Private equity manager Elliott Broidy today pleaded guilty in New York State Supreme Court to a felony charge that he paid about $1 million in bribes between 2002 and 2006 to four officials employed in the office of then-State Comptroller Alan Hevesi.
The bribes were made to secure an investment by the $126 billion New York State Common Retirement Fund, Albany, New York Attorney General Andrew M. Cuomo said today.
Mr. Broidy's crime was “a plain, old-fashioned bribery scheme,” Mr. Cuomo said at a news conference, and is unrelated to the pay-to-play scheme involving private equity placement agents that his office has been investigating for two years.
Mr. Broidy, co-founder and former chairman of Markstone Capital Group, admitted to bribing the four officials in the state comptroller's office to secure a $250 million commitment from the pension fund in Markstone Capital Partners, which invests in Israeli-based companies. The state retirement fund, which has invested in the Markstone fund since 2003, remains an investor in the fund.
Markstone remains under investigation by Mr. Cuomo's office and was not involved in Mr. Broidy's plea today.
Mr. Broidy resigned from all roles with the company, according to a statement from his attorney, Christopher Clark, a partner at Dewey & LeBoeuf.
“Mr. Broidy regrets the actions that brought about this course of events, but is pleased to have resolved this matter with the NYAG and will be cooperating in the ongoing investigation,” Mr. Clark said in his statement.
Dan Gillerman, chairman of the Israel Association of Chambers of Commerce and the former Israeli ambassador to the United Nations, was named to replace Mr. Broidy as chairman of Markstone Capital (Israel) and will soon be appointed chairman of Markstone Capital (U.S.), according to a statement from the firm.
"Markstone expects a seamless transition from Mr. Broidy's to (Mr.) Gillerman's leadership and that there will be no interruption of service to investors and no impact on the value of the investments held by Markstone Capital," said the statement.
Mr. Cuomo would not identify three of the four officials who allegedly accepted Mr. Broidy's bribes because they have not been charged and because the investigation is ongoing. Mr. Cuomo acknowledged that David Loglisci, formerly chief investment officer for the state retirement fund, who faces state criminal charges in connection with the pay-to-play scheme, was the fourth recipient of Mr. Broidy's bribes. None of the officials still works in the state comptroller's office, he said.
Mr. Cuomo said Mr. Broidy's bribes included a concealed $300,000 gift to Mr. Loglisci's family for the production of a film; payments to friends of the state comptroller's office officials; a sham consulting contract awarded to the relative of one of the four officials; and luxury travel in Israel and Italy provided to one of the officials and their relatives.
Mr. Broidy was required to repay $18 million in fees received from the state retirement fund and faces up to four years in prison for one count of rewarding official misconduct.