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Frederick McCarthy, a former dealmaker at scandal-scarred Drexel Burhnam Lambert, was indicted Tuesday along with three others on federal racketeering charges. McCarthy, now chairman of Triumph Capital Group Inc., a Boston private equity firm, was indicted by a federal grand jury in Hartford, Conn., for allegedly taking part in a pay-for-play scheme. In 1998, McCarthy allegedly agreed to raise $100,000 for the Connecticut Republican Party with the understanding that some of the money would be used to help the campaign of incumbent Treasurer Paul Silvester, according to the U.S. Attorney’s Office. In exchange, Silvester invested the state pension’s capital in Triumph’s investment fund. Silvester, who was defeated in the election, pleaded guilty last year to federal charges of racketeering and money laundering. In the last quarter of 1998, Connecticut’s state retirement fund committed $200 million to Triumph becoming the lone investor in a new partnership. The treasurer post in Connecticut — unlike in most states — has complete control of the treasury. Other states usually employ a board of trustees who make joint decisions. Triumph has branches in Los Angeles and San Francisco and has invested about $300 million in debt or equity in 30 companies, mostly in manufacturing. The firm manages three partnerships with approximately $850 million in committed capital. The charges against McCarthy carry a sentence of up to 95 years in prison and a fine of twice the gross gain from the offense. Others also indicted along with McCarthy included former Connecticut NAACP chief Ben Andrews, once a Republican candidate for Secretary of State, Lisa Thiesfield, a former Silvester aide, the sister of Andrew’s wife, Carol, and Triumph’s general counsel Charles Spadoni and the firm itself. At Drexel, McCarthy was a dealmaker who structured leveraged buyouts for firms like Bain Capital in Boston by arming them with high-yield bonds. In 1988, he helped structure a deal for the leveraged buyout of a Texas company partly owned by the wife of the judge investigating Drexel’s practices. McCarthy said in a court document that he was unaware of the conflict until it was brought to his attention. Copyright (c)2000 TDD, LLC. All rights reserved.

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