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Obama Adviser's Equity Firm Tied To State Pension Scandal
By
Jen Chung
Published Apr 17, 2009
Modified Apr 17, 2009
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By
Jen Chung
Published Apr 17, 2009
Modified Apr 17, 2009
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The state pension scandal, in which investment firms allegedly paid middlemen—state employees who were aides of former comptroller Alan Hevesi—to be included in the fund, has now apparently reached the Beltway. Sort of. Steve Rattner, who founded private equity firm The Quadrangle Group but is now heading up President Obama's auto industry task force, is apparently listed in the SEC's documents. The NY Times reports that while Rattner is not named, he is "described... as having arranged for his investment firm to pay more than $1 million to obtain New York State pension business." A U.S. Treasury spokesperson said Rattner let the Treasury know about the investigation before coming aboard.
The NY State pension fund is worth over $120 billion, and Attorney General Andrew Cuomo claims that firms were paying to get a piece of the business. The Wall Street Journal explains, "The main legal issue for the investment firms turns on whether they knew, or should have known, that fees they paid to certain entities for access to the New York fund were legitimate or were improper kickbacks, and whether they were properly disclosed, according to people familiar with the matter." As for the Quadrangle connection, "The SEC alleges in its complaint that a meeting was arranged between the senior Quadrangle executive and a brother of New York's then-deputy comptroller to discuss acquiring the DVD distribution rights to the low-budget film, 'Chooch.' The deputy comptroller, now under indictment, and his brothers produced the movie." [More about Chooch here.]
Hank Morris, aide to former State Comptroller Alan Hevesi, and David Loglisci, the retirement fund's head under Hevesi (and producer of 'Chooch'), have been indicted and deny any wrongdoing. Also somewhat related: Raymond Harding, who used to head the Liberal Party in New York, was charged with taking $800,000 in pension fund money to secure an Assembly seat for Hevesi's son. Fun fact: Quadrangle Group manages Mayor Bloomberg's wealth; the Mayor said of Rattner, "He’s a phenomenally competent guy."
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AG Cuomo
pension scandal
state pension fund
Steve Rattner
Jen Chung
Jen Chung is a former WNYC and Gothamist editor.
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