By Charlotte Young

Alphonse Fletcher Jr. is a man that knows how to play the financial game.

After his rise as a stock trader at the now defunct firm Kidder Peabody, he won $1.3 million in arbitration and started his own firm in 1991. From there, the New York hedge-fund manager boasted only of success. His company saw 300 percent-a-year returns and the flagship fund of Fletcher Asset Management held an 11-year record of monthly straight financial wins.

So when he approached three public pension boards in Louisiana in 2008 with an investment deal of a lifetime (12 percent a year returns) they jumped at the opportunity; ignoring misgivings and advice that the proposition was too good to be true.

The three boards invested $100 million designated for fire fighters and other public employees. But after a delay in their 2009 audit, two of the pension boards requested to withdraw $32 million. What they received in return were promissory notes assuring payment within two years.

Turns out Fletcher’s secret to the game is exploiting legal details. His flagship fund holds “preferred shares” in other Fletcher subsidies, gaining extra-bonuses whenever the market makes a gain and his feeder funds invest in one another. In addition the assets are often counted more than once.

Wall Street Journal’s investigation finds that though Fletcher reported $558 million to the Securities and Exchange Commission  in 2009 year-end total for assets under management, in reality he held about $198 million, most of which belonged to the Louisiana pension funds.

The public pension boards are “concerned” to say the least.  Looks like the investment deal of a lifetime may take a lifetime to access.