US - Former New York state comptroller Alan G. Hevesi told New York Attorney General Andrew Cuomo's office he is willing to plead guilty in connection with a probe of corruption at the state pension fund, according to a person familiar with the investigation.
Hevesi could admit to a felony as soon as next week that would leave it up to a judge to decide on jail time, the person said.
Hevesi, whose deal is still being ironed out, agreed to negotiate after being told by Cuomo's office that if he did not plead guilty he would be charged, said the person, who asked not to be identified because the deal isn't completed yet.
Cuomo, the Democratic candidate for governor, has been investigating "pay to play" at the New York State Common Retirement Fund for more than three years. Henry "Hank" Morris, Hevesi's former political consultant, is facing trial on about 75 counts in connection with the corruption probe.
At least six people have pleaded guilty to criminal charges in the probe, including the fund's former chief investment officer, David Loglisci. Fifteen firms have settled and agreed to adopt reforms that include limits on campaign contributions to those who can assign investment business.
"There is no agreement between the Attorney General's office and Alan Hevesi," Cuomo's office said in an e-mailed statement. "The office has an ongoing investigation."
Richard Bamberger, a spokesman for Cuomo, declined further comment.
Bradley Simon, a lawyer for Hevesi, was not available for comment, according to Tatjana Gall, a receptionist at his New York law office.
As sole trustee of the fund from 2003 to 2006, Hevesi, 69, was the official responsible for investing its money. During that time, Morris allegedly corrupted the investment process, favouring those who made campaign contributions and paid placement fees to favoured middlemen, including himself.
Morris's "group" participated in 19 separate alternative investments generating $35m in placement fees, with Morris himself or entities he owned taking $19m, according to court papers.
Morris, who was indicted in 2009 in connection with the probe, has pleaded not guilty. On September 16, New York state Supreme Court Justice Lewis Bart Stone urged him to resolve the charges without a trial.
David Loglisci, chief investment officer of the state fund under Hevesi, pleaded guilty on March 10 to a violation of the state's general business for allowing Morris the power to choose which money managers received alternative investments from the pension fund.
Loglisci, who agreed to cooperate, said in court that he was instructed by a senior official to get approval from Morris before recommending or declining investment suggestions. He also said he ceded authority over alternative investments at the direction of senior officials.
Ellen N. Biben, a prosecutor in Cuomo's office, declined to comment at the time on the identity of the officials.
"The political motivations for investment selection were chronic and institutionalised throughout the office, creating a culture of corruption at the highest levels," Loglisci said in court.
Elliott B. Broidy, founder of Markstone Capital Partners, pleaded guilty in December, saying he worked with high-ranking officials at the comptroller's office "to confer benefits upon public servants for having violated their duties."
Broidy said in 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.
"In connection with these trips, I paid at least $75,000 in travel expenses incurred by office of the New York state comptroller officials, as well as the expenses of one official's adult children," Broidy said.
Hevesi and his children took the trips, a person familiar with the matter said at the time. It wasn't clear whether Hevesi knew Broidy financed the travel, the person said.
Ex-New York Liberal Party Chairman Raymond B. Harding also pleaded guilty in the pension scandal. Harding admitted taking $800,000 in placement fees in exchange for political favours.
Before his 2002 election as state comptroller, Hevesi served for eight years as New York City's comptroller. He spent 22 years in the state Assembly, representing a district in the borough of Queens while he was a professor of political science at Queens College. He holds a doctorate in public law and government from Columbia.
Hevesi was re-elected to a second term as comptroller in November 2006 in the face of a finding by the state ethics commission that he had violated the law.
The next month, he pleaded guilty to defrauding the government and resigned from office. He admitted using state employees as drivers and personal aides for his disabled wife. His plea deal spared Hevesi any prison time.
Current state Comptroller Thomas P. DiNapoli, who succeeded 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.
In all, about $5bn of the New York state pension fund's $9.5bn in alternative investments made in the 2003- 2007 period were tainted by kickbacks, according to the U.S. Securities and Exchange Commission, which also has been investigating.
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