A.G. Schneiderman Announces Hank Morris Sentenced To Up To Four Years In Prison For Role In Pay-To-Play Pension Fund Kickback Scheme

Morris, Chief Political Adviser to Former Comptroller Alan Hevesi, Receives Maximum Sentence Available by Law

As Part of Plea Agreement, Morris Forfeited $19 Million and is Permanently Banned From the Securities Industry in New York State

NEW YORK – Attorney General Eric T. Schneiderman today announced that Henry “Hank” Morris, the chief political adviser to former Comptroller of the State of New York Alan Hevesi, has been sentenced to a term of one and one third to four years in prison, the maximum sentence available by law. Morris, who pleaded guilty in November 2010 to a felony for his involvement in a pay-to-play kickback scheme at the Comptroller’s Office, forfeited $19 million and is permanently banned from the securities industry in New York State.

“Today, justice was served on Hank Morris, who will be appropriately punished for his role in one of the largest pay-to-play schemes in New York State history,” said Attorney General Schneiderman. “Today’s sentencing decision by the Court sends a strong message to New Yorkers that those who abuse positions of power to line their own pockets will be held accountable by this office. I’d like to thank Governor Cuomo and his team in the Attorney General’s Office for their work on this matter.”

Morris was sentenced today before New York State Supreme Court Justice Lewis Bart Stone to an incarceration of one and one third to four years in state prison, the maximum sentence allowable by law.

In November 2010, Morris pleaded guilty to a felony violation of the Martin Act, a class E felony, for orchestrating a pay-to-play scheme out of the pension fund which generated millions of dollars in so-called placement fees for Morris, his political allies and associates.

According to the terms of his plea agreement with the Attorney General’s Office, Morris forfeited $19 million that will go to the state pension fund. He is permanently banned from the securities industry in New York State and prohibited from soliciting or receiving investments from the State of New York or any governmental entity within the state. In addition, Morris is prohibited from holding any public position or entering into any contractual relationship with the State of New York or any governmental entity within the state. He will also lose his license to practice law in New York State.

Today’s announcement marks the first sentencing decision stemming from the long-running investigation by the Attorney General’s Office into corruption involving the Office of the New York State Comptroller and the state pension fund. The investigation uncovered a complex criminal scheme involving numerous individuals operating at the highest political and governmental levels under former Comptroller Alan Hevesi. Through this scheme, Morris and his political allies and friends reaped tens of millions of dollars in kickbacks, bribes, and sham consulting and finder fees connected to pension fund investments.

DETAILS OF THE MORRIS SCHEME

During Hevesi’s administration, from January 2003 through December 2006, Morris engaged in a fraudulent scheme in which he used the pension fund’s multi-billion dollar alternative investment portfolio to enrich himself with so-called placement fees, and to hand out favors and paybacks to political friends and allies.

Morris knew that Hevesi and then-Chief Investment Officer David Loglisci both had fiduciary duties to act exclusively in the best interests of the members and beneficiaries of the pension fund.

Nevertheless, Morris worked with Hevesi and Loglisci to facilitate the approval of certain proposed alternative investments in order to generate fees for Morris or individuals chosen by Morris. Through this scheme, he promoted more than $5 billion worth of public pension fund securities transactions that brought him $19 million in fees. Morris concealed his involvement in these investments from pension fund staff.

Morris has acknowledged receiving millions of dollars in fees on over twenty investments and secretly sharing fees with other favored associates. In addition, Morris admitted arranging for Raymond Harding, the former head of the Liberal Party, to receive fees on at least two pension fund investments. Morris also admitted that as Hevesi’s chief political consultant, he sought and received contributions for Hevesi’s reelection campaign from financial firms and individuals who appeared before the state pension fund.

BACKGROUND INFORMATION

The investigation has resulted in eight guilty pleas to date. In addition to Morris, the Attorney General’s Office secured guilty pleas from former New York State Comptroller Alan Hevesi; former Chief Investment Officer David Loglisci; former Liberal Party Chair Raymond Harding; investment advisor Saul Meyer; hedge fund manager Barrett Wissman; unlicensed placement agent Julio Ramirez; and venture fund manager Elliott Broidy. These defendants are scheduled to be sentenced in the coming weeks.

Attorney General Schneiderman recognized the work of Governor Andrew M. Cuomo, who prosecuted this investigation during his tenure as Attorney General. He also thanked New York State Inspector General Ellen Nachtigall Biben, former Special Deputy Attorney General for Public Integrity, who has been cross-designated as a Special Assistant Attorney General for these sentencing proceedings for the Attorney General's Office, for her continued service to the Office of the Attorney General and to the people of the State of New York.

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