Former Comptroller Alan Hevesi Sentenced To Up To Four Years In Prison For Role In Pay-To-Play Pension Fund Kickback Scheme
Hevesi Receives Maximum Sentence Available by Law After Pleading Guilty to Felony Official Misconduct
Hevesi Admitted Accepting Nearly $1 Million in Exchange For Approving $250 Million in Pension Fund Investments
NEW YORK – Attorney General Eric T. Schneiderman today announced that Alan Hevesi, former Comptroller of the State of New York, has been sentenced to a term of one to four years in prison, the maximum sentence available by law. Hevesi pleaded guilty in October 2010 to a felony for his involvement in a pay-to-play kickback scheme while the head of the state Comptroller’s Office.
“Today, Alan Hevesi was appropriately punished for abusing his position as New York’s Comptroller,” said Attorney General Schneiderman. “Hevesi brazenly sold access to New York Pension Fund investments—a betrayal of the public trust that went to the heart of his duties as Comptroller. Today’s sentencing decision will help achieve my office’s principal objective of restoring New Yorkers' faith in their state government. I’d like to thank Governor Cuomo and his team in the Attorney General’s Office for their work on this matter.”
Hevesi was sentenced today before Judge Michael J. Obus. In October 2010, Hevesi pleaded guilty to a felony charge of receiving reward for official misconduct, a class E felony, for receiving nearly $1 million in gifts in exchange for improperly favoring and approving $250 million in pension fund investments in private equity fund Markstone Capital Partners, L.P.
Today’s sentencing decision was the second 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. Last month, Hevesi’s former political advisor, Henry “Hank” Morris, received the maximum allowable sentence of one to four years in prison after pleading guilty to a Martin Act felony charge for his role in the pay-to-play scandal.
DETAILS OF HEVESI’S CONDUCT
Hevesi, who served as State Comptroller from January 2003 through December 2006, admitted that he accepted nearly $1 million in gifts from Elliott Broidy, a founder of Markstone Capital Partners, L.P., (Markstone), as a reward for giving preferential treatment to Markstone’s investment proposal. Hevesi violated his fiduciary duty to act solely in the best interests of the beneficiaries of the pension fund by favoring and approving $250 million in pension fund investments in Markstone.
Broidy, a friend and fundraiser for Hevesi, pleaded guilty in December 2009 to a felony charge of rewarding official misconduct in connection with the nearly $1 million in gifts he gave to Hevesi and other officials at the Comptroller’s office, so that he could obtain investments in Markstone. Markstone has agreed to return $18 million in management fees to the pension fund associated with these investments. Broidy, who will be sentenced in the coming months, has also agreed to pay $18 million to the State of New York as part of his plea agreement with the Attorney General’s Office.
Hevesi further acknowledged that during his tenure as Comptroller, he was aware that Morris was a paid placement agent in connection with pension fund investments, that Morris steered pension fund investments to friends and political associates, and that Morris solicited campaign contributions from financial firms who appeared before the pension fund.
The investigation has resulted in eight guilty pleas to date. In addition to Hevesi and Morris, the Attorney General’s Office secured guilty pleas from 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 months.
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.