Former New York State Comptroller Alan Hevesi will serve one-to-four years in prison for his role in the now infamous pay-to-play pension fund kickback scheme.
This is the maximum sentence available by law, New York Attorney General Eric Schneiderman said in an April 15 statement.
Previously, in October 2010, Hevesi pleaded guilty to “receiving reward for official misconduct” during his time as comptroller. He admitted to accepting nearly $1 million in gifts from Elliott Broidy, founder and chairman of Markstone Capital Group Markstone Capital Partners LP, a private equity firm, in exchange for improperly favoring and approving $250 million in pension fund investments.
"I knowingly accepted and agreed to accept benefits from Broidy for having improperly favored Markstone for New York State Common Retirement Fund (CRF) investments, in violation of my fiduciary and other duties as a state public official and the sole trustee of the New York State Common Retirement Fund," Hevesi said at the time.
Hevesi served as state comptroller from 2003 to 2006, stepping down after pleading guilty of defrauding the government for using a state-employed driver for his personal use.
The Attorney General’s office has been conducting a long-running investigation into corruption involving the state’s comptroller’s office and pension fund investments, resulting in eight guilty pleas to date.
In February, Henry “Hank” Morris, who was the chief political advisor to Hevesi, was also sentenced to up-to-four years. Morris admitted that from January 2003 to December 2006, he utilized the CRF’s alternative investment portfolio “to enrich himself with so-called placement fees.” Morris also confessed that he “sought and received contributions for Hevesi’s reelection campaign from financial firms and individuals who appeared before the state pension fund,” Investment Management Weekly reported previously.
Also, in March 2010, David Loglisci, former CIO to the Common Fund, pleaded guilty to his role in the scandal. In his plea, Loglisci acknowledged that he ceded his authority over the alternative investment portfolio to Morris after being instructed to do so.
Other guilty pleas have been entered by Raymond Harding, a former leader of the New York Liberal party, and Barrett Wissman, a former hedge fund manager. Wissman is said to have made at least $12 million in sham “finder” and “placement agent” fees for arranging some of the payments made to Morris. Harding received approximately $800,000 in sham fees that were arranged by Morris and Loglisci.
Additionally, Saul Meyer, a managing partner at investment management firm Aldus Equity Partners; unlicensed placement agent Julio Ramirez; and Broidy have all admitted their wrongdoing as a result of the investigation.
“Today, Alan Hevesi was appropriately punished for abusing his position as New York’s comptroller,” Schneiderman said in the statement. “Hevesi brazenly sold access to New York Pension Fund investments—a betrayal of the public trust that went to the heart of his duties as comptroller.”
In a statement on the Office of the New York State Comptroller’s Web site, Thomas DiNapoli, who now holds the position, called the sentencing “a welcome and just conclusion to a years-long saga.”
“Mr. Hevesi betrayed the trust of all New Yorkers,” he said. “His sentence is clear evidence that this type of criminal behavior will not be tolerated.”
Hevesi was sentenced before Judge Michael J. Obus. Attempts to reach his lawyer, Bradley Simon, a partner at Simon & Partners LP, proved to be unsuccessful.
Lewis is the managing editor at Investment Management Weekly, a SourceMedia publication.
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