Subject: Hevesi Is Expected to Plead Guilty in Pension Case
From: "Eric Schwerin" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Date: Wed, 29 Sep 2010 08:21:59 -0400

Hevesi Is Expected to Plead Guilty in Pension CaseBy DANNY
HAKIM<http://topics.nytimes.com/top/reference/timestopics/people/h/danny_hakim/index.html?inline=nyt-per>
 and WILLIAM K.
RASHBAUM<http://topics.nytimes.com/top/reference/timestopics/people/r/william_k_rashbaum/index.html?inline=nyt-per>

ALBANY — Alan G.
Hevesi<http://topics.nytimes.com/top/reference/timestopics/people/h/alan_g_hevesi/index.html?inline=nyt-per>,
the former state comptroller, is poised to plead guilty to a felony
corruption charge after a lengthy investigation into his office’s rewarding
of pension investment business to firms that provided financial benefits to
Mr. Hevesi and his aides, people with knowledge of the case said on Tuesday.

Barring an 11th-hour change of heart, Mr. Hevesi would become the
highest-ranking state official convicted in the case and would be likely to
serve time in prison. In 2006, he pleaded guilty to a separate felony after
admitting he had used state workers to chauffeur his ailing wife, but
avoided jail time in that case after he agreed to resign.

The pension investigation, conducted by the office of Attorney General Andrew
M. Cuomo<http://topics.nytimes.com/top/reference/timestopics/people/c/andrew_m_cuomo/index.html?inline=nyt-per>,
is one of the longest running in Albany and came to symbolize the ethically
troubled culture of the capital. It has focused on allegations that Mr.
Hevesi’s friends, family and associates sold access to the state’s $125
billion pension fund, one of the world’s largest, to reward allies, pay back
political favors and reap millions of dollars for themselves.

The deal comes as Mr. Cuomo, the Democratic nominee for governor, is seeking
to burnish his credentials as a reformer who can clean up state government,
and his office has been in plea negotiations with Mr. Hevesi’s lawyer.

Mr. Hevesi, a Democrat, has long maintained that he did not know of the
wrongdoing taking place among his subordinates. He has not been formally
implicated in the scandal, and it remains unclear what specific offense Mr.
Hevesi would plead guilty to, or what wrongdoing he would admit.

Last December, a California money manager, Elliott Broidy, admitted paying
nearly $1 million in gifts in exchange for a $250 million investment from
the pension fund. Mr. Broidy, according to the attorney general’s office,
paid at least $75,000 to send a “very high-ranking” official in the
comptroller’s office and the official’s relatives on five trips to Israel,
including first-class airfare, luxury hotel accommodations and a security
detail. The high-ranking official was Mr. Hevesi, people with knowledge of
the investigation have said.

A guilty plea by Mr. Hevesi would not end the broader investigation. His
former political consultant and confidant, Hank
Morris<http://topics.nytimes.com/top/reference/timestopics/people/m/hank_morris/index.html?inline=nyt-per>,
was indicted last year on 123 counts; he has denied wrongdoing and remains
determined to fight the charges.

Also unresolved is the fate of Steven J. Rattner, the New York financier who
led the Obama administration’s rescue of the auto industry. This year,
the Quadrangle
Group<http://topics.nytimes.com/top/news/business/companies/quadrangle_group_llc/index.html?inline=nyt-org>,
the investment fund Mr. Rattner founded, paid $12 million to settle
allegations that it paid kickbacks to win pension fund business, and said it
was publicly disavowing conduct engaged in by Mr. Rattner.

Bradley Simon, Mr. Hevesi’s lawyer, was traveling in Europe and declined to
comment. Mr. Cuomo’s office released a statement on Monday night saying no
formal plea agreement had been reached with Mr. Hevesi, adding, “The office
has an ongoing investigation.”

But it appears that it was the fate of Mr. Hevesi’s two sons, Assemblyman
Andrew Hevesi and former State Senator Daniel Hevesi, that led him to accept
the plea deal. Their role in the investigation, and potential prosecution,
have been a part of discussions over the plea agreement, people with
knowledge of the case said.

