The U.S. Securities and Exchange Commission on Thursday charged the political adviser to New York state’s former comptroller for “corrupting the integrity” of the pension fund by taking kickbacks from companies seeking to manage its money.
The SEC, did not, however, charge the former state comptroller, Alan Hevesi, who plead guilty to misusing state drivers to chauffeur his ailing wife and resigned.
Hevesi’s political adviser and chief fund-raiser, Henry Morris, was charged, along with David Loglisci, who was the pension fund’s chief investment officer from 2003 to 2006, according to a copy of the SEC’s complaint.
State Attorney General Andrew Cuomo, whose office worked with the SEC on the investigation, said in an interview with an Albany-area radio station: “We are going to announce indictments today but this is going to be an ongoing matter.”
He added: “There will be other cases, other developments.”
It is unclear at this time if Cuomo believes that the investment firms listed in the indictment bear any blame, or if they were unwitting pawns. None of the firms or their partners, however, are named as defendants. Among those named are
SEC officials, whose charges are civil, and Cuomo, whose indictments are criminal, planned a midday news conference to discuss the investigation.
“The defendants’ scheme corrupted the integrity of the Retirement Fund’s investment processes and resulted in retirement funds being invested with the purpose of enriching the defendants,” the SEC said.
The federal complaint, filed in the U.S. District Court for the Southern District of New York, also charges “certain entities controlled by Morris.” Three firms listed as defendants in the complaint are: Nosemote LLC, Pantigo Emerging LLC, and Purpose LLC.
New York is one of three states that put their pension funds under the control of just one individual, in this case the comptroller, Cuomo noted in the interview. He added that concerns about this kind of “corruption” in New York’s pension plans date back decades.
“When you have a sole trustee of a pension fund, a $122 billion sole trustee, and these porous campaign finance laws, that I believe is a toxic combination that puts us in a vulnerable position,” said Cuomo, a Democrat.
Asked about the current comptroller, Thomas DiNapoli, a Democratic former legislator who replaced Hevesi in 2007, Cuomo again criticized lax campaign finance laws and the reliance on just one trustee. “It just breeds corruption,” he said.
(Primary reporting by Joan Gralla with additional reporting by Dan Primack, Grant McCool and Elizabeth Flood Morrow)