US - Two more people pled guilty in the ongoing investigation relating to a pay-to-play scheme at the New York State Common Retirement Fund (CRF), New York state attorney general Andrew Cuomo announced yesterday.
Liberal Party former chair Raymond Harding and Aldus Equity founding partner Saul Meyer pled guilty to felony securities fraud charges for their involvement in kickback schemes at the New York State Office of the comptroller and the CRF.
In April, Cuomo's office arrested Harding and charged him with felony for securities fraud violations (Global Pensions, April 16, 2009).
According to a statement by the attorney's office, during his plea, Harding admitted to having participated in a scheme devised by Henry Hank Morris, a top political adviser to former New York State comptroller Alan Hevesi, and David Loglisci, the former state pension fund chief investment officer - to corrupt "the process of selecting investments at the CRF to favor political allies, friends and family".
Harding faces up to four years in prison.
Meyer was arrested at the end of April and also charged with securities fraud for paying illegal kickbacks to Morris in exchange for business with the CRF.
During his plea, Meyer admitted he entered into an arrangement with Morris according to which Aldus Equity agreed to pay Morris 35% of management fees and profit on the CRF investment. Meyer also faces up to four years in prison.
"These guilty pleas vividly depict the depth and breadth of corruption involving the New York State pension fund," said Cuomo.
"In one case, we see New York's state pension fund looted to reward a political boss with hundreds of thousands of dollars in improper payments. In the other, we see a pension fund adviser - the outside ‘gatekeeper' who is supposed to safeguard the integrity of the pension fund process - recommending deals based on pressure from pension officials and politically-connected people. We are bringing this ugly corruption to light and we must fix the system as well."
This is the latest development of an ongoing investigation which led to the conviction of a number of people as well as several investment firms paying back CRF millions of dollars and signing Cuomo's Code of Conduct on investments (Global Pensions, September 21, 2009).
It also led to a number of US pension funds banning the use of placement agents (Global Pensions, May 22, 2009).
Meyer's attorney Paul Shechtman, Harding's attorney Gary Naftalis and Aldus equity did not immediately return emails seeking comment.
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