Documents in the case have suggested that Mr. Morris, Mr. Hevesi’s most
trusted political adviser, was the architect of the corruption in the
comptroller’s office and reaped millions of dollars by acting as a
gatekeeper for private
equity<http://topics.nytimes.com/top/reference/timestopics/subjects/p/private_equity/index.html?inline=nyt-classifier>
firms
and hedge funds looking to do business with the pension fund.

But the activities of Mr. Hevesi’s sons have also drawn scrutiny:
investigators have questioned why an obscure firm operated by Daniel Hevesi
was paid more than $1 million in fees for deals with pension funds in New
York City and New Mexico, and whether any legitimate work was done for the
payments.

Andrew Hevesi had more limited exposure in the case: prosecutors say a
former Liberal Party boss in the state, Raymond B.
Harding<http://topics.nytimes.com/top/reference/timestopics/people/h/raymond_b_harding/index.html?inline=nyt-per>,
maneuvered to force a vacancy in an Assembly seat in Queens so that Andrew
Hevesi could assume the position. Mr. Harding pleaded guilty last year after
accepting more than $800,000 for doing political favors, prosecutors said,
including securing a private job for Andrew Hevesi’s Assembly predecessor,
Michael Cohen.

Andrew Hevesi did not return calls on Tuesday. Daniel Hevesi’s lawyer could
not be immediately reached.

The investigation by Mr. Cuomo’s office, and a parallel inquiry by the
Securities
and Exchange Commission<http://topics.nytimes.com/top/reference/timestopics/organizations/s/securities_and_exchange_commission/index.html?inline=nyt-org>,
led to a nationwide re-evaluation of public pension practices and the role
of placement agents, the middlemen who brokered business for the investment
firms from the comptroller’s office. Last year, the current comptroller, Thomas
P. DiNapoli<http://topics.nytimes.com/top/reference/timestopics/people/d/thomas_p_dinapoli/index.html?inline=nyt-per>,
barred placement agents and other paid intermediaries from doing business
with the state fund. The city comptroller has also banned placement agents
from the New York City pension funds.

A number of other Hevesi lieutenants have been implicated in the
investigation, which began in 2007 amid allegations that Mr. Hevesi’s former
chief of staff, Jack Chartier, had obtained, among other things, a loan from
Mr. Broidy for his friend the actress Peggy Lipton, from the television show
“Mod Squad.” Mr. Chartier has been cooperating with investigators, people
with knowledge of the case have said.

In March, David J. Loglisci, the former chief investment officer in the
comptroller’s office, pleaded guilty to securities fraud, saying he helped
steer pension money to Mr. Hevesi’s political contributors and to companies
that paid kickbacks to Mr. Morris.

The case has also entangled prominent New York figures and institutions.
Last year, the Carlyle
Group<http://topics.nytimes.com/top/news/business/companies/carlyle_group/index.html?inline=nyt-org>,
the private equity firm that once employed the first President Bush, paid
$20 million to settle charges related to the investigation.

The inquiry has also extended into Mr. DiNapoli’s office; a meeting between
Mr. DiNapoli and a prominent Democratic fund-raiser and money manager has
been the subject of scrutiny. Mr. DiNapoli has denied doing anything
improper.

For some time, it has been clear that Mr. Hevesi was the ultimate target of
the investigation. This year, after Mr. Loglisci pleaded guilty, he said in
court that senior officials in the comptroller’s office had instructed him
to clear investment decisions with Mr. Morris, an alarming admission since
Mr. Morris was Mr. Hevesi’s outside political consultant.

At the time, Mr. Cuomo declined to discuss whether Mr. Hevesi was one of the
senior officials, but said: “This is the chief investment officer. He did
report directly to the comptroller, at that time Mr. Hevesi.”

Danny Hakim reported from Albany and William K. Rashbaum from New York.
-- 
Eric D. Schwerin
Rosemont Seneca Partners
(202) 333-1880
[email-masked]