Ex-N.Y. Comptroller Pleads Guilty In Pension Scam
ROBERT SIEGEL, host:
The former comptroller of New York State, Alan Hevesi, pleaded guilty to corruption charges today. Authorities say Hevesi took gifts and campaign contributions from a money manager who did business with the state's enormous public pension fund. The case has already swept up some highflyers in New York political circles, and it's not over yet.
NPR's Jim Zarroli joins us to talk about this case.
And, Jim, first, can you explain what Hevesi's involvement was with the pension fund?
JIM ZARROLI: Well, Hevesi was the state's comptroller until he was forced to resign in 2007, and one of his functions was to oversee the public pension fund. These pension funds are usually very large. New York's fund has $125 billion in it. And Hevesi's office got to decide where to invest the money.
ZARROLI: So it's a huge responsibility, a lot of discretion to steer money where he wanted it to go. And this is really a place where, you know, big money and politics intersect. And a lot of investment firms were willing to do, you know, whatever it took to get a piece of the money.
SIEGEL: And what do authorities say Hevesi did that broke the law?
ZARROLI: Well, this is your, you know, your basic pay-to-play scandal. One of the places that Hevesi invested the money was a venture capital firm called Markstone Capital Partners. He gave it $250 million. And the state Attorney General's Office says that, in exchange, Hevesi and his family got $75,000 worth of luxury travel and gifts. Markstone also arranged to give a half million dollars worth of campaign contributions to Hevesi and his political supporters. And this money was laundered through a charity, so it would be hard to see what was happening. And Hevesi, for this, faces up to four years in jail.
SIEGEL: And, Jim, who are some of the other people who've been caught up in the Hevesi case?
ZARROLI: Well, the attorney general, Andrew Cuomo, has been investigating this for three years. And the case has - it's really exposed sort of a culture of mutual back scratching in state politics. Seven people have pleaded guilty. And they include some really big players in New York politics. I mean, if you follow New York politics, you would know some of these people. One is Ray Harding, the former head of the Liberal Party. He has acknowledged that he got a kickback for doing a favor for Hevesi. Another person who's involved is Hank Morris, who is Hevesi's chief fundraiser. Now, he has denied any wrongdoing, and he is expected at this point to stand trial.
SIEGEL: Another big name who has been implicated is the former Obama administration car czar, Steven Rattner, who also protests his innocence. But what is his alleged involvement, anyway?
ZARROLI: Well, Rattner is the founder of a private equity firm called Quadrangle, and the Attorney General's Office says he paid Hank Morris a million dollars as a way of getting some business for the firm. He also did something else, which is a little harder to - if you bear with me -the New York pension fund's chief investment officer had a brother. The brother had produced a low-budget movie called "Chooch," and Rattner promised to help distribute it. And in exchange for doing all this, the pension fund agreed to invest a hundred million dollars in Rattner's firm.
Now, Rattner says his involvement has been completely mischaracterized by state officials. But, you know, there have been press reports that suggest that he will come to some kind of plea deal with the attorney general and cooperate in the case. As of yet, he hasn't been charged with anything. He's maintaining his innocence. But, you know, a growing number of other people have been involved, and this looks like a case that will keep expanding.
SIEGEL: And, again, the news today, the former comptroller of New York State, Alan Hevesi, pleaded guilty to corruption charges. Jim Zarroli, in New York, thanks.
ZARROLI: You're welcome.