitors: NEPC  Callan  Segal  Meketa 

Up until the mid-2000’s, Wainwright Investment Counsel was a consultant to a number of towns in Massachusetts. Now they have virtually disappeared. One possible reason is their affiliation with Madoff Investment linked feeder funds. The SEC / FINRA websites show that Wainwright and subsidiaries had three major arbitration cases settled in 2009-2010 for a total of $2.4 million dollars. Some was covered by Wainwright’s insurance policy and some not. Wainwright was putting investors into a Madoff feeder fund known as Gaspee Offshore Fund LTD.

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Wainwright Investment Counsel, WFS, LLC and Mr. Bertonazzi were all named in the 3 complaints. All complaints were settled (see right).  

These incidents bring up many questions and almost certainly inspired every town that had dealings with Eric Bertonazzi or Wainwright Investment Counsel, LLC to review the relationship and proceed with exploring a new consultant using the RFP process. But Providence has made no change in 20 years. Did Taveras even review the pension investment process when he took office? Was he unaware of who the consultant was? Has he ever put this out as an RFP? After all he’s the Chair if that board. What is the relationship with Wainwright? How are they paid and how much are they being paid?  When Taveras volleyed similar questions about Cliffwater, the state’s Investment Adviser , they were answered.

The really creepy gut feel

I knew Bernie Madoff, but I doubt he remembers me. I shook his hand a few times and was at some meetings and events with him. When we shook hands the hair stood up on the back of my neck.

Several Wall Street people reacted the same way I did and Madoff was pretty universally distrusted. We knew something wasn’t kosher, but it was Harry Markopolos who put it all together. The SEC ignored him several times. Markopolos spent at least 10 years of his life trying to expose him and no one listened.

So. I was starting to feel a bit creepy about Wainwright, especially given the lack of truth emanating from Mayor Taveras’ office and Mancini, and I decided to become a gumshoe. I called Wainwrights offices in Boston. The conversation went like this….

10 rings then gruff voice …

WW: hello

Me: I am trying to reach Wainwright Associates. Do I have the right Number?

WW: yeah (gruff again)

Me: I am doing a series of stories about the municipal pension system in Rhode Island and each city’s consultants. I see that you are designated as the Consultant to Providence, Rhode Island. Is that correct

WW: (sigh, gruff ) yeah

Me: may I speak with someone responsible for the relationship with Providence?

(there was a very long pause and I noticed no background noise whatsoever)

WW: No (gruff and strong)

Me: (taken aback) that’s an unusual response, is there someone else I can speak with?

WW: NO (faster and more annoyed) Look I don’t want to answer any questions.

Me: I have called numerous consultants and I am surprised by your response. Your website claims you have 21 people working there…..

WW: (interrupting) I’ve said enough, we don’t talk to reporters…(click)

That was it. 

Creepy enough but wait till you hear what I found out next.

A crappy website, lousy receptionist, connections to Madoff, and losing multiple contracts in Massachusetts  are not necessarily fraud- or even illegal- but they are certainly enough for a prudent manager of Public Pension Funds to ask questions of Wainwright and get answers. Just as in the $57 million missing from pension plans, Taveras owes a fiduciary duty to carefully safe guard the funds entrusted to him. I think he has completely ignored his responsibilities as fiduciary.

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Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC news, Yahoo TV, and CNBC.

 

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