NY Officials Take Retirement Funds

Top New York officials have been charged with extracting millions of dollars in kickbacks from investment management firms seeking to manage the assets of New York’s largest pension fund.

The SEC’s complaint alleges that Henry “Hank” Morris, the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi, and David Loglisci, former Deputy Comptroller and Chief Investment Officer of the New York State Common Retirement Fund, orchestrated a fraudulent scheme from 2003 through late 2006 that corrupted the integrity of the New York State Common Retirement Fund in order to enrich Morris as well as others with close ties to Morris and Loglisci.

The government officials are accused of profiting by over $15 million in so-called placement and finder fees (read: kickbacks) from private equity firms and hedge fund managers.  

James Clarkson, Acting Regional Director of the SEC’s New York Regional Office, said:

“Kickback schemes corrupt the integrity of the investment decision-making processes. These defendants enriched themselves and their associates at the expense of the fund.”

The complaint lays out the scheme in which Loglisci ensured that investment managers who made payments to Morris, Loglisci, and their designess, were rewarded with lucrative investment management contracts, while investment managers who declined to make such payments were denied fund business.

The SEC alleges that Loglisci repeatedly directed investment managers, who solicited him for investment business, to Morris or certain other individuals and signaled to the investment managers that they first needed to “hire” Morris as a finder or placement agent. Neither Morris nor anyone else who received the payments at issue allegedly performed legitimate placement or finder services for the investment management firms who made the payments.

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