Wednesday, October 7, 2009

More Guilty Pleas in NY State Pay-to-Play Pension Fund Scandal

NY General Andrew Cuomo today announced two guilty pleas in the ongoing investigation relating to the New York State Common Retirement Fund (“CRF”). Raymond Harding, the former chair of the Liberal Party, and Saul Meyer, a founding partner of a Dallas-based firm that advises public pension systems across the nation, both pled guilty to felony securities fraud charges for their involvement in pay-to-play kickback schemes at the New York State Office of the Comptroller and the CRF.

“These guilty pleas vividly depict the depth and breadth of corruption involving the New York State pension fund,” said Attorney General Cuomo. “In one case, we see New York’s state pension fund looted to reward a political boss with hundreds of thousands of dollars in improper payments. In the other, we see a pension fund adviser - the outside “gatekeeper” who is supposed to safeguard the integrity of the pension fund process - recommending deals based on pressure from pension officials and politically-connected people. We are bringing this ugly corruption to light and we must fix the system as well.”

Harding, one of the last of New York’s political bosses, admitted that he had accepted more than $800,000 in exchange for doing favors for Alan G. Hevesi, the former state comptroller.

Meyer, a national public pension adviser, paid $300,000 to Hank Morris -- the top political adviser to Hevesi -- to obtain and influence fund investments.

Many investment firms have skated the scandal, since there has generally been a body they can point to between the bribes paid and themselves. Thay have only agreed to a new "code of conduct", agreed to pay relatively small fines and agrees to return some funds.

To date, seven firms have signed onto the Attorney General’s Reform Code of Conduct: The Carlyle Group, Riverstone Holdings, Pacific Corporate Group, HM Capital, Falconhead Capital, Levine Leichtman Capital Partners, and Access Capital Partners. These firms collectively have agreed to return nearly $60 million associated with CRF investments

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