Former Car Czar Steve Rattner to Pay SEC $6.2 Million for 'Pay-to-Play' Scheme
The SEC detailed the elaborate scheme in a statement released Thursday:
The SEC also said that Rattner arranged a $50,000 contribution to Hevesi's re-election campaign, which they believe was linked to deputy comptroller Loglisci increasing the Retirement Fund's investment with Quadrangle from $100 million to $150 million. Rattner ultimately received about $3 million as his share of fees paid to a Quadrangle subsidiary that managed the $150 million for the fund.Rattner secured investments for Quadrangle from the New York State Common Retirement Fund after he arranged for a firm affiliate to distribute the DVD of a low-budget film produced by the Retirement Fund's chief investment officer and his brothers. Rattner then caused Quadrangle to retain Henry Morris -- the top political advisor and chief fundraiser for former New York State Comptroller Alan Hevesi -- as a "placement agent" and pay him more than $1 million in sham fees even though Rattner was already dealing directly with then-New York State Deputy Comptroller David Loglisci and did not need an introduction to the Retirement Fund.
Although Rattner, the former auto czar for the Obama administration, has settled his case with the SEC, his legal trouble involving this matter is not over. New York Attorney General and incoming Governor Andrew Cuomo announced today that he is suing Rattner for "influence peddling," and is demanding the return of $26 million to the state and that Rattner be banded for life from the securities industry.
The SEC charged Morris and Loglisci for their involvement in the kickback operation in March 2009. The SEC said both men were paid millions of dollars in sham finder and placement agent fees by private equity firms and hedge fund managers seeking to manage investments for the retirement fund. Firms that did not pay the sham fees were denied business.