Just In: Former NY State Comptroller Alan Hevesi Arrested


alan-hevesiJust in: ¬†Alan Hevesi is under arrest and heading to court for arraignment right now in Manhattan Criminal Court, Politico reports. This comes after widespread reports that he was about to cop a plea in¬†Attorney General Andrew M. Cuomo’s ongoing probe into the pay-to-play in the pension fund under Hevesi’s watch. Then Hevesi is expected, after arraignment, to head to Judge Stone’s courtroom, Politico said.

Stone has seen all the defendants involved in this case.

It’s a big scalp for Cuomo, who’s been probing the fund for several years.

Reports last week anticipated that Hevesi, the former state comptroller, was poised to plead guilty to a felony corruption charge after a lengthy investigation into his office’s rewarding of pension investment business to firms that provided financial benefits to Hevesi and his aides.

Hevesi becomes the highest-ranking state official convicted in the case and will likely serve time in prison. In 2006, he pleaded guilty to a separate felony after admitting he had used state workers to chauffeur his ailing wife, but avoided jail time in that case after he agreed to resign.

The pension investigation, conducted by the office of Attorney General Cuomo, is one of the longest running in Albany and has come to symbolize the ethically troubled culture of the capital. It has focused on allegations that Hevesi’s friends, family and associates sold access to the state’s $125 billion pension fund, one of the world’s largest, to reward allies, pay back political favors and reap millions of dollars for themselves.

The deal comes as Cuomo, the Democratic nominee for governor, is seeking to burnish his credentials as a reformer who can clean up state government, and his office has been in plea negotiations with Hevesi’s lawyer.

Hevesi, a Democrat, has long maintained that he did not know of the wrongdoing taking place among his subordinates.

Last December, a California money manager, Elliott Broidy, admitted paying nearly $1 million in gifts in exchange for a $250 million investment from the pension fund. Broidy, according to the attorney general’s office, paid at least $75,000 to send a “very high-ranking” official in the comptroller’s office and the official’s relatives on five trips to Israel, including first-class airfare, luxury hotel accommodations and a security detail. The high-ranking official was Hevesi, people with knowledge of the investigation have said.

The guilty plea by Hevesi does not end the broader investigation. His former political consultant and confidant, Hank Morris, was indicted last year on 123 counts; he has denied wrongdoing and remains determined to fight the charges.

Also unresolved is the fate of Steven L. Rattner, the New York financier who led the Obama administration’s rescue of the auto industry. This year, the Quadrangle Group, the investment fund Rattner founded, paid $12 million to settle allegations that it paid kickbacks to win pension fund business, and said it was publicly disavowing conduct engaged in by Rattner.

It appears that it was the fate of Hevesi’s two sons, Assemblyman Andrew Hevesi and former State Senator Daniel Hevesi, that led him to accept the plea deal. Their role in the investigation, and potential prosecution, have been a part of discussions over the plea agreement.

Documents in the case have suggested that Morris, Mr. Hevesi’s most trusted political adviser, was the architect of the corruption in the comptroller’s office and reaped millions of dollars by acting as a gatekeeper for private equity firms and hedge funds looking to do business with the pension fund.

But the activities of Hevesi’s sons have also drawn scrutiny: investigators have questioned why an obscure firm operated by Daniel Hevesi was paid more than $1 million in fees for deals with pension funds in New York City and New Mexico, and whether any legitimate work was done for the payments.

Andrew Hevesi had more limited exposure in the case: prosecutors say a former Liberal Party boss in the state, Raymond B. Harding, maneuvered to force a vacancy in an Assembly seat in Queens so that Andrew Hevesi could assume the position. Mr. Harding pleaded guilty last year after accepting more than $800,000 for doing political favors, prosecutors said, including securing a private job for Andrew Hevesi’s Assembly predecessor, Michael Cohen.

The investigation by Cuomo’s office, and a parallel inquiry by the Securities and Exchange Commission, led to a nationwide re-evaluation of public pension practices and the role of placement agents, the middlemen who brokered business for the investment firms from the comptroller’s office. Last year, the current comptroller, Thomas P. DiNapoli, barred placement agents and other paid intermediaries from doing business with the state fund. The city comptroller has also banned placement agents from the New York City pension funds.

The case has also entangled prominent New York figures and institutions. Last year, the Carlyle Group, the private equity firm that once employed the first President Bush, paid $20 million to settle charges related to the investigation.

The inquiry has also extended into Mr. DiNapoli’s office; a meeting between Mr. DiNapoli and a prominent Democratic fund-raiser and money manager has been the subject of scrutiny. Mr. DiNapoli has denied doing anything improper.

{Noam Amdurski-Matzav.com Newscenter}