NY Pension Scandal Grows; 100 Subpoenas Sent

One hundred subpoenas are being sent to so-called "middlemen" who were paid millions of dollars in fees for their alleged efforts to steer pension business to certain investment firms, News 4 New York learned Friday.

Attorney General Andrew Cuomo sent out the inquiries stating as many as half of all placement agents were unlicensed and unregistered. Cuomo said if agents were doing work without being registered, it could violate federal and state law.
Cuomo voiced concern that politically connected agents who were not licensed were "selling access" to the public fund and that it was a system "fraught with peril." Cuomo said he could not quantify the financial damage to the public pension system as a result of the system, but he said he is concerned there was widespread civil and criminal fraud. 
Other states are now taking a look to see if their public pension funds also were exploited by politically connected brokers seeking big paydays. Cuomo said he was consulting with the Securities and Exchange Commission and other state attorneys general in Connecticut, California and New Mexico.

"I just held a briefing with 100 individuals from 36 Attorneys General's Offices to discuss findings of our ongoing pension fund investigation," Cuomo said in a statement Friday. "We decided to create a multi-state task force to explore pension fund abuse so states can share vital information to prosecute wrongdoing and facilitate nationwide reform. The task force will allow us to have a unified, efficient method for gathering information as we fight to combat corruption and restore transparency and integrity to public pension funds."

A founder of Dallas investment firm Aldus Equity Partners, Saul Meyer, was charged Thursday with securities fraud in connection with the pension investigation. Meyer denied any wrongdoing. This latest arrest comes after veteran political consultant Hank Morris and one-time state pension official David Loglisci were charged in March. Former Liberal Party boss Ray Harding was arrested and charged last month in connection with the investigation as well. The Aldus firm allegedly paid Morris $300,000 for help in obtaining more than $300 million in state pension funds to manage.
Investigators want to know whether former state comptroller Alan Hevesi was aware that some of his longtime political allies were running an alleged pay-to-play system. Hevesi has not been charged, and his lawyer, Brad Simon, said his client was not aware of any wrongdoing.

Cuomo said his probe would focus on finding recommendations for reforms. He also said that as of today, he believes paid middlemen should be barred from helping secure state or city pension fund business.

City Controller William Thompson issued a statement saying, "I fully support the Attorney General’s investigation of this issue and will provide whatever assistance he needs from my office. I have already recommended to all of the city pension funds that they immediately suspend the use of any placement agents, firms or middlemen in their investments."

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