$1M settlement reached with former fundraiser in NY state pension fund investigation

By Michael Gormley, AP
Thursday, September 16, 2010

$1M deal reached in NY state pension fund probe

ALBANY, N.Y. — New York has reached a million-dollar settlement in a probe of the pay-to-play scandal at the huge state pension fund, state Attorney General Andrew Cuomo announced Thursday.

The agreement is with Bill White, a former president of the Intrepid Sea, Air and Space Museum in New York City who raised funds for former state Comptroller Alan Hevesi.

Cuomo said White brokered investments worth several hundred million dollars for firms that paid him hundreds of thousands of dollars in fees. White wasn’t licensed, as required. Later, Cuomo said White contributed and “bundled” several other contributions from the firms to Hevesi’s campaign.

“The state pension fund, which should be safeguarded for taxpayers, was instead served up to fixers, finders, and fundraisers like Bill White, who used his access to fill his pockets,” Cuomo said at a news conference in New York.

“Unlicensed placement agents, secret fees, and even the appearance of pay-to-play erode taxpayers’ trust and pose an intolerable risk to our pensioners’ retirement funds,” said Cuomo, a Democrat who is running for governor. “New York’s pension system is fraught with systemic problems that we can no longer afford to ignore.”

The pension fund is valued at about $124.8 billion.

White confirmed the deal through a spokesman.

“Today, Bill has fully resolved this matter with the attorney general’s office,” spokesman Steven Kobre said. “He is looking forward to putting this behind him and working with the New York attorney general in his important effort to reform the New York state public pension system.”

Cuomo’s investigation so far has returned $138 million to the public workers pension fund and the state.

The investigation focuses on often politically connected people who Cuomo says acted as unlicensed “placement agents” seeking to get the comptroller, as sole trustee of the pension fund, to invest in their companies.

The Quadrangle Group — the former firm of President Barack Obama’s ex-auto industry czar, Steven Rattner — agreed in April to pay $12 million to settle its role, giving the long-running probe national attention. As part of the deal, Quadrangle made a statement condemning Rattner’s behavior as “inappropriate, wrong, and unethical.”

As a result of the investigation, 15 firms that have agreed to return $100 million to the pension fund have endorsed the Cuomo’s code of reform.

The case has also resulted in criminal charges and six guilty pleas to date, including a plea by some of the pension fund’s chief investment officer. Former Hevesi political adviser Hank Morris has been indicted.

Associated Press writers Jenn Peltz and David B. Caruso in New York contributed to this report.

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