NYC pension CIO sues Diamond Castle for $10m

Diamond Castle argues founder Lawrence Schloss' $10m suit for withholding payment is 'inappropriate and unreasonable'.

Lawrence Schloss sued his former firm Diamond Castle Holdings Tuesday, alleging the private equity firm he founded in 2004 is withholding pay and investment proceeds from Diamond Castle Partners IV and Diamond Castle Partners IV GP Offshore Fund.

The filing “seeks to hold all defendants liable for their breaches of the implied covenant of good faith and fair dealing, breaches of fiduciary duty, conversion, and promissory estoppel,” according to the summons. Diamond Castle executives Ari Benacerraf, Michael Ranger and Andrew Rush were also named as defendants in the suit.

Schloss, his attorney at Quinn Emanuel Urquhart & Sullivan, and a spokesperson for the New York City Comptroller’s office, did not return calls by press time.

Lawrence
Schloss

“We tried to reach a resolution that was fair to Mr. Schloss and consistent with our obligations to our investors. Hopefully, upon further reflection, Mr. Schloss will realize that, as New York City deputy controller and chief investment officer, his demands are inappropriate and unreasonable,” said a Diamond Castle spokesperson in a statement.

Schloss was the co-founder, chairman and chief executive officer of Diamond Castle since 2004, after leaving Credit Suisse. At Credit Suisse, Schloss oversaw the largest private equity operation in the world at the time, with over $31 billion of funds under management in a range of investment categories including leveraged buyouts, mezzanine, real estate and venture capital.

He started his private equity career at Donaldson, Lufkin & Jenrette, where he eventually became chairman of DLJ Merchant Banking Partners.

As CIO and the deputy comptroller for pensions since January, Schloss oversees the pension’s private equity programme, which has about $12.5 billion of commitments, with $6.8 billion funded.

The New York City retirement system is made up of the New York City Employees’ Retirement System, the city teachers’ pension, the city fire department pension, the city police pension and the city board of education retirement system.