Alan Hevesi, former New York state comptroller, pleaded guilty Thursday in New York State Supreme Court to accepting nearly $1 million in gifts in exchange for approving $250 million in investments for the New York State Common Retirement Fund from 2003 to 2006.
Markstone Capital Partners, the firm that received the investments, gave Mr. Hevesi more than $500,000 in campaign contributions, $380,000 in sham consulting fees for a lobbyist friend and $75,000 in travel expenses for Mr. Hevesi and members of his family, state Attorney General Andrew Cuomo said in a news release announcing the guilty plea.
“I deeply regret my conduct, and I sincerely and deeply apologize to the people of the state of New York, the court and my family,” Mr. Hevesi said. He faces up to four years in prison and has agreed to cooperate with Mr. Cuomo's ongoing investigation.
“Alan Hevesi presided over a culture of corruption and violated his oath as a public servant,” Mr. Cuomo said in the release. “He was solely charged with protecting our pension fund, but he exploited it for his personal benefit instead.”
“I deeply regret my conduct, and I sincerely and deeply apologize to the people of the state of New York, the court and my family,” Mr. Hevesi said.
Mr. Hevesi resigned as comptroller after pleading guilty to a felony in December 2006 for using state employees to chauffeur around his disabled wife, ending his 35-year career in politics.
He was sole trustee of the $124.8 billion fund from 2003 to 2006, the official responsible for investing its money. He allegedly allowed his political consultant, Henry “Hank” Morris, to corrupt the investment process to benefit money managers who made campaign contributions and politically connected placement agents who received lucrative fees.
Mr. Cuomo has spent more than three years investigating and prosecuting “pay-to-play” practices at the fund. At least six people have pleaded guilty to criminal charges, 15 investment firms have settled and more than $130 million has been paid to the fund and state from the probe.
Mr. Cuomo has elicited admissions and cooperation from at least six men connected to the corruption.
David Loglisci, chief investment officer of the state fund under Mr. Hevesi, pleaded guilty in March to a violation of the state's general business law for allowing Mr. Morris to choose which money managers received alternative investments from the pension fund.
Mr. Loglisci, who agreed to cooperate, said in court then that he was instructed by a senior official to get approval from Mr. Morris before recommending or declining investment suggestions.
In all, about $5 billion of the New York state pension fund's $9.5 billion in alternative investments made in the 2003-‘07 period were tainted by kickbacks, according to the SEC, which is also investigating.
Mr. Loglisci had been charged in March 2009 along with Mr. Morris in a 123-count indictment. Mr. Morris, who has pleaded not guilty, faces trial on enterprise corruption and more than 70 other charges.
Elliott B. Broidy, founder of Markstone Capital Partners, pleaded guilty in December, saying he worked with officials at the comptroller's office “to confer benefits upon public servants for having violated their duties.”
Mr. Broidy said that in seeking investments from the pension fund, he made almost $1 million in payments for the benefit of high-ranking officials, including luxury travel. On five occasions from 2003 to 2006, he said, he traveled to Israel and Italy with “high-ranking officials” of the comptroller's office.
Ex-New York Liberal Party Chairman Raymond B. Harding also pleaded guilty in the pension scandal, admitting to taking $800,000 in placement fees in exchange for political favors.
Saul Meyer, founder of consultant Aldus Equity Partners, pleaded guilty last October to fraud charges, saying he paid $300,000 to Mr. Morris to secure money from the pension fund.
Current Comptroller Thomas P. DiNapoli, who was chosen by the state Assembly to succeed Mr. Hevesi, has banned the use of placement agents or lobbyists in investments with the fund, and banned contributions from those who do business with the fund.
Mr. Cuomo supports legislation to establish a board of trustees to oversee the state pension fund in place of the current sole trustee.
Bloomberg contributed to this story.